MEIDENSHA REPORT 2013
CSR & ANNUAL REPORTFor the year ended March 31, 2013

01

MEIDENSHA REPORT 201302

Message from Management“Power of being in Touch,” “Agility” and“Sharing the Sense of Responsibility” in supportof the Social Infrastructure– We Aim to Make a Company Group Trusted
by the Society
Since its inception in 1897 and for 116 years, as a supplier, we have been engaged in theinnovation of various technologies, products and services as well as the constant pursuit of
improvement for the benefit of the society. This reflects our spirit of challenge to meet the
expectations of the times by our customers and society and our “passion for
manufacturing excellence.”
We value:- “Power of being in Touch,” which refers to the deep level of communication across thewide spectrum of networks and across-the-board co-operation among Meiden Group
companies;- “Agility,” which refers to our ability to respond quickly and flexibly to meet the needs andsolve the problems of the customers.
- “Sharing the Sense of Responsibility” in support of the social infrastructure.
In so doing, we aim to make a company group trusted by our customers and society.
Under a new management team since June of this year, the Meiden Group is working
to strengthen our collaborative power of “manufacturing excellence” in order to realize the
new growth path envisioned in our current Medium-term Management Plan, “POWER 5,”
Phase III.
While keeping track of the basic course outlined in the Medium-term Management
Plan under the slogan: “Meiden Group Challenges – Helping Society with Our Collaborative
Power of Manufacturing Excellence,” we will solidly execute the various policy programs in
response to the changing current management environments at home and abroad, withthe goal of contributing to the realization of a vibrant and rich future society.
We ask all shareholders, as well as our customers and business partners, to grant us
their continuing support and advice.

Yuji Hamasaki
President
Meidensha Corporation

03

MEIDENSHA REPORT 201304

The Group Corporate Philosophy / Editorial Policy

CONTENTS

Meiden Group Corporate Philosophy
Corporate Mission

Value Provision

Illuminating a more affluent
tomorrow

For customer peace of mind
and satisfaction

We continue to create value and technologies for therealization of a more affluent and environmentallyaware society.

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

Meiden Group Corporate Philosophy

1

Value Provision
It defines the unique value provision andcore competence

1 CSR Definition

2

3

President’s CSR Policy Order

MEIDEN CYCLEMEIDEN CYCLE shows the guiding spirits shared by all members of
the Group in realizing the Group’s corporate philosophy.

Scope of Reportt3FQPSUJOHQFSJPE
This report mainly covers initiatives taken in fiscal 2012
(April 1, 2012 - March 31, 2013)t4DPQFPG3FQPSU
The report mainly covers initiatives of Meidensha and its Group
companies. Human resources data applies to Group
companies in Japan, while environmental reporting data applies
to Meidensha and 45 major Group companies (27 in Japan and18 overseas).
Guidelines Used as ReferencestGRI “Sustainability Reporting Guidelines Version 3.1”
tMinistry of the Environment “Environmental Reporting
Guidelines (Fiscal Year 2012 Version)”

MEIDEN CYCLE -A Meiden Group Way of Action-

Build Royalty

In order to realize our Group Corporate Philosophy, we must
identify the direction for each individual employee to aim towards
and provide signposts to help them proceed without losing theirway. To enable us to do so, we have made these five actions
our watchwords. The actions are mutually linked, with one action
calling forth the next, creating a cycle of action and growth.
Based on this image, we call this the Meiden Cycle.
By sharing and practicing the Meiden Cycle as the ethos
underlying our actions, we seek to maximize the growth cyclefor each of our employees. And at the same time, this meansthat the Meiden Group continues to grow sustainably, looking
towards the realization of the Group Corporate Philosophy.

03

Editorial Policy

04

Financial Highlights

05

Outline of Meiden Group06

Meiden Group Businesses

09

SpecialfeatureMeiden Group Initiatives towards therealization of Smart Communities

1

Dialogue

11

2

Smart BEMS: Contributing toFuture Community-building

15

Corporate Code of Conduct

This policy sets forth the policy of our CSR programs and activities in
the medium term. The Policy Order asks each Group employee to
implement CSR programs and activities in their daily work. We willdraw up specifications that reflect the given business climate andCSR challenges under the then current stage of the POWER 5
management plan.

2 Corporate Code of Conduct
4 MEIDEN CYCLE

Meiden Group Corporate Philosophy

CSR Definition

This code defines compliance in conducting our CSR programs andactivities.

4

3 President’s CSR Policy Statement

This report is designed to give the reader a clearer overview
of Meidensha’s management. It contains the company’s
Annual Report (covering management and financial
information) and CSR Report (describing our environmental
and social initiatives). This combined publication includes
the key points of our management initiatives in a single
volume. The Meiden Group undertakes its businessactivities with a sense of mission to support society’s
infrastructure. We hope this publication will help people toknow the Group better.

01

Under the Meiden Group’s definition of CSR, “Each and every
employee shall work to realize the Group’s corporate philosophy sothat the Meiden Group is needed by society.”

Corporate Mission
It defines the raison d'être and corporate mission

Editorial policy

Message from Management

To realize the “best product experiences” for the customers, let’s
produce the new added-value.
Take a pride and responsibility that you are engaged in the job that iscreating the “backbone or social infrastructure of the society.”
Make a solid growth as a personal level as well as the corporate leveland should reach the level of being “admired” or “trusted” withroyalty by the stakeholders.

Keep in Touch

Do not be afraid the potential conflict of opinion with the “associates”
and keep in touch with each other beyond the mental barrier.
Have a genuine dialogue with the “customers” to learn their insights.
Have a consciousness of being in touch with the community, thesociety and the global climate.

Think Big

“Is this O.K.?” : Put a question to the status quo.
“Inquisitive mind” and “curiosity.” : You should keep such mind habit.
“The road leading to a solution is not just one” : Please explore every
possibility.

Move Ahead“Act now or perish.” : Take a first step with your strong will.
“Action of today will make your future.” : Make your way towards thegoal without hesitation.
“Come from your own action with the challenging target” : Take apositive action.

Have Fun

Let’s enjoy the moment of “personal growth.”
Let’s sincerely enjoy your “job.”
Let’s get “the passion for Manufacturing Excellence”

PublicationtPublication of this report: July 2013tNext scheduled publication: July 2014
Inquiries about the CSR Report
Public & Investor Relations Division,
Public & Investor Relations Section
ThinkPark Tower, 2-1-1, Osaki, Shinagawa-ku,
Tokyo 141-6029 Japan
TEL: 81‐3‐6420‐8100
FAX: 81‐3‐5745‐3027
Website: http://www.meidensha.co.jp/pages/top/index.html
Disclaimer
In addition to past and current facts about the Meiden Group,
this report contains forecasts for the future based on plans,
outlooks and business policies and strategies in effect at thetime of publication. These forecasts are our assumptions andjudgments as based on information available at the time they
were stated, and may differ from actual business activity
results and events in future owing to changes in conditions.
Thank you for your understanding.

Business Report
Medium-term Management Plan POWER 5 Phase III

17

Overview by Business Strategy

19

Research and Development / Capital Investment

21

Fiscal 2012 Topics

22

Promoting CSR Management
CSR in the Meiden Group

23

Environment Report27

Social Report

37

Governance

46

Financial Statements
Consolidated Balance Sheets

51

Consolidated Statements of Income

53

Consolidated Statements of Comprehensive
Income (Loss)

54

Consolidated Statements of Shareholders’ Equity/
55
Changes in Net Assets
Consolidated Statements of Cash Flows

57

05

MEIDENSHA REPORT 201306

Financial Highlights / Outline of Meiden Group

Financial Highlights

Outline of Meiden Group

Meidensha Corporation and Consolidated Subsidiaries Years ended March 31
Million of Yen(except per share data)

Thousand of U.S. Dollars(except per share data)

2009

2010

2011

2012

2013

2013

¥ 188,803¥ 161,464¥ 168,826¥ 186,986¥ 219,113$ 2,330,989

For the year:
Order received

Corporate Data (as of March 31, 2013)
Corporate NameMEIDENSHA CORPORATION

Consolidated Number of Employees

7,920

Established

June 1, 1917 (Since December 22, 1897)

Shareholders

22,472

198,798

173,067

167,729

181,107

197,733

2,103,543

President

Yuji Hamasaki

Common Stock

227,637,704 shares issued

Operating income

4,085

3,322

5,778

6,279

7,881

83,840

Head Office

43 (26 in Japan, 17 overseas)(1,083)

971

1,196

1,679

4,025

42,819ThinkPark Tower, 2-1-1, Osaki,
Shinagawa-ku, Tokyo, 141-6029 Japan

Consolidated Subsidiaries

Net income (loss)
Capital expenditures

8,218

5,514

4,530

6,824

8,882

94,489Stock Listing

Tokyo Stock Exchange, Osaka Stock
Exchange, Nagoya Stock Exchange

Depreciation and amortization

7,797

7,611

7,166

7,009

7,930

84,362R&D expenses

6,939

6,836

7,413

8,425

9,681

102,989

Net sales

Capital¥17,070 million

Consolidated Sales¥197,733 million

Per share data (yen and U.S. dollars):
Net income (loss)(4.77)

4.28

5.27

7.40

17.74

0.19

Cash dividends

4.00

4.00

4.00

4.00

5.00

0.05

Total assets

214,165

206,608

206,871

211,733

224,623

2,389,606

Total equity

52,702

54,132

52,72253,422

58,077

617,840

Number of employees

7,133

7,144

6,994

7,145

7,920

—

Key Business Region (business scale)At year-end:

Notes: 1. The translation of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using theprevailing exchange rate on March 29, 2013, which was ¥94 to U.S $1.
2. Figures for employee numbers exclude those employees on temporary contracts.

Japan

The Meiden Group endeavored to achieve the new leap forward targeted in Phase III of its “POWER 5” medium-term management
plan. The Group has made a concerted effort to reorganize itself and achieve structural reforms of its businesses, to develop the powertransmission and distribution business taken over during the fiscal year under review, to expand overseas operations, and to establish solid
foundations in such growth businesses as motors and inverters for electric vehicles.
As a result, consolidated net sales in the fiscal year ended March 31, 2013, increased 9.2% over the previous fiscal year to ¥197,733
million, operating income grew 25.5% to ¥7,881 million, ordinary income rose 12.9% to ¥5,946 million, and net income surged 139.7% to¥4,024 million.

t4BMFT

159,757 million
80.8%t4BMFT3BUJPEurope, U.S.
and otherst/VNCFSPGDPNQBOJFT3t4BMFT3,377 milliont4BMFT3BUJP1.7%

Operating income

Net sales

Millions of yen

Millions of yen

167,729FY

26t/VNCFSPGDPNQBOJFT

2011

181,107

2012

6,279

197,733

2013

Net income (loss)

7,881

Asia (excluding Japan)t/VNCFSPGDPNQBOJFT14t4BMFT34,599 milliont4BMFT3BUJP17.5%

5,778

FY

2011

2012

2013

Total assets%

Millions of yen

4,025

Number of employees

Ratio of sales by region (Fiscal 2012)

Millions of yen

206,871

211,733

224,623

People

1.7

7,920

17.5
6,994

7,145

2011

2012

80.8
1,679
1,196

FY

2011

2012

2013

FY

2011

2012

2013

●Japan●Asia●Europe, U.S. and others

FY

2013

07

MEIDENSHA REPORT 201308

Outline of Meiden Group

Consolidated Subsidiary Companies March, 2013

Area CodeCompany Name

Share data (As of March 31, 2013)

CapitalBusiness Entity

Total number of authorized shares

576,000,000

Total number of issued shares

227,637,704 (Including treasury shares of 701,861)

Number of shareholders

22,472Japan

MSA Co., Ltd.

¥400 million

Manufacture and sales of surge arrestersJapan

Kofu Meidensha Electric Mfg.Co.,Ltd.

¥400 million

Manufacture and sales of electric motors

Japan

Meiden Plant Systems Corporation¥400 million

Construction services

Japan

M WINDS Co., Ltd.

¥330 million

Business of wind farm and consulting services

Japan

MEIDEN SHOJI Co., Ltd.

¥300 million

Sales of electric components

Japan

MEIFIS CORPORATION¥150 million

Accounting

Japan

MEIDEN KOHSAN CO., LTD.

¥100 million

Sales products and materials, and agent services
of insurance¥100 million

Maintenance and control services of water
treatment equipment

Sumitomo Electric Industries, Ltd.

13,147

5.79

The Master Trust Bank of Japan, Ltd.

11,252

4.96

Japan

Meiden Kankyo Service Co., Ltd.

Major shareholders(Unit: Millions of yen)

Number of shares held
(1,000 shares)

Name of shareholder

Shareholding ratio (%)

Japan

MEIDEN CHEMICAL CO., LTD.

¥95 million

Insulting varnish and molded instrumenttransformer

Japan

Meiden Sheet Metal Products Corporation¥90 million

Manufacture and sales of sheet metal

Sumitomo Mitsui Banking Corporation

11,2094.94¥90 million

Engineering, Manufacturing and sales of electric
products

Japan Trustee Services Bank, Ltd.

8,956

3.95

Japan

MEIDEN T&D CORPORATION

8,730

3.85

MEIDEN SINGAPORE PTE. LTD.

S$25.4 million

Manufacture and sales of transformers,
switchgears and circuit-breakers and related
engineering and construction services

NEC Corporation

Singapore

Sumitomo Mitsui Trust Bank, Limited

7,500

3.30

Thai

MEIDEN ELECTRIC (THAILAND) LIMITED

TB70.0 million

Manufacture and sales of switchgears

Meidensha employees stock ownership

5,736

2.53

Thai

THAI MEIDENSHA CO., LTD.

TB20.0 million

Engineering and consulting services

SUMITOMO LIFE INSURANCE COMPANY

5,307

2.34

Indonesia

PT. MEIDEN ENGINEERING INDONESIA

US$320.0 thousand

Engineering and consulting services

Mitsui Sumitomo Insurance Company, Limited

4,377

1.93

Malaysia

MEIDEN MALAYSIA SDN. BHD.

RM800.0 thousand

Engineering, consulting services and tradings

China

MEIDEN HANGZHOU DRIVE SYSTEMS CO., LTD.

Meiyu stock ownership

3,020

1.33

China

MEIDEN SHANGHAI CO., LTD.

U.S.A.

MEIDEN AMERICA, INC.

US$16.5 million

Sales of dynamometer products, engineering andconsulting services

UnitedKingdom

MEIDEN EUROPE LIMITED€750.0 thousand

Sales of electric products and components

US$19.0 million¥320 million

Manufacture and sales of electric motors
Sales of electric products and components

Another 24 companies

Japan

26

China

6

Hong Kong

1

Singapore2

Malaysia

2

Thai

2

Indonesia

1
Asia

14

U.S.A.

2

United Kingdom

1

Other Areas

3

Total

43

(Note) The shareholding ratio excludes treasury shares.

Distribution of shares by shareholder
Classification

Other
0.30%

Investment ratio (%)

Financial institutions

34.21

Securities companies

4.51

Business companies

22.18

Overseas investors

7.65

Individuals

31.12

Other

0.30

Individuals
31.12%

Overseas
investors
7.65%

Financial
institutions
34.21%

Securities
companies
4.51%
Businesscompanies
22.18%

09

MEIDENSHA REPORT 201310

Meiden Group Businesses

Meiden Group Businesses

The Meiden Group continues to contribute to theenvironment and the realization of an abundant society
through its manufacturing activities.

10
11

12
1

4

8

7

8
3

2

9

6

5

1 Parks

4 Factories

Disaster information management system

6 Railways

Dynamic voltage compensator

Traction substation for railways

8 Drinking water treatment plants andSewage treatment plants
Total monitoring system for watersupply and sewage system

10 Hydroelectric power

11 Solar power

Hydraulic turbine generator

Mega solar farmIn-house power
generation system

Mobile power
generating system

Vacuum condenser
PV power generating
systemProtection relay & control panel for“Shinkansen Line”

In-house water supply system

2 Hospitals

7 Automobile plants

3 High-rise buildings

DynamometerSling hoist

PV Inverter

Operation and Maintenance, Outsourcing
Service for Facility Management

9 Wind turbinWind turbine generator system

12 Substations
Supervisory control and data acquisition (SCADA) system for power stations and substations

Industrial controller

Vacuum circuit breaker
Automated guided vehicle (AGV)

5 Electric vehicles (EV)
Motor drive systemfor elevators

Elevator inverter
Cogeneration system(combined heat and power system)

Drive system for EV

Meiden Customer CenterTransformer

11

MEIDENSHA REPORT 2013

Special feature 1

12

Dialogue

1

Meiden Group Initiatives towards the realization of Smart Communities

Dialogue

Junzo
InamuraThere is growing hope for Smart
Communities as a solution toenvironmental and energy problems
and for creating safe and secure cities,
as well as a main pillar for invigorating
the economy in Japan.
Wewelcomed
Prof.
Takao
Kashiwagi, an Institute Professor of
the Tokyo Institute of Technology who
is a specialist in the environment andenergy field. We would like tointroduce the discussion between our
Chairman Mr. Inamura and Prof.
Kashiwagi on recent trends in theenergy field and challenges in realizing
smart communities.

Takao
Kashiwagi

Prof. Kashiwagi: After the Great East
Japan Earthquake in 2011, there was ahuge paradigm shift in energy use inJapan. Going forward, we could not
avoid a decline in the ratio of nuclear
energy dependence. What we can do tocompensate for the loss in nuclear poweris becoming a big issue. As possible
solutions, we could think of many things
such as a scheme for power demand
control on the residential and corporate
sides or renewable energy developments
such as solar and wind farms and CHP(combined heat and power) systems toeffectively use fossil fuels.

From now on, I believe there will be a
migration towards distributed energy
resources. Currently our energy system inJapan is a large-scale centralized powersystem modeled mostly on nuclear
power or thermal power. It will shift todistributed power resources utilizing
clusters of small-scale energy resources
like renewable energy resources and
CHP systems, and it will meet thedemands of the power-user side.
However,theproblemwithrenewable energy resources like solar
and wind farms is fluctuation of energy
yield. To resolve this problem, it is vital topromote the technical development ofload-leveling such as introduction ofhydrogen storage tanks with metal
hydrides for load leveling or energy
storage systems. We have a high hopesthat the Meiden Group will be there as a
key member of load-leveling systemdevelopment projects.
Inamura: The Meiden Group is workingonpower
stability
technology
development of power systems using
distributed power sources from solar orwind farms. We are also working on thedevelopment of control technology
utilizing ICT technologies compatible with
relevant
international
standards.

Currently, we have joined a smart city
project in Yokohama City where we are in
charge of a demonstration test forload-leveling
using
such
control
technology and energy storage systems.
This is a part of a smart grid development
project there. In this project, we control
the power supply level for the large
shopping
centerfacilities
using
distributed power control technologies.
Through this demonstration project, wewere able to improve the “visibility” ofpower supply control, and as such, ourtechnology is moving from theexperimental level to the practicalapplication level.

Institute Professor of Tokyo Institute of Technology, Project Leader of the International Research Center of Advanced Energy Systems for Sustainability

Chairman, Meidensha Corporation

SpecialfeatureKashiwagi:Inreading
Meiden’s
Medium-termManagement
Plan,
POWER 5, I found that the Meiden Group
has a wide variety of business fields. Your
products are not only related to thepower industry, but also concern the rail
industry. Your products could very well
support future smart communities. For
the Smart Grid, my hope is that the
Meiden Group will aim to change its rolefrom a simple supplier of products to asystem integrator. Regarding the problemof limited resources, think about businessalliances with other good partners. This
could be a potential target of your current
management plan.

13

MEIDENSHA REPORT 2013

Special feature 1

14

Dialogue

1

Meiden Group Initiatives towards the realization of Smart Communities

SpecialfeatureDialogue

Inamura: So far, our main business is asa supplier of power products andsystems. While retaining our competence
there, we need to think beyond the box,
as in thinking about creating a modern
new city. This may be close to theconcept of a smart community. What weneed now is “innovation” in our productdevelopment.
Kashiwagi: In a general sense, the term
“Innovation” may sound as if it ends when
the development program is over.
However, this is not the case with mydefinition. In my view, innovation also
refers to the resulting new values from thestructural reform spurred on by the
disruptive power of innovation to thesocio-economic system. What are thenew values? Things like “Life with better
security and safety,” or “A far more
comfortableworkingenvironment.”
Through the innovation of the latest
technology, if we could develop a systemthat allows more clever ways of using
power, it demands changes in various
mechanisms
orregulations.
This
produces new markets and businessmodels. For instance, reform of thesocio-economic system will lead to newvalue creation with social significancesuch as a silvering of society where senior
people are able to live alone comfortably.
Such innovation will invigorate Japan.
Inamura: Meiden Group’s corporate
philosophy is: “Illuminating a more affluent
tomorrow” and “For the customer’s
peace of mind and satisfaction.” Smart
communities will provide people withsecurity and joy. However, it is hard to geta picture of what a smart community is allabout. It is not easy to describe how our
products will contribute to society andwhat our role-playing will be. I think thatsome of our people can be at a bit of aloss at times because they cannot see thebig picture, the network of lines thatconnect the dots represented by theirindividual jobs to our customers’
happiness.
We are suppliers of hardware and to
draw on our long-standing engineeringresources, the concept of “building asmart community” matters and becomesreal in its importance. This concept has
tons of possibilities. We need to think that
“we need to innovate to realize new joy forpeople out of something new.” We would
like to get there with such vision.
Kashiwagi: Each technology has a valueof its own. However, there will be asynergy when it meets with othertechnologies and the value will be
multiplied. This is the essence of system
integration. Then, you have to set the rightgoal. It may be “to provide the power in asafe manner” or “to provide a life withsafety and security,” etc. Each person
may have a different goal. There may be
many ideal situations out there. What willbe the most value-creating reality? Whatsituation produces the best interest for
the nation or satisfaction for theenterprise? By drawing a sketch of theimaginary reality that produces the best
added value by the Meiden Group, it will
provide a clear road to realize the vision
under the corporate philosophy. When

“We will help the emergence of smart communities with
innovation. Through such emergence, our innovation
will help create new kinds of joy for people.”“When technology meets with other technologies,
there will be a synergy and value will be
multiplied.”
you get there, it will really elevate thecorporate power and financial shape. And
when the company is in good corporate
shape, it will be good for the nation.

like Prof. Kashiwagi, we would like tocontribute to the realization of a morevibrant and livable future society.
Prof. Kashiwagi, thank you for yourtime today.

Inamura: I am a firm believer that thevalue of our products will be enhanced
when these products are networked withother products or systems. The value
goes up. Then, I would like to tell our
people to create the resulting new values
and imagine how they will help to realize
the new dream somewhere out there.
Such good results will be our challenge
and our mission.
Kashiwagi: In the next 10 years, Japan
will face a chronic power shortage. Yet, if
we can get there earlier on the smart
community, it will lead to a solution ofenergy shortages and will be an
innovation that drives Japan’s growthstrategy. I have big hopes that by drawing
on the excellent engineering resources ofthe Meiden Group, you will help togenerate new consequent value throughthe disruptive power of innovation.
Inamura: In fiscal 2013, Japanese energy
policy will move to a new practical stage
from the early stage of preparing the
ground work for a new growth strategy.
This includes the national smart gridprojects. Being a member of suchimportant load-leveling projects gave us
great pleasure. I also believe our Group
has to carry such burdens.
Going forward, while receiving
various advice from many related parties

Takao Kashiwagi
Institute Professor of Tokyo Institute of Technology
Project Leader of the International Research Centerof Advanced Energy Systems for Sustainability
CareerBorn in Tokyo in 1946. Graduated from the School ofEngineering, Tokyo Institute of Technology (TIT), in 1970.
Received Ph.D. in engineering from TIT in 1979. Invited
Researcher at the National Bureau of Standards of the U.S.
Department of Commerce from 1980 to 1981. Appointed full
professor on the Faculty of Engineering, Tokyo University ofAgriculture and Technology in 1988. Concurrently appointed
professor of Kyushu University in 1996. Appointed professor of
the Graduate School of Engineering and Project Leader of theInternational Research Center of Advanced Energy Systems
for Sustainability at TIT in 2007. Appointed Institute Professor
of TIT in 2012.

15

MEIDENSHA REPORT 2013

2

SpecialfeatureSpecial feature 2

16

Smart BEMS: Contributing to Future Community-building

Meiden Group Initiatives towards the Realization of Smart Communities

Smart BEMS: Contributing to Future Community-building
Image of control of energy supply and demand via Smart BEMS

What can Meidensha do to create a more abundant and livable society?
One possibility is to support the realization of smart communities throughAir conditioning

the optimization of energy use. Meidensha’s Smart BEMS will help to makeCogeneration system

the communities we live in low carbon – and smart.

Smart BEMS

Yokohama World Porters

Participation in the Yokohama Smart City Project
Meidensha is participating in the Yokohama Smart City
Project (YSCP), which was selected by the Ministry of
Economy, Trade and Industry to be part of its
Demonstration of Next-generation Energy and Social
Systems program. The project has been conductedsince fiscal 2010. Seeking to create a model for thesmart city and to export the successful model overseas,
YSCP is conducting large-scale trials involving
cooperation between citizens, private companies, andthe market, with the advanced city of Yokohama as thestage. Through the phased introduction of energy

Lighting

management systems (EMS) to homes, offices andcommercial facilities, and factories, and thecomprehensive management and control of thesesystems, the project seeks to reduce CO2 emissions,conserve energy, and cut peak power at a local level.
Meidensha’s contribution to YSCP is thedevelopment of a next-generation building energy
management system, Smart BEMS, which we aretrial-testing in the large-scale commercial facility
Yokohama World Porters, located in Yokohama’s
Minato Mirai 21 district.

Power storage
systemCharging anddischarging of EV

EnergydemandEnergysupplyPhotovoltaic
generation system

Smart BEMS: Maintaining comfort while reducing CO2 emissions
Conventional BEMS up to the present haveindividually monitored and controlled the status ofenergy use in specific facilities. Representing anevolution of the BEMS concept, Meidensha’s Smart
BEMS not only controls each piece of equipment that itmonitors, but also formulates operating plans for an
optimal energy balance throughout the entire facility,
and reduces CO2 and conserves energy through fully
automatic operation based on these plans.
Smart BEMS constantly predicts energy demand
up to the next day based on factors including data forpast demand and weather conditions, and uses thesepredictions to select the optimum power supply fromamong energy supplying devices such as power supply
equipment, heating equipment, and power storage
systems.
The system also
makes effective use
KW
of concepts such as
peak shift, in which
Reduction of peak power
energy stored during
Amount of powerpurchased
the night is used to0Power storage
cut peak energy use
at night
12during the day, and is
Image of peak shift

24 Timeable to flexibly respond to requests to limit the purchaseof electricity from the Community Energy Management
System (CEMS). This contributes to the reduction ofCO2, the conservation of energy, and the curbing ofpeak power use in the community as a whole.
Precisely an “intelligent” energy management
system, Smart BEMS reduces CO2, conserves energy,
and contributes to making communities smarter, all thewhile ensuring the comfort of visitors to the facilities inwhich it is installed.
Examples of equipment installed in Yokohama World Porters

Verification experiments at the community level
From January to February 2013, the YSCP conducted
fully fledged verification experiments in office andcommercial buildings in which BEMS had been
installed. Involving collaboration between thecompanies participating in the project, in these trials
power supply and demand was adjusted on acommunity-wide level. Requests to limit the purchase ofelectricity were sent from the CEMS in order to curb
peak power use, and each facility involved in the trials
responded to these requests by altering its modes ofenergy consumption and supply. This was the first trial

in Japan involving multiple large-scale facilities, and it
achieved an overall maximum reduction of 22% in peak
power consumption. At Yokohama World Porters,
where Meidensha was responsible for the trial, peak
power was cut by approximately 30%.
The YSCP trials are scheduled to continue until
2014. Meidensha will continue to contribute to therealization of smart cities through the reduction of CO2
and the conservation of energy in large-scale facilities
via Smart BEMS.

Comment from a project leader

Always seeking what is “right” for people’s daily lives
Power storage system

Smart BEMS (Monitoring console)

Many people from Japan and overseas have visited Yokohama World Porters in order to see Smart
BEMS in operation. Expectations are high for Smart BEMS and smart communities. We are currently
gathering extremely precise data and working on system development to enable us to build social
systems that are both stable and comfortable. I want to go on making a contribution to futurecommunity-building, always giving consideration to what form the things that are “right” for people’s
daily lives will take in the next generation.

Takashi Uyama
Cogeneration system

System Business Planning Division, Complex System Technology
Department, Technology Section

18

Medium-term Management Plan POWER 5 Phase III

Medium-term Management Plan
POWER 5 Phase III

Business Report

Enhancing ourmanufacturing power
towards a new leap
forwardIn April 2009, the Meiden Group formulated POWER
5 as a five-year medium-term management plan withfiscal 2013 as its final fiscal year. However, factors
including the turnaround in Japan’s energy policy
since the Great East Japan Earthquake and theeffect of the strong yen have resulted in rapid change
and diversification of the business environment for
the Group on a global scale. In order to respondto these changes in the business environment, wehave further extended POWER 5 to incorporate
Phase III, a three-year initiative from April 2012, withfiscal 2014 as its final fiscal year. Holding firm toPriority measures for POWER 5 Phase III in fiscal 2013
Looking towards the realization of the goal of “Enhancing our manufacturing power towards a new leap forward,”
as specified in POWER 5 Phase III, we have reformed our business structure, for example through reorganization of
the Group. From fiscal 2012, the Group has worked together as one to create a foundation for business growth, forexample by developing transformer and power distribution businesses that we have acquired, expanding overseas
businesses, and moving into the field of motors and inverters for electric vehicles.

execution of business strategies that
1. Swiftmeet the challenges of evolving markets
The domestic social infrastructure systems business targeted atelectric power companies, public demand, and private-sector
industries has long been the core driver of Group earnings. However,this business is undergoing dramatic changes brought about by adwindling population, budget cuts required by fiscal reconstruction
at the national and local government levels, and a trend towards
private-sector capital investment overseas and replacing aging
domestic facilities with overseas production sites.
At the same time, the Great East Japan Earthquake has
prompted a review of Japan’s energy strategy and raised corporateawareness of the need for business continuity planning (BCP).
In addition, limited energy and other resources and economic
developments in emerging nations are contributing to dynamicchanges in the Group’s operating environment.
To ensure sustainable growth while coping with the various
changes and restrictions it faces, the Meiden Group is targeting new
businesses with long-term growth prospects while also working tomaintain and expand sales and profits in the near term.

our basic orientation, “The Meiden Group challenge– To contribute to society through the POWER of
manufacturing excellence,” we have established aset of priority measures tailored to the immediatebusiness environment. By steadily implementing
these measures to ensure our ability to stably supply
products and services that will contribute to anabundant society, we will strive to be a company thatboth offers security and satisfaction to its customers
and realizes a high level of profitability.

p.17 • Medium-term Management Plan POWER 5
Phase III
p.19 • Overview by Business Segment
Social Infrastructure Systems BusinessIndustrial Systems BusinessEngineering Systems Business
Real Estate Business
Other Businessp.21 • Research and Development / Capital
Investment

Medium-term Management Plan POWER 5
The Meiden Group challenge – To contribute to society
through the POWER of manufacturing excellence

Social Infrastructure Systems Business
The Social Infrastructure Systems Business isstrengthening its development of new technologies
and its ability to propose new systems to customers.
Examples of these efforts include the development
er generationof energy systems utilizing very large photovoltaic power
or distributed
facilities and other renewable energy sources, equipment forors, overheadenergy resources, substation equipment for railway operators,
catenary system (OCS) inspection systems, and a system for managing
and controlling energy that makes use of storage cells. In addition tostrengthening earnings of existing businesses which provide electricalsystems for water purification and sewerage treatment plants, the Social
Infrastructure Systems Business is aggressively developing business insuch new areas as ceramic membranes and cloud computing.

2. Strengthening overseas businessOne of the targets of Phase III of the Group’s current medium-term
management plan is an overseas sales ratio of 30%.
To capitalize on the prominent demand growth in Asia andother emerging markets, the Meiden Group has placed executives
responsible for enhancing the Group’s overall capabilities inlocal markets in Singapore and China. In addition, the Group isstrengthening local product development, manufacturing andmarketing functions as it builds a system of “local production for
local consumption” to provide automatic guided vehicles (AGVs),
components and other logistics equipment as well as transmission
and distribution systems to be used at power and railway companies
of Japanese and local businesses.
The Group will also make effective use of M&As and strategic
business alliances to open up new markets overseas and enhanceGroup brand power.

3. Creating world-beating products

To promote the development and introduction of new globallycompetitive products, the Meiden Group has created the positionof Product Management Director. The PM Director oversees
development of new offerings from the Group’s three coreproducts, namely power transmission and distribution products,
power generation products, and power conversion products, aswell as information and communications technologies (ICT). The
PM Director also is tasked with setting cross-segment productstrategies, raising the price competitiveness of the Group’s products
and ensuring that they meet the quality standards demanded invarious countries.

the Group’s business
4. Strengthening
foundation
With an eye toward bolstering its competitive capabilities, theMeiden Group is restructuring Group companies, enhancing costcompetitiveness from a group-wide perspective, and making efforts
to make more efficient use of its valuable human resources.

t&TUBCMJTINFOUPGUIFJOJUJBMýWFZFBSQMBOQFSJPE BTPG"QSJM

Industrial Systems Business

Phase I

Phase II

(FY2009-FY2010)(FY2011-FY2013)

Period of building a growth platform

Period of growth and expansiont3FFTUBCMJTINFOUPGUIFQMBOQFSJPE GSPN"QSJM

Phase I

Phase II

Phase III

(FY2009-FY2010)(FY2011)(FY2012-FY2014)

Period of building a growth platform

Review strategies

Period of growth and expansion

p.22 • Fiscal 2012 Topics

The Industrial Systems Business is endeavoring to
expand sales in Japan and abroad of its automobile
testing systems as well as logistics systems targeting
manufacturers such as transport equipment
es of massmanufacturers. The business is also expanding its sales
brid vehicles,
produced motors and inverters for use in electric and hybrid
two areas with considerable growth potential.

Business Report

Business Report

5. Nurturing of Group employees

For the Meiden Group to make a new leap forward, it needs
employees who are capable of surmounting the challenges
presented by the long-term trends in the world’s environment andsocial issues. To support efforts to fulfill the corporate philosophy,“For customer peace of mind and satisfaction,” the Group will assign
talented young staff from Japan to overseas subsidiaries while also
hiring local staff and providing them with training that will enable
them to move up into management ranks. Toward these goals, theGroup will implement personnel policies designed to create “global
human resources.”

Promoting CSR Management

MEIDENSHA REPORT 2013

Financial Statements

17

MEIDENSHA REPORT 2013

Business Report

20

Overview by Business Segment

Overview by Business Segment

Industrial Systems

Industrial Systems BusinessThis sector includes business operations related to product systems used in the manufacturingindustry, IT, and other general industry operations. In addition to providing private industry with
automotive testing systems and logistics support systems, we engage in the manufacture andmarketing of motors, inverters, and other products for use in textile machinery, elevators, andother such equipment.
We are active in the information and telecommunications field, manufacturing andmarketing component products for industrial computer and networking systems.

Net sales for the segment declined 0.5% year on year to ¥38,933 million,
and the segment recorded an operating loss of ¥929 million.
The segment’s components-related business saw its sales decline
due to continued low demand for components used in semiconductor
manufacturing equipment and a slump in demand for motors andinverters used in electric vehicles.
Meanwhile, the segment’s dynamometer and logistic systems
business increased sales amid a steady recovery in demand for testing
equipment used in automobile development and electrical components
used in forklifts.

Net Sales

Net Operating Income
Millions of yen

105,368 107,525

Millions of yen

128,277

5,798

3,543

Business Report

This sector includes business related to the construction of social infrastructure. We provide
solution services of all kinds in relation to electric power quality, energy conservation, andrelated matters, and we engage in the manufacture and marketing of all types of electricalequipment involved in power generation, transmission, transforming, distribution, and otherrelated functions for power companies, governments and other public agencies and offices, railroads, highways, private facilities, and other such establishments.
We are also involved in the field of water supply and sewerage treatment for local
governments. Our activities include manufacturing and marketing products for the control oftreatment equipment and processes of all kinds, and for the improvement of IT networks. We
are further developing environmental solution services that include contracting for the
maintenance management of water treatment plants, recycling of industrial waste, etc.

Net sales in the segment increased 19.3% year on year to ¥128,277
million, helping fuel a 193.0% surge in segment operating income to¥5,798 million.
Sales of social infrastructure systems increased over the previous
fiscal year as the Group assumed certain power transmission anddistribution operations formerly conducted by Japan AE Power Systems
Corporation. In addition, significant sales contributions came fromphotovoltaic power generation systems and substation equipment for
railway operators.
Sales in the water and environmental business also rose over theprevious fiscal year, supported by earthquake-related reconstruction
demand for electric power systems for water treatment facilities andprojects to renew water purification and sewerage treatment facilities.
Sales in the overseas business increased as a result of solid
performances by Group subsidiaries in Thailand, Singapore and other
ASEAN countries, as well as the succession to power transmission anddistribution operations of Japan AE Power Systems Corporation.

1,979

FY

2010

2011

2012

Net Sales

FY

2010

2011

2012

Operating profit and loss
Millions of yen

39,120Millions of yen

38,933
186

30,987-929-1,4962010

FY

Engineering Systems

Engineering Systems BusinessThis sector provides services relating to the remote management and monitoring of facilities andthe proposal of measures for extending the life of facilities, energy conservation, and other suchservices related primarily to the maintenance of products we supply. We also engage in themaintenance of semiconductor manufacturing equipment and the reconditioning of used
manufacturing equipment.

Net sales in the segment declined 8.7% year on year to ¥23,675 million
and operating income declined 34.1% to ¥2,281 million.
The sales and profit declines can largely be attributed to the winding
down of emergency reconstruction work following the Great East Japan
Earthquake.

Real Estate
Other

This sector includes marketing companies not tied to specific business fields, and companies
that contract accounting, payroll, and other administrative functions, as well as welfare services
for employees.

2010

2011

2012

Net Operating Income
Millions of yen

3,460
2,728

2010

Net sales in the segment totaled ¥3,285 million, on a par with the level
achieved in the previous fiscal year, and Operating income amounted to¥1,141 million. The Group is engaged in the real estate leasing business,
centering on the office and commercial building ThinkPark Tower (Osaki,
Shinagawa City, Tokyo).

Net sales in the segment amounted to ¥28,068 million, up 0.3% year on
year, while its operating income expanded 24.8% to ¥1,056 million. This
segment includes the sale of products not included in any of the above
segments, as well as welfare services for employees and the provision ofchemical products.

25,92523,675

2011

2012

FY

2010

2,281

2011

2012

Net Operating Income

Net Sales
Millions of yen

3,289

2010

FY

Other Business

FY

Millions of yen

FYThis sector includes rentals of real estate holdings, including ThinkPark (Osaki, Shinagawa City,
Tokyo).

2012

Net Sales

22,205

Real Estate Business

2011

Promoting CSR Management

Social Infrastructure Systems

Social Infrastructure Systems Business

3,285

2011

Millions of yen

3,285

2012

FY

1,159

1,183

1,141

2010

2011

2012

Net Operating Income

Net Sales

Millions of yen

Millions of yen

26,67927,982

28,068

846

1,056

314
FY

2010

2011

2012

FY

* Sales figures include transactions between segments.

2010

2011

2012

Financial Statements

19

22

Research and Development / Capital Investment / Fiscal 2012 Topics

Research and Development / Capital Investment

Fiscal 2012 Topics

Status of research and development

Status of capital investment

With basic technologies that look toward the future as
our foundation, the Meiden Group is working toincrease the competitiveness of its products, expand its
lineups, and develop systems that bring these products
together.
In the area of basic technological development,
we are using Meidensha’s unique circuit configurationsin advancing the development of small, low-costtransformerless high-voltage inverters and ferrite
magnet motors for electric vehicles that eliminate theuse of rare earths.
In addition, we are working towards the practicalrealization of environmentally friendly electric
double-layer capacitors using the Aluminum-Celmetmaterial developed by Sumitomo Electric Industries,
Ltd. to realize reduced size and improved performance.
These new strategic products can be expected to findapplications in a range of transport equipment.
To increase the competitiveness of our products
and expand our lineups, in the area of transformers andpower distribution equipment, power generation
products, and power conversion products, which
represent our core business areas, we have developeda range of new products including Cubicle-type Gas
Insulated Switchgear (C-GIS), gas engine generators,
and high-performance transformerless uninterruptible
power supply (UPS) systems.
In the area of system products, we have createdenergy management and control systems that fusepower electronics products and ICT products, andconducted development towards the practicalrealization of cloud computing services for water
treatment businesses.
As a result of these developments, our total
research and development costs reached 9.68 billion
yen.

Seeking to enhance product competitiveness, we haveprioritized investment in production facilities. At ourNumazu Works, we have newly introduced large-scale
processing facilities in order to increase thecompetitiveness of our transformers and power
distribution equipment, and we have worked to realize
automation and reduce power consumption byreorganizing production lines in order to increase
production efficiency for power distribution equipment.
At Kofu Meidensha Electric Mfg. Co., Ltd., we haveconstructed a test building in order to enhance ourdevelopment capability for all motor-related products,
including products for electric vehicles, hybrid electricvehicles, and forklifts.
As an initiative related to new business areas, wehave installed mass-production facilities for flat ceramic
membranes for use in sewage and wastewater
treatment at our Nagoya Works. Overseas, we haveconducted investments to enhance order acceptance,purchasing, and accounting systems in order to assist
in business expansion.
As a result of these initiatives, our total investment
expenditure reached a figure of 8.882 billion yen.

Topics 1

Research and Development
Millions of yen

9,680
8,424
7,413

Full-fledged entry to the Myanmar
market by our transformer business– Technological cooperation andcapital participation with AGE

On December 15, 2012, Meidensha established an agreement regarding technologicalcooperation in the design, manufacture, and repair of power transformers with Asia General
Electric Co., Ltd. (AGE), a transformer manufacturing and sales company located in the Republicof the Union of Myanmar, in addition to signing a Memorandum of Understanding with thecompany concerning examination of the potential for future capital participation.
The acceleration of industrialization and urbanization in Myanmar as a result of economic
liberalization is seeing the country proceed with the construction and upgrading of infrastructure
systems, including electrical infrastructure. AGE is strong in the area of transformer sales in
Myanmar, and our cooperation agreement with the company will enable us both to make a fully
fledged entry to the Myanmar market and enhance our competitiveness in Southeast Asia
through the supply of low-cost, high-quality products.

Topics 2
Installation of world’s-first 204 kV
vacuum circuit breaker (VCB) on
Hokkaido Shinkansen line

Meidensha was commissioned by the Japan Railway Construction, Transport and Technology
Agency to develop a tank-type vacuum circuit breaker (VCB) rated at 204 kV, the world’s highest
voltage for a device of this type. In November 2012, the unit was installed in a substation on the
Hokkaido Shinkansen line (between Shin-Aomori and Shin-Hakodate).
Since delivering Japan’s first VCB (7.2 kV) in 1971, Meidensha has worked to increase
voltages and expand its lineup. The development of the new 204 kV-class VCB means that VCB
can be employed for system voltages of up to 187 kV. Because of their unique characteristics,
such as the ability to interrupt current approximately 10,000 times and a low requirement for
maintenance, we have delivered large numbers of the devices not only to electric rail operators,
but also to power utilities and general industrial companies.

Capital Investment

Today, a reduced environmental burden is also demanded from transformers and power

Millions of yen

distribution equipment. VCB do not use the greenhouse gas SF6 in their circuit-breaking sections,making them environmentally friendly devices. We will go on working to increase the voltage of

8,882

VCB, and to bring composite switchgear using high-voltage VCB to the market.

6,823
4,529

FY

2010

2011

2012

Topics 3
Commencement of sales of power
conditioners for photovoltaic
generation specialized for DC 750V
current– Low-cost devices reduce transmission loss

In July 2012, a feed-in tariff scheme for renewable energy was introduced in Japan, invigorating
the domestic mega solar market. Against this background, Meidensha has developed a 250 kW
power conditioner (with a built-in transformer) for photovoltaic generation that is specialized for
750 V, the maximum voltage for the DC low-voltage range under domestic regulations (technicalstandards for electrical equipment).
Previously, the majority of domestic photovoltaic systems were designed for a maximum of
DC 600 V. However, in photovoltaic systems, transmission loss is reduced in proportion to themagnitude of DC voltage, and increased voltage also reduces overall system costs, for example
by lowering construction costs due to the requirement for a reduced number of cables andgrounding boxes.
With the new unit, we have also realized a level of conversion efficiency of 96.5% (rated), in
the highest industry class for a power conditioner with a built-in transformer, and the device
retails for approximately 20% less than our conventional models. We will continue to actively

FY

2010

2011

2012

Business Report

Business Report

Promoting CSR Management

MEIDENSHA REPORT 2013

develop our photovoltaic generation systems business, supplying power generation businesses
with products offering a diverse range of merits.

Financial Statements

21

23

MEIDENSHA REPORT 2013

Promoting CSR Management

CSR in the Meiden Group24

How We See CSR at Meiden GroupHow We See CSR at Meiden Group

p.34 • Enhancement of environmental measures
Social Report
p.37 • Moving Forward with Our Customers
p.39 • Working with Business Partners
p.40 • Together with Shareholders/Investors

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

3 Human resources Produce work that gives pride to ouremployees and creates positive working environments

p.41 • For a Better Workplace

We will tackle these issues: create a positive working environment that bringsout the best potential and unique talents of each employee; promote better
work-life balance; and develop abundant and diverse talent, as humanresources are precious to the Group.

p.43 • Positive Communication with Local Community
GovernanceMedium-term Management Plan POWER 5 Phase III:
President’s CSR Policy Statement

p.46 • Corporate Governancep.47 • Compliance

Environment

p.48 • Risk Management
p.49 • Directors / Corporate Auditors
Executive Vice President (Environment & CSR)

Akira Wachi

SocietyHuman
resources

CSR Award System
In 2009 we established a CSR award system to honorgroups or individuals who made significant contributions
to enhancing the Group’s corporate value as theresult of its long-term efforts for the satisfaction of its
stakeholders. In Fiscal 2012, the CSR Award went toseven BUs that were involved in disaster relief operationsin Japan following thedevastating earthquakeof 2011. These BUs
include: Tohoku Branch,
Water Processing &Environmental Engineering(WPEE) Business Unit

[Management foundation of our business activities]
Compliance, Corporate Governance and Risk Management
By strengthening these management foundations, we hope to further cultivate our corporate culturenecessary for CSR management.

Promoting CSR Management - CSR in the Meiden Group

1 Environment Promote strategic environmental management
We contribute to society through the offering of products and services for theenvironment and energy. At the same time, we will work to reduce theenvironmental impact of our business activities.

Yukio Aida, President of the Tohoku Branch, accepts aletter of commendation on behalf of the branch

Financial Statements

p.33 • Development of environmentally friendly
products

CSR Office
Employment & Human Rights

p.31 • Promotion of businesses that contribute to theenvironment

Executive Vice President (Environment & CSR)

Occupational Safety and Healthp.30 • Initiatives to Protect Biodiversity

Procurement of Materials

p.29 • Targets and Results

Note: PDCA Cycle refers to “Plan-Do-Check-Act Cycle” or the Deming Cycle.
The PDCA Cycle is used as an approach to change and problemsolving for QC management.

Quality and Product Safetyp.27 • Basic Environmental Philosophy andEnvironmental Vision

Eco

Environment Report

By strengthening these management foundations, wewould like to further cultivate our corporate culture asnecessary for CSR management.
We seek to maintain and improve the soundness andtransparency of Group governance and promote promptand efficient management. In terms of compliance,
ethical business conduct and compliance with applicablelaws and regulations are our essential policies.
We seek to maintain and improve risk management
systems for identifying and controlling various risks
through coordinated activities for auditing risk item
inspection, etc.

Disclosurep.25 • Results and Planning[Management foundation of our business activities]
Compliance, Corporate Governance and Risk Management

Compliancep.23 • How We See CSR at Meiden GroupAt the Meiden Group, under the supervision of theexecutive vice president (environment and CSR), we
promote the programs under 10 core subjects (seebelow chart). Under each theme, each related key
business unit (BU) plans specific programs and actively
promotes them through the participation of various
related committee activities across the organization of
BUs. In the creation of such planning, we refer to theprinciples of the ISO/DIS 26000 Draft International
Standard of CSR management.
The CSR-related office compiles plans and resultsof programs at each BU for each core topic and uses
the PDCA cycle (see ‘Note’) to promote the programswith the aim of increasing Group-wide awareness of
CSR. “Promote CSR Management” was selected as a
key management policy for Medium-term Management
Plan POWER 5 (Fiscal 2009 – Fiscal 2014). We aim topromote CSR as our management strategy and make
CSR activities key daily items of all employees.

Contribution to Society

CSR in the Meiden GroupCSR Management Promotion System

In practicing the Group’s philosophy, we view “theenvironment,” “society,” and “human resources” as our key
challenges. The Meiden Group considers “compliance,”“corporate governance,” and “risk management” as
our management foundations, and by addressing thesethree challenges, we would like to carry the Group’s
responsibilities to our various major stakeholders, including
our customers.

Risk management

Promoting
CSR Management

At the Meiden Group, CSR means “Practicing the
Meiden Group’s Philosophy by each and every employee
to make a trustworthy group needed by society.”
The Meiden Group’s corporate philosophy reflects
our commitment to “Provide the best product and service
experiences to customers by addressing their problems
through the offering of high-quality products andservices. Further, through our business operations, we
promote initiatives to address the current requirementsof society such as reducing the environmental impactof all our products and business activities. We would
like to contribute to realizing an affluent and more livable
society, and for this objective, we need to continue toidentify and solve challenges.”
Two years has passed since the Great East
Japan Earthquake on March 11, 2011. Through theexperiences of disaster relief programs by the Group, we
have learned lessons on what we can do for society.
To us, one of our senses of responsibility to society
is to “play a vital role in supporting social lifeline systems
like power, water supply and rail, and provide help in
realizing an affluent and more livable society.
Sharing such common CSR-related values among
the Group and practicing the Group’s corporate
philosophy; in other words, “Practicing the Meiden
Group’s philosophy in everyday business activities
by each and every employee” - this is the essence ofMeiden Group’s CSR programs.
We will promote our corporate culture that values
actions and initiatives for society through the best practices
and integrity of all members of the Meiden Group.
In so doing, I hope we may rely on your continued
support and advice.

POWER 5 Phase III: President’s CSR Policy Statement

Corporate Governance

A message from the Executive Vice President(Environment & CSR)

Business Report

Practicing the Group’s
Corporate Philosophy byeach and every employee

MEIDENSHA REPORT 2013

Promoting CSR Management

CSR in the Meiden Group

26

Results and Planning

Results and Planningz Enhancement of CSR promotion systemz Improvement of provision of CSR-related informationz Realization of independence and autonomy inmanagement
Corporate Governancez Realization of observance of laws and efficientmanagement throughout the Group

Plan for POWER 5 Phase III

Fiscal 2012 results

Fiscal 2013 planz Creation of mechanisms to make every employee aware of CSR in
their everyday workz Expansion of CSR activities to overseas basesz Continuation of measures to diffuse CSR concept using in-house video news, etc.
z Revision of system for promotion of CSR activities
z Revision of indicators for evaluation of CSR (KPI)z Promotion of activities to inculcate awareness of CSR
z Linkage with MAP activities (Meidensha’s program for the reform andimprovement of work processes)z Enhancement of governance throughout the Group, including
domestic and overseas group companies

z Enhancement of governance throughout Meiden Group, both domestically andz Strengthening of Group regulation with introduction of unified system overseas
overseasz Reviews of operational evaluation of internal regulatory systems andz Ongoing reviews of operational evaluation of internal regulatory systems andappropriate governance systemappropriate governance systemz Continuation and further evolution of meetings for exchange ofcompliance informationz Enhancement of domestic and overseas group companies
compliance activities

z Continuation and expansion of scope of compliance information exchange
meetings
z Creation of company compliance systems for overseas Group companies
z Use of e-learning for training of compliance managers
z Renewal of in-house compliance webpagez Thorough implementation of suggestions of Third-Party Review Committeesz Holding of compliance information exchange meetingsz Maintenance of compliance violation reporting system
z Strengthening of compliance systems at domestic and overseas Group
companiesz Promotion of compliance educationz Improvement of information on in-house compliance webpage

Risk managementz Convening of Company-wide Risk Management Committee(Identification of and response to risk)z Realization of increased effectiveness in safety confirmation
system and expansion to group companies
z Clarification of risk management principles and definitions z Upgrading of disaster prevention system
for Meiden Groupz Formulation of business continuity plan (BCP) as disaster prevention measures● Realization of appropriate information managementz Upgrading of start-up and recovery manuals for earthquake disasters
z Upgrading of security guidelines for overseas affiliatesz Establishment of security technologies for new types of
information device and incidentsz Increased awareness of information security among Meiden Group employees

z Operation and improvement of Company-wide Risk Management Committee
z Formulation of regulations for Company-wide Risk Management Committee
z Formulation of business risk management guidelines
z Improvement of security of in-house e-mail systemz Holding of disaster prevention training with cooperation between multiple
bases

z Continued identification of risks and implementation of countermeasures byspecialist committees and individual departmentsz Expansion of scope of safety confirmation system to domestic Group
companiesz Continuing implementation of information security education

Customers (Quality/
Product safety)

z Improvement of level of collection and analysis concerning z More active use of data concerning customers’ needs
customers’ needsz Improvement of quality at domestic and overseas Group companiesz Creation of Meiden Group quality assurance system andz Enhancement of initiatives to prevent defects
promotion of activities to improve quality

z Improvement of quality of information on customers’ needsz Provision of quality management training and aftercare to domestic andoverseas Group companies
z Regularization of initiatives against 3F situations (first time, far from norm, far
in frequency)z Promotion of use of information concerning customers’ needsz Provision of support and guidance for quality-related activities at overseas anddomestic Group companiesz Revitalization of activities to prevent reoccurrence of problemsz Deployment of various PR activities to support overseas businessexpansionz Reexamination and enhancement of risk management PR systemz Improvement of provision of information to shareholders and investorsz Enhancement of information provision with renewal of English- and Chineselanguage websites
z Creation of risk management PR materialz Formulation of integrated reportsz Increase of information on website (More detailed press releases andincreased information in English and Chinese)z Creation of risk management PR system

Compliancez Enhancement of compliance systemz Maintenance and improvement of level of awareness ofcompliance· Support for domestic group companies compliance activities· Thorough observance of regulations at overseas group companies(Upgrading of regulations and compliance systems)z Continuation and evolution of compliance education (Expansion ofrange of employees/Improvement of quality)z Evolution of in-house compliance webpage (Increased complianceawareness/Support for solving problems)

Shareholders/
Investors (Information
disclosure)z Appropriate and timely disclosure of information

Business partners(Procurement ofmaterials)

z Strengthening of Group procurement systemz Establishment of green procurement systems in all domesticz Thorough notification of procurement guidelines to Meiden
Group companies
Groupz Reexamination of BCP, including supply chainz Promotion of green procurementz Observance of relevant laws and regulations, active promotion oftransactions based on CSR procurementz Further improvement of occupational health and safety management

Employees(Occupational
health and safety/
Employment andhuman rights)

z Further improvement of health and safety management
and environmental awarenessz Improvement of work-life balancez Expansion of employment of disabled peoplez Enhancement of fostering of human resources· Reduction of number of employees suffering mental health problems· Reduction of number of accidents

z Improvement of work-life balance (Elimination of long working hours)· Reduction of long working hours

z Expansion of employment of disabled people
Maintenance of legally specified employment ratez Enhancement of fostering of personnelz Holding of periodic Meiden Group Procurement Meetings (Conducting ofz Strengthening and advancement of Meiden Group procurement systemawareness-raising activities for Meiden Group and partner companies)z Continuing implementation of regular surveys of CSR activities at businessz Promotion of green certification through commencement of regular surveys ofpartners and further advancement of green certification
CSR activities of business partnersz Continuing application of Meiden group procurement standards and activities
z Realization of thorough CSR awareness through addition of clauses concerning
to increase awareness in Group and partner companies
CSR activities promotion to basic contracts with business partners
z Further improvement of occupational health and safety management andrealization of increased environmental awareness· Improvement of preventive measures for mental health problems (Education, etc.)· Enhancement of safety patrols and horizontal deployment of measures to prevent
reoccurrence of problems

z Improvement of work-life balance (Elimination of long working hours)· Enhancement of interviews with representatives of target departments by Officers incharge of Human Resources· Implementation of human resources allocation plans based on interviews· Ongoing enhancement of human resources management· Enhancement of recruitment schemes for overseas human resourcesz Increased employment of disabled personnelz Enhancement of personnel education / Training of managers and engineers atoverseas subsidiaries

z Further improvement of occupational health and safety management andincreased environmental awareness· Enhancement of stress checks and improvement of workplace environment on that basis· Eradication of work-related accidents among younger employees

z Improved work-life balance· Implementation of measures to prevent long working hours· Promotion of taking of paid holidays

z Increased employment of disabled personnel· Implementation of recruitment initiatives towards ensuring legally specified rate of employmentz Enhancement of personnel education· Expansion of scope of training of managers and engineers for overseas subsidiaries
and systematic follow-up after return

Local communities/
Society (Social
contribution)z Maintenance of activities for social contribution in eachregion / Higher level of activities

z Proposal, planning and implementation of activities for social
contribution rooted in the local community; giving the Group a“face”z Continued activities towards social contribution closely connected to the local
community at each base (Craftsmanship Workshop held at eight elementaryand junior high schools throughout the country)

z Continuation of existing activities for social contribution and planning andimplementation of new activities based on regional needs

Environmentz Advancement of business that makes an environmental
contributionz Development of environmentally friendly productsz Enhancement of environmental measuresz Promotion of environmental communication / Fostering ofenvironmental awarenessz 400,000 t/year reduction in CO2 emissions from productsz Development of next-generation green products
z 33% reduction in CO2 emissions per unit of sales volume
z Further increase in environmental awareness among employeesz 230,000 t/year reduction in CO2 emissions from products
z 100% green rate for new products
z 20% reduction in CO2 emissions per unit of sales volume
z Test run for fundamental environmental education (e-learning)z 300,000 t/year reduction in CO2 emissions from productsz Creation of standards for next-generation green products
z 1% reduction in CO2 emissions per unit of energy consumed against fiscal
2012 figurez Use of e-learning

Business Report

CSR management

Main target of POWER 5 initiatives

Promoting CSR Management - CSR in the Meiden GroupItem

Financial Statements

25

MEIDENSHA REPORT 2013

Promoting CSR Management

Environment Report

28

Basic Environmental Philosophy and Environmental Vision

Basic Environmental Philosophy and Environmental Vision

PDCA (Plan-Do-Check-Act) Cycle.*❶ By promoting the development of new products and innovative*Note: The Plan-Do-Check-Act Cycle means: Plan: Identifying andtechnologies and providing such products to wider global
analyzing the problem. Do: Developing and testing a potential
markets, we endeavor to contribute to mitigating climate
solution. Check: Measuring how effective the test solution was,change, building a recycling society, and conserving
and analyzing whether it could be improved in any way. Act:biodiversity.
Implementing the improved solution fully.
❷ We strive to design and develop green products by conducting
environmental impact evaluation for the product’s life cycle, ❻ We strive to implement initiatives including environmental
education and PR activities in order to increase all of ourfrom initial material procurement to final disposal.
employees’ understanding of environmental management❸ We strive to promote environmentally conscious businessand make our environmental programs more proactive.
processes with green initiatives: promoting energy saving,promoting the 3Rs (reduce, reuse and recycle) and reducing ❼ We endeavor to publicize our environmental initiatives bothwithin the Group and to society and promote broader
the release of hazardous materials to reduce thecommunication with our stakeholders.
environmental impact from our business activities.
❹ After establishing our internal guidelines, we endeavor tocomply with the related environmental laws, regulations, rules
June 2013
and other required matters and strive to avoid the release ofcontamination from our operations.
Yuji Hamasaki❺ After establishing an environmental management system, we
President
Meidensha Corporation
strive to maintain and improve it through the QC tool of theEnvironmental Vision Fiscal 2020
The Meiden Group defines the Environmental Vision Fiscal 2020 as contributing to realizing a sustainable society. This Vision
sets the eco-efficiency level target of the Group based on what the Group’s environmental target should be in fiscal 2020.
We strive to play a key role in realizing a sustainable society by providing long-standing products and innovativetechnologies for energy and water-processing fields that support the social infrastructure.

What we can do forPlanet Earth

A. Mitigating Climate Change

Meiden Group Environmental Vision– Contribute to realizing a sustainable society –A Corporate Culture that Highly Values the Environmentt1SPNPUFFOWJSPONFOUBMDPNNVOJDBUJPO
t'PTUFSFOWJSPONFOUBMBXBSFOFTTof Action
Plans

Meiden Group Environmental Vision– Contribute to realizing a sustainable society –A Corporate Culture that Highly Values the Environment

C.$POTFSWJOHCJPEJWFSTJUZ
D. Foster a corporate culture thathighly values the environmentt1SPNPUFFOWJSPONFOUBMDPNNVOJDBUJPO
t'PTUFSFOWJSPONFOUBMBXBSFOFTT

Deployment of Action Plans

Medium-term Management Plan POWER5
Promote strategic environmental management

I. Promote business that makes an environmental contribution
II. Develop environmentally conscious products
III. Enhance environmental measures
IV. Promote environmental communication
V. Foster environmental awareness❶ Promote the 3Rs (Reduce, Reuse and Recycle) of waste materials inthe various stages of the product life cycle.
❷ Promote zero emissions of waste products from our production
activities.

Contribute to society through products in the areasof water processing and energy
Reduce environmental impact caused by ourbusiness activities

Basic Environmental
Guidelines

C. Conserving biodiversity❶ Contribute to securing water resources through our water processing
systems business.
❷ Conduct risk management on chemical materials and promote thereduction of very risky hazardous chemical materials, as well as
initiatives to find alternative materials on a basis to reduce or replace
harmful chemicals.
❶ Promote environmental communication: Actively disclose ourenvironmental activities and results and promote two-day
communication with our stakeholders.
❷ Foster environmental awareness: For mitigating Climate Change,
increaseenvironmental literacy to promote environmentallyconscious R&D and product development and cultivate the Group’s
individuals who actively perform local community and social
contribution programs by acting on their own initiative.

Conserving biodiversity

Conserving biodiversityt$POUSJCVUFUPTFDVSJOHXBUFS
resourcestReduce the release of toxic
chemicals

B. Conserving Resources (Building a Recycling Society)t$POUSJCVUFUPDBSCPOFNJTTJPOSFEVDUJPOUISPVHIPVS
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What we can do forPlanet Earth

B.$POTFSWJOH3FTPVSDFT
(Building a Recycling Society)Deployment

President’s
CSR Policy
Statement

D. Foster a corporate culture that highly values the environment

Realize a recycling society

A..JUJHBUJOH$MJNBUF$IBOHF
Realize a recycling societytPromote the efficient use of
SFTPVSDFTCZQSBDUJDJOHUIF3T
(reduce, reuse, recycle) for our
productstRealize zero emission of thewaste discharge❶ Contribute to the reduction of CO2 emissions through the sale ofenergy-related products and systems (i.e., products for renewableenergy resources, etc.)❷ Promote environmentally conscious product design and reduce CO2
emissions in the product life cycle.
❸ Reduce CO2 emissions in our production activities.

Mitigating Climate Changet1SPNPUFUIFFGýDJFOUVTFPG
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Meiden Group Environmental Vision
Mitigating Climate Changet$POUSJCVUFUPDBSCPOFNJTTJPO
reduction through ourenergy-related productstReduce the greenhouse gas (GHG)
emissions from our production
activities

POWER 5 Environmental Activities

Basic Measures
Actions Relating to “Environmental Vision”

Product-related initiatives
I. Promote business that makes anenvironmental contribution
A. Mitigating Climate Change

II. Develop environmentallyconscious products
A. Mitigate Climate Change
B. Realize a recycling society

A Road to Reaching The Environmental Vision Fiscal 2020
The Meiden Group’s Medium-term Management Plan
POWER 5 (fiscal 2009 – fiscal 2014) defines action plans
for the Group’s contribution in realizing a sustainable
society. In order to address the key topics of theEnvironmental Vision: “A. Mitigating Climate Change,” “B.
Realizing recycling societies,” “C. Preserving biodiversity”
and “D. Fostering a corporate culture that highly values
the environment, “POWER 5 defines each environmental
target until fiscal 2014 for POWER 5’s five (5) basic
policies, and each related business unit translates thepolicies into specific action plans and implements eachaction using the PDCA Cycle.

Environmental Activities

Promoting CSR Management - Environment Report

With
our
basic
environmental
philosophy: “Contribute to people,
society and the global environment,”
the Meiden Group aims to help build asustainable society and to realize thegrowth of the Group and actively
implement environmental management
to tackle important issues: mitigatingclimate change, efficient use ofresources (building a recycling society)and conserving biodiversity.

The Meiden Group’s Environmental Action Guidelines

Deployment of Action Plans

C. Conserve biodiversity

Increase environmental contribution
through products

1 Promote environmentallyconscious design
2 Enhance management ofchemical substances in products
3 Promote green procurement

Initiatives related to business activities
III. Enhance environmental
measures

1 Reduce CO2 emissions from

A. Mitigate Climate Change

2 Promote the 3Rs in relation to

B. Realize a recycling society

business activities
waste from products
3 Promote initiatives against harmful

C. Conserve biodiversity

IV. Promote environmental
communication
D. A corporate culture that highly vales
the environment

V. Foster environmental awarenessD. A corporate culture that highly vales
the environmentchemical substances
Promote two-way communication:
inside the Group and withstakeholders.
Promote environmental awarenesscampaign programs.

Financial Statements

The Meiden Group Basic
Environmental Philosophy

We understand the key challenges for companies in
21st Century society are: “Mitigating Climate Change,”“Realizing a Recycling Society,” and “Preserving
Biodiversity.” The Group defines the Environmental Vision
based on “What we should achieve from our business
operations” and “What our future products should be
like.” We view “A Corporate Culture that Highly Values
the Environment” is a basic springboard to enable us to
get there with the eco-efficiency target level of the Vision.
Against such a background, we endeavor to conduct
environmental management.

Vision (Fiscal 2020)

Basic Environmental Philosophy

Business Report

Contribute to people, society and the global environment

Action Plan (Fiscal 2009 – Fiscal 2014)27

MEIDENSHA REPORT 2013

Promoting CSR Management

Environment Report

30

Targets and Results / Initiatives to Protect Biodiversity

Targets and Results

Initiatives to Protect Biodiversity

Draw up the annual action plan to get to the Eco Vision 2020
and Continue and Improve the Eco-efficiency Level of the Group

Minimize Environmental Impact and Create a Harmonious
Coexistence

II. Develop environmentally conscious
products (ECPs)

III. Promote environmentally conscious
business processes

Environmental initiatives○Achieved
Fiscal 2012 results

Fiscal 2012 targets

Not achieved
Evaluation

Increase the contribution to the environment via products

Contribute in reducing 200,000 t/year CO2 emission
reduction effects by ECBs.

Contributed 230,000 t/year CO2
emission reduction effects by ECBs

1) Promote environmentally conscious design

Achieve the clearance rate of passing “Meiden Green
Products” program, an internal green quality assessment
system of new ECPs – target 100% clearance

Achieved ‘100% clearance’ of new
green ECPs at Meiden Green Product
Program
Built a chemical substancemanagement system
Achieved expected level of green
procurement - 60 new certified suppliers
Reduced 20% of CO2 emissions perunit of sales revenue
Reduced 42% of VOC released fromburning fuels

2) Enhance management of chemical substances in
products
3) Promote efficient use of resources by 3Rs (Reduce,
Reuse and Recycle)
1) Reduce CO2 emissions from business activities (against
the level of fiscal 1990)
2) Promote initiatives to eliminate hazardous chemical
substances in products (against the level of fiscal 2000)
3) Promote reduction of waste discharge by 3Rs (Reduce,
Reuse and Recycle)

Build a chemical substance management system
Achieve green procurement through its green quality supplierapproval program – more than 50 certified suppliers
Reduce 30% of CO2 emissions per unit of sales revenue
Reduce volatile organic compounds (VOC) released fromburning fuels
Achieve “zero emissions”* at five major business sites in
Japan

○
○
○

○
○

Zero emissions*1 (Six locations)

The business activities of the Meiden Group benefit from,and have a number of impacts on, the blessings of nature
as provided by biodiversity. We understand that conserving
biodiversity is a key challenge to achieving a sustainable
society. Thus, the idea of conserving biodiversity isreflected in the Meiden Group Basic Environmental
Philosophy and Environmental Action Guidelines as wellas the Meiden Group Environmental Vision.

*1 Meiden Group definition of zero emissions: To achieve efficient use of resource rate in a range that is less than 1.0% of the total volume of waste (including industrial waste, general waste, and saleable waste, but excluding construction sludge,etc.) is not recycled.
Regarding our environmental initiative: “Reduce CO2 emissions from our business activities,” we could not get there with the CO2 emissions per unit of sales revenue. This is because since the summer of 2012, we completed the building of a new
production site for ceramic flat sheet membrane and started its operation. These production activities increased the CO2 release and the sales level of fiscal 2012 was below the planned target level.
This caused the target of CO2 emissions per unit of sales revenue to be unachieved. We aim to increase our eco-efficiency level at each workplace and energy saving from the current initiative of “Reduce Energy Use by 3% at All Meiden Group Levels.”

Medium-term Management Plan POWER 5 and Fiscal 2013 Environmental Targets
Meiden Group Fiscal 2013 Targets and POWER 5 Medium-term Targets (in Japan)
Basic measure
I. Promote businesses that contribute to theenvironment (“Eco-contributing Businesses” (ECBs))

II. Develop environmentally conscious products (ECPs)

Environmental initiatives
Increase the contribution to the environment
via products
1) Promote environmentally conscious
design2) Enhance management of chemical
substances in products
3) Promote green procurement

III. Promote environmentally conscious businessprocesses

Fiscal 2013 targets
Contribute in reducing 300,000 t/year CO2
emission reduction effects by ECBs
Build a product eco-system for nextgeneration green products
Build a higher-level chemical substancemanagement system
Achieve green procurement through its green quality supplierapproval program – more than 50 certified suppliers
Reduce 1% in CO2 emissions per unit ofenergy (against the level of fiscal 2012)

1) Reduce CO2 emissions from businessactivities*2
2) Promote initiatives to eliminate
Reduce 30% in volatile organic compounds
hazardous chemical substances in(VOC) released from burning fuels
products (against the level of fiscal 2000)
3) Promote reduction of waste discharge by
3Rs (Reduce, Reuse and Recycle)

Achieve “zero emissions”* at major production
hubs in Japan

Medium-Term Targets
Contribute 400,000 t/year CO2 emission reduction effects
by ECBs
Build a product eco-system for next-generation green
products
Build a higher-level chemical substance management system

Basic Policy

Action Guidelines

We understand that our business activities benefit
from the blessings of nature and at the same time,
give various environmental impacts. We will
deepen our people’s understanding of theimportance of “Conserving Biodiversity” andcontribute to realizing a sustainable society throughour products and innovative technologies.

❶ We will contribute to conserving biodiversity through the development and supply of environmentally conscious
products and innovative related technologies and thus promote our water processing business and renewableenergy-related business and reduction of the use of hazardous chemical substances in our products.

Meiden Group EMS Programs Ad-hoc Supporting Organization

Chief Officer(Management - Group EMS)
GM, Environmental Management Program
Administrative Division (EMPAD)

Meiden Group EMS Program Committee(Committee Chairman: Executive Vice
President (Environment))
EMS Measures andPromotion WG

Meiden Group companies

International Business Planning &Management Division

Plant Construction &Engineering Business Division

Engineering Business
Unit

Research andDevelopment Department

Branch Offices and Branches

Head Office

Kofu Meidensha Electric
Mfg. Co., Ltd.

Meiden Nagoya Works

Administrative Office (EMPAD)❸ We will comply with applicable laws, regulations and international rules relating to biodiversity.
❹ We will deepen our people’s understanding of “conserving biodiversity” and we will take voluntary related initiatives
at home and abroad.

Map of relationships between business activities and biodiversity
Impacts on biodiversityt$MJNBUFDIBOHF t&OWJSPONFOUBM t)BCJUBUMPTT
impacts

INPUT

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President
Meiden Group EMS Internal
Audit Group❷ We will clarify how our business activities interrelate with biodiversity and we will help to conserve biodiversity by
reducing the environmental impacts of our business activities.

❺ We will undertake activities in cooperation with our stakeholders such as local communities, non-profit
organizations (NPOs), and non-governmental organizations (NGOs), governments, etc., and we will promote
environmental communication with such activities’ information.

Reduce 30% in VOC released from burning fuels
Achieve “zero emissions”* at major premises in Japan in
Fiscal 2014 (production hubs, engineering service business
units (BUs) and construction service business units (BUs)

the Group-wide issues of EMS. The topics of theCommittee are: each firm or BU’s environmental targets,action plan, the organization’s management review,
emergency response, working group (WG) programs forenvironmental measures and EMS promotion.

Meiden Ohta Works

The Meiden Group promotes the environmental
management system (EMS) at each firm level and at theGroup-wide level. We made an ad-hoc administrative
support organization to promote Group-wide EMSs
(see right organization chart). For supervision of thisorganization, the President of Meidensha Corporation(“Meiden”) was appointed. For actual management of thisorganization, Meiden appointed a general manager of
its Environmental Management Program Administration
Division as chief officer of this organization.
It also formed the Meiden Group EMS Internal
Audit Group. For the final decision-making body of
Meiden Group EMS, it formed the Meiden Group EMS
Committee, which handles reporting on the resultsof various inter-Group EMS programs and decides

Meiden Group Biodiversity Guidelines

Achieve green procurement through its green quality supplierapproval program – more than 50 certified suppliersContinuously reduce 1% in CO2 emissions per unit of energy
every year (against the level of preceding fiscal year)*2 Reduction of CO2 emissions from business activities: We modified our targets in line with levels proposed in “the Action Plan Towards a Low-carbon Society” by the Japanese Electrical Industry.
In the Japanese Electrical Industry, as a part of initiatives to mitigate Climate Change, started a new “Action Plan Towards a Low-carbon Society” from fiscal 2013 that replaced the previous “Voluntary Action Plan” by each member firm. The Meiden
Group joined this program of “Action Plan Towards a Low-carbon Society” and reviewed and changed the targets to “Continuously reduce 1% in CO2 emissions per unit of energy every year (against the level of preceding fiscal year)” in terms of theinitiative to reduce CO2 emissions from business activities.

Group Environmental Management System
Supporting Administrative Organization

In addition, we clarify how our business activities
interrelate with biodiversity and define how we should
reduce environmental impacts from our business
operations through the internal guidelines, and we
implement initiatives for “conserving biodiversity.
“Further, the Meiden Group conducts nature observation
events with a local community in Tokyo (see page 45 fordetails) as a part of such initiatives.

Conserving Biodiversity○

Impacts on biodiversityt$MJNBUFDIBOHF t&OWJSPONFOUBM t)BCJUBUMPTT
impacts

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Promoting CSR Management - Environment Report

Basic measure
I. Promote of businesses that
contribute to the environment (“Ecocontributing Businesses” (ECBs))

Impacts on biodiversityt$MJNBUFDIBOHF t)BCJUBUMPTT

INPUT

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Use ofproducts andmaintenanceImpacts on biodiversity
Product sales
andtransportation

Recycling

Meiden Groupbusiness activities
Product
design andprocurement

Product
manufacturingt$MJNBUFDIBOHF t)BCJUBUMPTT

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Impacts on biodiversity
Land use* This map is based on the Business & Biodiversity Interrelationship Map® of the Japan Business Initiative for Biodiversity (JBIB).

t&OWJSPONFOUBMJNQBDUt)BCJUBUMPTT

Financial Statements

Meiden Group Environmental Targets / Status of Achievement of Targets (in Japan)

Business Report

Environmental Targets and Results for Fiscal 2012

Meiden Numazu Works

29

31

MEIDENSHA REPORT 2013

Promoting CSR Management

Environment Report

32

Promoting businesses that contribute to the environment

Promoting businesses that contribute to the environment

Contribute to mitigating Climate Change through the CO2
reductions achieved by ECBs

Wind power-related
business

Electrical components
for EV

400,000 t/year
reduction in
CO2 emissions

Solar power-related
business
230,000 t/year
reduction in
CO2 emissions

Construction of mega-solar farms
Meiden has had project consortiums with Mitsui &Co.,
Ltd. and Tokio Marine Asset Management Co., Ltd. todevelop three mega-solar farm projects in Japan. In
these projects Meiden is in charge of EPC (engineering,procurement, and construction). One mega-solar
project, the 2.2MW Kumamoto Ichibu Solar Farm
Project (located in Nishiki-machi, Kuma-gun, Kumamoto
Prefecture), started commercial operation in April 2013.
For other development of solar farms in Japan, we hada joint business project with Tokyo Electric Power Co.,
Inc. and Yamanashi Prefectural Government. This was
the 10MW Komekurayama Solar Farm Project thatcommenced commercial operation in January 2012.
These solar farms are contributing to CO2 emissions
reduction.

Wind power generation businessWe are operating a wind farm business through a Group
company, M Winds Co., Ltd. and its affiliates. We havethree wind farms in operation, producing and selling thepower, in total, of about 100,000MWh per year (fiscal2012). We are contributing to reduction of the CO2
release.
For the construction of a wind farm project inJapan, we comply with the pre-construction long-term
environmental assessment requirements by the Ministryof Environment in Japan. For each wind farm project, we
also set the internal environmental assessment guidelines
and conduct such programs before the construction.
Through these programs, we can determine the presenceor absence of any possibility of detrimental impact toliving animal or plant life or migrating birds, etc. in thearea. In this way, we are performing environmentallyconscious business activities.
Total power generated by the Meiden Group by year

2009
result2010
result2011
result2012
result2013
resultPerforming maintenanceproceduresMWh98,362 96,559

60,826FY

55,035Businesses related to electricalcomponents for EV

2014
resultFY* The results figure for each fiscal year shows the aggregated figure of the annual CO2
emissions reduction effect from products shipped since fiscal 2009

2009

2010

2011

2012

Solar power-related business
Meiden has manufactured and marketed power
conditioning subsystems (PCSs) for solar power sincethe 1980s, and we also have a proven track-record withmany solar projects – for total system design as well as
construction.

Increasing sales of new PCS for
mega-solar
Drawing on our rich know-how
and experience relating to solar
farm projects, we released a solar
inverter, PCS for mega-solar in fiscal
2012. The model name is SP310250T, marketed for industry- SP310-250T: a PCS for use
leading high power efficiency in solar power generation

We conduct periodic programs of “total inspectionof blades (repairs for lightning damage to the blades)”and “preventive maintenance by gear oil analysis insidegear modules or by seismic vibration measurement.”
By conducting such maintenance programs, we canfactor out maintenance problems unique to wind turbine
generators and reflect such findings in the maintenanceplan. Through such programs, we aim to increase theavailability of wind turbine generators and contribute to
the reduction of CO2 emissions.

Since the 1980s, we have developed various motors for
EV car models. In fiscal 2009, we started supply of motor
drive units for “i-MiEV,” a pure EV built by Mitsubishi
Motors Corporation (“Mitsubishi Motors”) in Japan.

Development of businesses related to plug-in hybrid
electric vehicles (PHEV)
2.2MW Kumamoto Ichibu Solar Power Plant

Wind power-related businessIn addition to the development of permanent magnet
generators (PMG) for wind power, we conducted
development of generators for wind turbine generatorsfor off-shore application and converters for windturbine generators. To gain operational experience, wedeveloped several wind farm projects in Japan andpromoted the development of innovative technologies
for wind power for the wider acceptance of wind powerin Japan.

Hachiryu Wind FarmWind turbine generator system maintenance service
business
Meiden conducts maintenance service business for our
supplied wind turbine generator systems manufactured
by REpower Systems SE, a German-based company.

Promoting CSR Management - Environment Report

We identified the related businesses of three businessfields (solar power, wind power, and electricalcomponents for electric vehicles (EV)) as ECBs withhigh levels of contribution and we enlisted the resultant
contribution of CO2 emission effects through thesebusinesses and the related products as environmental
contribution volume and thereby set the eco-efficiency
targets (For fiscal 2014, reduction of 400,000 t-CO2). We
realized our target of a 200,000 t-CO2 reduction in fiscal
2012, achieving the target reduction of 230,000 t-CO2.

(rated 96.5%) as a built-in transformer model. The
750V DC input reduces transmission loss and saves on
construction costs by reducing the number of required
cables and grounding boxes. By increasing sales of the
PCS, we are contributing to significant reduction of CO2
emissions.

Electric vehicles are “zero emission cars” during driving
and can reduce CO2 emission levels compared withgasoline-engine vehicles. To extend the possible driving
distance of EVs, it is necessary to deploy higher battery
capacity. Plug-in hybrids EVs (PHEVs), as opposed topure EVs, eliminate the range anxiety concerns because
the gasoline engine serves as a back-up to recharge
the battery to provide electric power to the electricmotor. Meiden started supply of motor drive units andgenerators for the “Outlander,” a PHEV by Mitsubishi
Motors. We contribute to reducing CO2 emissions
through the wider international acceptance of EVs and
PHEVs.

Financial Statements

Promote excellent ECBs

Business Report

Drawing on our technical resources of technologies and experience
accumulated over a long period of time, we promote businesses that
contribute to the environment (“Eco-contributing Businesses” (ECBs))

Environment Report

34

Development of Environmentally Friendly Products / Enhancement of Environmental Measures

Development of Environmentally Friendly Products

Enhancement of Environmental Measures

Promote Environmentally Conscious Product (ECP)
Development

Strive to reduce the Environmental Impact of All Our
Business Activities

Internal Environmental Assessment for ProductsManagement of chemical substances usedin products

Reducing CO2 Emissions from Our Business
Activities

Reducing Emissions of Greenhouse Gases(GHGs) Other than CO2

To comply with environmental regulations, including
the RoHS Directive and EU REACH regulations, we
introduced in fiscal 2009 an environmental BOM*2
management system. Under this system, suppliers
provide us with information concerning the chemical
substances contained in products and parts, etc.
This contributes to the development of ECPs as we
can calculate total chemical substances contained in
our products and check the compliance level of our
ECPs. For suppliers, we hold green partner meetings
with them and exchange topics of chemical substancemanagement. We are also working to share informationby conducting explanatory workshops for suppliers.
In addition, we are promoting the introduction ofenvironmental BOM management systems at overseas
Group manufacturing companies.

In fiscal 2012, we set a target of a 30% reduction in CO2emissions per unit of sales*3 against fiscal 1990, and theresult was a 20% reduction. The sales of products madein Japan slightly decreased and non-production-related
CO2 release increased. These factors made our CO2
emissions per unit of sales revenue in fiscal 2012 lower
than the target.
Meanwhile, our CO2 emissions volume for fiscal 2012
was 32kt-CO2, (a 32% reduction against fiscal 1990). Our
average reduction for the period from fiscal 2008 to fiscal
2012 was 27%, significantly exceeding the figure set by
Japan in the Kyoto Protocol. Meiden secured the capitalspending budget for the environmental measures and weare planning to introduce energy-saving facilities. For Fiscal
2013, we have a plan to introduce solar power facilities,
efficient air-conditioning systems, LED lighting, etc.

*2 BOM: Bill of Materials (List of Products and Parts)*3 CO2 emissions per unit of sales volume = Energy consumption (CO2 equivalent) /Sales volume

GHGs (other than CO2) released by Meiden Group are:
- SF6 gas for our insulation tests of surge arresters,
circuit breakers, etc.
- Methane and dinitrogen monoxide from the burning offuels, etc.
In particular, as to the release of SF6 gas having a very
high effect of GHG, we actively promote the reduction ofSF6 gas emissions. In fiscal 2012, we worked to achievea rate of SF6 gas emissions of 3.4% or less against theamount of the gas we purchased. The result of fiscal
2012 was an emissions rate of 3.0%. Going forward,
we will take some measures such as capacity increase
for the SF6 gas collection facility and application of analternative insulation gas, and will strive to reduce SF6
emissions further. Our combined emissions of methaneand dinitrogen monoxide were 74t-CO2 (CO2 equivalent)in fiscal 2012. Although the level of reduction of suchgases is a small amount, we will continue to monitor the
release levels and make improvements, for instance byincreasing combustion efficiency, etc.

The Meiden Group conducts internal productenvironmental impact assessments using its own
set of standards for ‘green product’ development*1,
and promotes the development of environmentallyconscious products (ECPs) with due consideration given
to such factors as energy saving, conserving resources,
recycling, etc. We have a certification system to approveexcellent ECPs as “Meiden Green Products.”*1 Internal assessments are conducted at each stage of ECP development: 1) During product planningstage, 2) during development & design stage, and 3) during product development completion stage
Meiden Green Products have to clear all the above stages of our green quality gates.

Evaluation Work Flow of Internal Product Environmental Impact Assessment
ECP product development

1 Product

planning stage
Setting “eco-targets” forenvironmental
performance of new ECP

2 Development

and design stage
Intermediate follow-up
review

3 Productdevelopment
completion stage
Final evaluation

Assessment
judging criteria

Certified as‘Meiden Green
Product’Application for registration

After going through our internal
green quality gates, approved
excellent ECPs can bear the sealof “Meiden Green Product”
as an eco symbol.

Overview of Environmental Assessment Standards for Products
Evaluation item
Category
Evaluation item
① Weight
Reduction of ②External dimensions and volume Long-term ① Ease of maintenanceproduct③ Reduction of number of② Reliability/Durability
usability
volumecomponents① Reduction of power consumption② Conservation of water
Conservation ③
Management
Reduction of consumablesof energy/ ④of chemical ① Level of environmental protection
Reduction of packaging
resources
substancesmaterials (Primary
packaging)① Volatility① Level of use of recycled② Risk during separation ormaterials
disassembly work
Environmental ③②
Recycling
Separability of materials
Environmental measuressafety③ Ease of collection and(Compliance with laws andregulations on noise emission
transport
and vibration issue)

Diagram of environmental BOM management system
Trends in CO2 emissions and CO2 emissions per unit of sales
revenue in Japan

Environmental BOM management system

CategorytInformation on chemical substancesin productstJudgmental information oncompliance of product to regulations(RoHS, REACH, etc.)

Questionnaire and reply

Chemical substancessurvey sheet
Sales person(point of contact)

Design engineer(point of contact)* See the ‘Note’ below.

100%
47
10

77%

83%

88%

FY

Provision of information

Topics Examples of Meiden Green Products certified in
Fiscal 2012

For T & D field - 72/84kV Eco Tank-type
Vacuum Circuit Breaker (VCB)

Customers
Excellent points
from previous
model

Weightdecrease

Saving energy
and resources

Recycling
designLong productlife for use

This product is an environmentally conscious dry air-insulated VCB that is totally free from SF6 gas(greenhouse gas (GHG)). SF6 gas switchgear required during repair or scheduled maintenance:
taking measures to prevent SF6 gas leakage, filling SF6 gas. During the product disposal stage, it
must fully remove the SF6 gas. VCB can offer lower running cost and reduced disposal cost.
Not only the merit of no GHG gas, by the effect of adoption of an aluminum tank, decreased
self-closing power in vacuum interrupter’s arc quenching chamber performing as a switch, effective
design for magnetic field environment inside the tank, we endeavored to realize a compact andlightweight design and high efficiency. By factoring the 3R (reduce, reuse, and recycle) elements, it
has an easy-to-disassemble structural design. This creates an ECP that is easy for part replacement
during repairs and easy to collect the usable parts at the disposal stage.

Amount of emissions of GHGs other than CO2 in Japan

96%
39
7

80%

34
7

33
7

33
7

37

27

26

26

32

27

1990

2008

2009

2010

2011

2012

32
5

Development of ECPs

Disclosure of ① Information disclosure on productinformation
disposal conducted

72/84kV Eco Tank-type VCB

CO2 emissions volume(Corresponding to amount for
AE Power Numazu* )CO2 emissions(AE Power Numazu* )CO2 emissions(Meiden Group)
CO2 emissions per unit of sales(against fiscal 1990)

Suppliers

kt-CO2
70% of CO2 emissions
per unit against fiscal
1990 level

Methane (CH4)
Dinitrogen monoxide (N2O)
Sulfur hexafluoride (SF6)
Hydrofluorocarbons (HFC)
Perfluorocarbon (PFC)

Amount ofemissions (t)
1.39
0.14
0.49
0.38
0

CO2 equivalent(t-CO2)29
43
11,80090
0* Up to fiscal 2011, national average results for each fiscal year published by the Federation ofElectric Power Companies of Japan (“FEPCJ”) were used for the CO2 coefficient for electric
power (receiving end); for fiscal 2012, FEPCJ’s average target value for fiscal 2008-2012,
0.34t-CO2/MWh, was used.
* The figure for Meiden Group CO2 emissions in fiscal 1990 was changed due to changes inthe scope of calculation.

Topics

Initiatives at Meiden Numazu Works
Meiden Numazu Works, a main manufacturing hubof the Group, promotes environmental management
programs with the three pillars of key subjects: “Make
EMS programs a part of the daily activities as EMS as a
key management challenge,” “Improve eco-efficiency
through energy management system,” and “Contributeto local communities.”

Business Report

Promoting CSR Management

Promoting CSR Management - Environment Report

MEIDENSHA REPORT 2013

Financial Statements

33

Examples of initiatives for fiscal 2013
• Replacement of water-tube boilers
with new small through-flow boilers• Introduction of solar power system• Reduction of power consumption
through introduction of LED lighting
50kW solar power system

Environment Report

Reducing Volatile Organic Compounds(VOCs) Release

Promoting the 3Rs for Wastes from Our
Business Activities

In fiscal 2012, we set a target of a 30% reduction infigures for the release of VOCs against fiscal 2000
figures, and achieved a 42% reduction. Reduction
factors include a reduction in our manufacturing activities
for forged products and the introduction of varnish trickle
impregnation technologies for the manufacture of new
EV motors, etc. These significantly contributed to thisreduction in VOC emissions. In fiscal 2013, we willcontinue to improve the varnish impregnation process
and make further reductions in emissions.
Trends in VOC release and rate of reduction in Japant
Amount of VOCs released
into water(Corresponding to amountfor AE Power Numazu)Amount of VOCs released
into water(AE Power Numazu)Amount of VOCs released
into water(Meiden Group)
Rate of reduction(Against fiscal 2000)

FY

100%

149
12

69%
59%
103
12

137
2000

91
2008

88
11
77
2009

66%

66%

99
11

98
8

88

90

2010

2011

36

Enhancement of Environmental Measures

58%
87
12
75

1,000m3

The Meiden Group is promoting 3Rs (reduce, reuse, andrecycle) of the wastes (including industrial waste, generalwaste, and saleable waste) produced by the Group’s
production hubs and offices in Japan. In fiscal 2012, werealized a total 99.4% waste recycling rate for the Groupfirms in Japan. In addition, we established a target of ‘zero
emission rate’ of wastes*1 at five Japanese production
hubs for fiscal 2012, and six business premises*2 actuallyachieved zero waste products. We are aiming to achieve
zero wastes from the business activities in fiscal 2014,in particular, our major production hubs in Japan andservicing business units (BUs) like construction-related
BUs.

The Meiden Group also considers the conserving ofwater resources to be an important issue for conserving
biodiversity.
We are working to conserve water resources byconstantly monitoring our water consumption volume.

1,398

1,375

2008

FY

2009

1,404

1,342

1,220

2011

2010

2012

* Total of tap water, industrial water, and groundwater.

Overview of Environmental Impacts by Our Business Activities (Fiscal 2012)*1 Meiden Group’s definition of ‘zero waste from business activities’: Less than 1.0% of thetotal volume of wastes generated (industrial waste, general waste, saleable resources, but
excluding sludge from construction) from the business activities are unrecyclable.
*2 The six facilities that achieved zero emissions in fiscal 2012: Meiden Numazu Works,
Meiden Ohta Works, Meiden Nagoya Works, Kofu Meidensha Electric Mfg. Co, Ltd., Hokuto
Denko Corp. (Atsugi Plant), and Meiden Foundry Industrial Co., Ltd.

At the Meiden Group, we monitor the environmental impacts from our business activities. Our rate of use of major resourcesand our environmental impacts from our business activities are shown below.

Trends in volume of waste products, etc. and recycling rate in
Japan

INPUT

kt

Item

96.3% 93.7% 95.8% 98.8% 99.4%

2012

Volume of waste(Corresponding to amount for
AE Power Numazu)
Volume of waste(AE Power Numazu)
Volume of waste(Meiden Group)
Recycling rate

* The figure for Meiden Group VOC release in fiscal 2000 was changed due to changes in thescope of calculation.

8.9
0.8

8.1

FY

2008

7.3
0.7

6.6
2009

8.4
0.6

8.2
0.6

6.4
0.5
5.9
2010

7.6

7.8
2011

OUTPUT
Japan

Overseas

Item

Unit

TopicsReduction of VOC release using trickle impregnation of low-styrene
varnish (Kofu Meidensha Electric Mfg. Co., Ltd.)
Varnish is used in the motor production process in order to fix the coils in place.
We previously used a process in which the rotors and stators were fully immersed
in a tank of varnish using solvents containing styrene and other VOCs. For our
new EV motors, we employ a varnish containing minimal VOCs, and use the trickle
impregnation method, in which the amount of varnish necessary for impregnating
the coils in place is directly trickled onto the coils. This has reduced the amount ofvarnish that we use, and significantly reduced releases of VOCs.

Note: Following the 2012 dissolution of Japan AE Power Systems Corporation, Japan (a joint venture of Hitachi-Fuji-Meiden by merging each T & D business since 2000, “AE Power”), the AE Power’s business
operations at Numazu City (“AE Power Numazu”) were transferred to a new company called Meiden T&D Corp. in April 2012 (now merged in Meiden BUs). The graphs showing the volume of CO2
emissions and VOC release and wastes from business activities show data for AE Power Numazu from fiscal 2008 to fiscal 2011. For the period prior to fiscal 2000 (Pre-AE Power) and fiscal 2012
(Post-AE Power), the amount of equivalent AE Power Numazu figures shows the corresponding then and current related figures by T&D activities of Meiden Group for reference.

Japan

Overseas

Unit

Release to Air

Energy32

9k·t-CO2

Electricity

54,555

10,957Mwh

CO2

Fuel oil

1,839

555

kℓ

VOCs

87

–

t

59

3

SF6

494

165

kg

SOX

1.3

–

t

NOX

31

–

t

Fuel gas

3,571

1,000m2012* Construction sludge is not included in the volume of waste produced.

Trickle impregnation

Volume of water used by year in Japan

Conserving water resources

Business Report

Promoting CSR Management

Promoting CSR Management - Environment Report

MEIDENSHA REPORT 2013

Water
Tap water

71

60

kt

Release into public
water area

Industrial water

149

–

kt

Wastewater

1,688

60

kt

kt

BOD

6,099

–

kg

Amount not recycled

756

114

t

Amount recycled

8,105

2,230

t

Product weight

55,096–t

CO2 release bytransportation

2,052

–

t-CO2

Groundwater

1,184

–

Wastes from ourbusiness activities

Chemical substances
VOCs(excluding sludge from construction)

Products
440–t

Transportation

Greenhouse gases
SF6

16,6002,820kg
Transportation* Average figures for the period from 2008 to 2010 published in the International Energy Agency (IEA)’s CO2 Emissions from Fuel Combustion (2012 Edition) were used for the emission coefficient for power
use for each country. For fuel oil and fuel gas, emission coefficients for each country published by the Greenhouse Gas Protocol Initiative were used.

Financial Statements

35

MEIDENSHA REPORT 2013

Promoting CSR Management

Social Report

38

Moving Forward with Our Customers

Moving Forward with Our Customers

Offering customers peace of mind and satisfaction
Mission: “To produce trusted products and best product experience for the customers” While keep “the passion for manufacturing excellence” andby producing the high quality products and services, we aim to assist our customers in solving their issues and to produce the best productexperience. We need to solidly implement the key policy measures to get the tangible results.

Basic Policy❶ To enhance the best product and service experiences at the customers, we need to act as a “problem-solving partner” of the customers and thus we all need to get
the actual feedbacks from our customers and shall fast take up the needed actions reflecting the demands and requirements of the customers.
❷ To increase the quality level of the products and services (quality, delivery schedule and reliability level) and the job performance quality, we need to define what iseach one’s challenges and issues and start over the key actions: “Change, Stop (the nonessential matters) and Start Over (new things)”. By practicing such actions,
we shall make the incremental improvements on each step and realize the overall quality improvement.
❸ Realizing by each and every member, the contribution of our products to the society and the damages to be inflicted by defective products and services, we will
maintain a reliable level of technology, plan out reliable procedures for conducting our business, establish a reliable system to execute those procedures, and conduct
our business with a sense of concern and the highest priority on safety.

Incorporating Customer Comments in
Products and Services
Meidensha watches market trends and listens tocustomers’ information, wishes and disappointments
so that we can offer satisfying products and services.
We analyze these customer needs to propose solutions,develop new products and take concrete action toprovide services and make improvements.
Each of the departments that interact withcustomers–development,
marketing,engineering,
manufacturing, onsite construction and maintenance–
incorporates certain evaluation items and a review ofthe state of its own initiatives into subsequent plans,conducts a self-evaluation of initiative results and uses
the PDCA cycle to enhance initiatives.

Flow of initiatives for finding customer needs
Determining
needs

Draft targets
and policies
Plan targets andpolicies basedon departmental
strategy

Individual
responseand daily
initiatives

Initiatives for error-proofing program against 3F
situations (first time, far from norm, far in frequency)
Our aim is to be mindful of change points, when errors arelikely to happen, and to be aware of risk and take steps
against it in advance. We work to build mechanismsthat examine, verify and control risks at three error-likely
situations: 3Fs (first time, far from norm, far in frequency).

Follow-up on quality improvement measures byexecutive officer
The Quality Control Officer visits each department’s sites
to check the state of quality improvement initiatives andappropriateness of recurrence prevention measures forany problems that have occurred. By seeing the actual
situation on the ground, the officer works to ensure
improvement in quality. Moreover, the direct contact withsite staff increases quality awareness.

Individual
response

Evaluation

ConcreteactionPrompt response to individual requests

Evaluate targets
and link them tonext stage

Responsefrom total
information:
analysis,
investigationof problem

Extraction ofprobleEvaluation

Enhancing Reliability
The Materials and Environmental Performance Analysis
Center evaluates product reliability, prevents defects, anddiagnoses cases of reduced life. These efforts are basedon improving product quality, creating new products, andconsidering the environment.
In recent years, moreover,regulations on chemical substances
have expanded internationally,
as with the RoHS Directive and
REACH Regulation. To respond tosuch regulations, we are preparing
measuring techniques for harmful
substances as listed in productand environmental regulations
and we are actively applying theseeven to inexpensive, high-quality Analyzing electronic component
quality by soft X-ray
components outside Japan.

Front-Loading by Computer Analysis
The Analytic Simulation and Advanced Control Center
practices front-loading, which is computer validation ofdesigns by analysis simulation from the earliest stage,
thereby determining the optimal design. This enhances
product quality, shortens development time by reducing
rework, and improves product performance and safety.

Analysis

Evaluate

Earth-friendly craftsmanship enhancing
product reliability, extending life, andboosting efficiency

Follow-up by executive officer

Organization
into themes
From the information collected, findcommon problems and solve them

TopicsTraining Maintenance Engineers for Safety and Assurance
TopicsBuilding quality control skills

Scene from a training session

Meidensha gives rank-specific training in quality control technology to help staff learn thebasics of quality control. This applies not only to production department staff directly engaged
in product craftsmanship but also to new and young employees, mid-career leaders, and soon. In fiscal 2012, we expanded training to Group companies in Japan and abroad. Trainees
learned the role of quality control, how to make improvements, the seven QC tools, “5 Whys”
analysis, preventing human error, and preventing new and recurring defects. Practice waspart of the training.

Maintenance technology training

Meidensha’s Engineering Center, located next to the Numazu Works, provides skill andtechnology training for maintenance engineers. The curriculum covers nearly all Meidensha
products, including ultra-high- and high-voltage substations, computer equipment, power
conversion equipment, power generation equipment, motors, and more. The teachingapproach is to let trainees learn by getting their hands on actual equipment. Trainees learn
about the internal construction of equipment by using cut-away models of products. They
get to actually operate disconnect switches and circuit breakers, test protective relays, andto operate power generation equipment and inverters, among other experiences. Teachingmaterials include the latest equipment, such as solar power generators.
This technical training develops engineers who help our customers run their equipment
safely, securely, and efficiently.

Promoting CSR Management - Social Report

Initiatives for Improving Quality

President’s Quality Management Policy Directive for Fiscal 2013

Business Report

We help resolve our customers’ issues by offering highquality products and services

Financial Statements37

Social Report

40

Working with Business Partners / Together with Shareholders/Investors

Working with Business Partners

Together with Shareholders/Investors

Practicing CSR throughout the supply chain based on fairtrade

Communication Activities Based on Proactive Information
Disclosure

Meiden Group Basic Procurement Policy
Basic Procurement Policyy Compliance with applicable laws and social norms
y Fair trade based on free competitiony Consideration for the environmenty Building healthy partnerships

Practicing Environmentally Aware
Procurement
The Meiden Group works to build eco-friendly products,
which reduce the environmental impacts acrosstheir life cycle from manufacturing to disposal. We
have established Green Procurement Guidelines topromote procurement of products and services withlittle environmental burden. Following these guidelines
ensures that we practice green procurement. We also
survey our business partners to learn how they are
addressing CSR and the environment using our CSR
survey sheet (environmental activities survey sheet), andwe obtain their cooperation in our CSR procurement
activities, which include green procurement.

Information Disclosure and IR Initiatives

Production Plan Briefings for Business Partners

Information Disclosure Policy

Twice a year at the start of each fiscal year, our works,
which are production bases, invite major business
partners to a briefing session to learn about businessconditions and plans in the Company and its various
departments. In addition, we select certain business
partners who have been especially cooperative with ourmaterials procurement efforts, and we commend themand show them our appreciation at the briefing sessions.
Also, we use Web-EDI to make ordering, delivery
date response, and delivery work more efficient, while
the use of electronic information is making us ever more
paperless.

The Meiden Group has established an information
disclosure policy rooted in the basic stance found in
our Corporate Code of Conduct that “We disclose
corporate information in a timely fashion according topredetermined rules to ensure that our business activities
are transparent and that customers, shareholders
and other investors, local communities and otherstakeholders correctly understand and trust us.”As the Meiden Group has stepped up business strategy
overseas, we have strengthened our ability to provide
information in languages other than Japanese. We have
newly released an English version of our CSR Report. Our
English and Chinese websites have enhanced content
under the company profile and business overview, andhave new IR and CSR information. In ways like these,
we are working to make the Meiden Group better known
outside Japan. We also actively published press releases
and cooperated with media coverage so that information
going through outside media would be more credible.

Communication with Institutional Investors and Analysts

Providing Information through IR Tools

We hold results briefing sessions twice a year to deepen
understanding of the Meiden Group. Top managers
explain our financial results and business strategy
and answer questions from institutional investors andanalysts. Materials distributed at these briefing sessions
are also posted on our website so that individual
shareholders and investors who cannot attend thesessions also have access to the information.

The Meiden Group endeavors to provide information
to shareholders and investors with a variety of IR
tools. We release a report every year to coincide with
our regular general meeting of shareholders in June.
Every December we publish a mid-term shareholders
newsletter covering the latest topics along with semiannual management and financial reporting, in a format
that is easy to understand. Also, once a year we issue
the Meidensha Report, which contains management,
financial, and CSR information. These tools are alsoavailable on our website so that more stakeholders canaccess the information.

CSR Provisions Added to Basic Purchasing
Agreement
We revised our basic purchasing agreement in fiscal 2012,
adding provisions related to environmental management.
To go with this, we held training/study sessions at
our internal procurement departments in each area.
Information provided here
included the content of
the explanation given tobusiness partners.

At a study session
Results briefing session

TopicsA Stronger Procurement System throughout the Meiden GroupAt periodic Meiden Group Procurement Meetings, we work to improve the Group-wideprocurement platform. Meetings address four themes: thorough legal compliance, thoroughCSR procurement, stronger risk management (BCP, internal control), and stronger humanresource development.

At a Meiden Group Procurement Meeting

Stronger Information Sharing

Communication with Business Partners

Business Report

Promoting CSR Management

Promoting CSR Management - Social Report

MEIDENSHA REPORT 2013

Financial Statements

39

MEIDENSHA REPORT 2013

Promoting CSR Management

Social Report42

For a Better Workplace

For a Better Workplace

Human Resource Development
Human Resource Development Policy

Employment Policy
Our basic policy is to evaluate employees in a fairand just manner and respect their individual abilities
and willingness, irrespective of gender, educational
background, age, etc.

① We will develop human resources capable ofcontributing to the management philosophy and tosecuring the necessary profit for such objectives.
② We will provide advice and support to each person sothat he or she can find their unique potential and canhave career development to maximize their current
and future job performance.

Hiring of People with Disabilities

Main Training Programs

The designated company, Meiden Universal Service
Co., Ltd. (“Meiden Universal Service”), a Meiden Group
company, for providing workplaces for people withintellectual disabilities, was established in 2006 andincreased the number of workplaces by establishingbranch offices and expanding the staffs at key Meiden
manufacturing hubs in Japan. Meiden Universal Service
was awarded by Ohta City Government, Gunma
Prefecture as an excellent “Business Enterprise inSupport of the Hiring of People with Disabilities.”
From April 2013, the mandatory hiring level ofpeople with disabilities was increased by the JapaneseLabor Law to 2.0%. Not only the hiring at the designatedcompany, but also at Meiden’s Tokyo area, we promoted
the hiring of such individuals. In fiscal 2012, we hired
two (2) people in the Tokyo area. For fiscal 2013, we
aim to increase the hiring of such persons at each major
manufacturing hub in Japan.

❶ New-recruit training to help them get a smooth start asa working member of society and subsequent followup training after one year
❷ Newly promoted-employee training to enable them tohave the necessary knowledge and way of thinking fortheir new job performance

Rate of employment of people with disabilities
2009/6

2010/6

2011/6

2012/6

2013/6

1.73%

1.95%

2.09%

2.12%

2.13%

* We are reinforcing the training for younger cluster employees; inparticular, young employees with third and fourth year company
experience after joining.
We added the training for such company age groups. For newly
promoted assistant managers or managerial staff, we havea training program immediately after their appointment andfollow-up training. These training series will help them to acquire
practical knowledge.

❸ Subjectively based and participative training programin the form of collective training or by correspondence
course. This program is for career development ofeach employee to enable him or her to acquire thenecessary knowledge or skills for the career goal set
by themselves.
❹ Life-planning and career-design training program tohelp senior employees prepare for their retirement
or post-company life-plan in Japan. This training will
enable them to acquire the life-planning skills including
budgeting.
❺ Departmental training programs to foster professional
people in each job description such as engineers,technicians, sales and marketing people.
❻ Basic product technology introductory course forback-office staff to strengthen their basic knowledge
base as members of a supplier company.

Building a Positive Workplace with Job
Satisfaction
Promoting Work-Life Balance Practices
With the enactment of “the Act on Advancement of
Measures to Support Raising Next Generation Children”
in July 2003, a measure to counter the declining birthrate
in Japan, since April 2005, we drew up an action plan torealize a good balance between work and child-rearing
or work-life balance in general and conducted the related
initiatives.
In the first half of fiscal 2012, we won an excellence
award from Nagoya City Office in their program of “Nagoya
City Child-Rearing Support Enterprise Recognition andAward Program.” We conducted child-rearing support
seminars and manager training programs for work andchild-rearing balance. Through these programs, we
can raise the awareness of various available programsfor child-rearing support and promote workplaces thatare positive about employees attending such programs.
We can produce good results. For raising of awarenessamong children on manufacturing jobs, we held a“handicraft session” and for direct music experience, we
held a “Meet-the-Music Session.” We actively promoted
community involvement programs and we received
positive reviews.

Occupational Safety and Health Initiatives
Establishment of President’s Safety and HealthManagement Policy Statement
Each year the Meiden Group establishes a President’s
Safety and Health Management Policy Statement andundertakes safety and health initiatives in keeping withthe policy.
Recognizing that the safety and health of each
employee are fundamental to company operations, wework to eliminate occupational accidents and enhance
health management.
We
also
createEnglish and Chineseversions of the President’s
Policy Statement andpresent the policy to all
overseas Meiden Group
companies.
Computer System Factory awarded for
3,000 consecutive accident-free days

Occupational accident statistics

PeopleAccidents with no lost work time
Accidents with lost work time

9
8

2
FY

2008

7

4

4

3

3

2010

2011

1

1
2009

2012

A Scene at a Child-rearing Support Meet-the-music Session
Seminar (at Meiden Chubu Branch)

Meiden Group Safety and Health Management Policy Statement for Fiscal 2013
TopicsStrengthen Human Resource Development through Training ofOverseas Meiden Group Managers and Technicians
We provide various training programs for the personal development of our employees as
members of society or professionals. Following the training program for Overseas Meiden
Group company engineers in Japan in fiscal 2011, we started a training program forOverseas Meiden Group company managers and technicians in fiscal 2012. We promote
fostering and increasing ‘global’ business leaders and engineers among Overseas Meiden
Group companies.
Engineer training at an overseas affiliate

Promoting CSR Management - Social Report

Promote Fair and Just Employment
Practices and Support Diversity in the
Workplace

Business Report

Promote to Building a Positive Workplace to Enable
Employees to Prove Their Potential Talents

In recognition of the sayings that “Safety is our first priority” and “Nothing is more valuable than good health,” Meiden Group shall pursue the following initiatives to fully review the existing
programs and promote and maintain safety and health management in accordance with the following Basic Policy and Code of Conduct Guideline on Occupational Health and Safety (OH&S).

Basic Policy

Code of Conduct Guideline on Occupational Health and Safety (OH&S)

In order to realize our responsibilities
under Meiden Group CSR, Meiden
Group recognizes that the safety andhealth of our employees at work is thecentral core value issue for the Group,and shall implement action witheveryone’s help at all of our business
units at home and abroad toward theobjectives: “To secure a safe andcomfortable work environment andhelp in realizing the work-life balanceand better lives of our employees.”

The Group shall work towards realization of the Basic Policy in compliance with the following Code of Conduct Guideline on OH&S.
❶ Abide by applicable legislation and other regulations and strictly obey the existing rules regarding OH&S.
❷ Build the OH&S Management System in a phased manner and perform the Plan-Do-Check-Act Cycle on a continuous basis.
❸ Promote risk assessment and seek to lessen risk factors to a permissible level at every workplace to realize safe workplaces and eliminate
serious occupational accidents.
❹ Realize a Group-wide safety and health system through OH&S education and training and internal patrol programs.
❺ Promote a comfortable workplace environment through the 5 S’s (Sort, Set in Order, Shine, Standardize, Sustain) Program and aim towards
vibrant workplaces and productivity gains.
❻ Raise awareness of OH&S at each Group employee level and strive to improve personal health on its own responsibility and work hard to maintainand build health.
In implementing the Code of Conduct, all our Group employees shall implement a safe and comfortable work environment with the help andguidance of the head of each business unit in accordance with “The Safety and Health Management Policy Guidelines for Fiscal 2013.”

Financial Statements

41

MEIDENSHA REPORT 2013

Promoting CSR Management

Social Report

44

Positive Communication with Local Communities

Positive Communication with Local Communities

Meiden Group Social Contribution Policies❶ We shall contribute to the sustainable

development of society through our main
business of manufacturer and supplier ofelectromechanical products.
❷ We appreciate the local communities that
support our business activities and we shall
execute social contribution that helps the
progress of community development.
❸ The Group’s executive officers andemployees shall voluntarily support oursocial contribution initiatives.

In 1918, Mrs. Take Shigemune, the second
President of the Company and wife of our
founder, Mr. Hosui Shigemune, used her
own funds to establish Hosui Elementary
School in Osaki (Shinagawa City, Tokyo), an
area where the Company had a factory.
Following in her footsteps, the Meiden
Group makes a wide variety of social
contributions through our active involvementwith local communities and with society.
Since fiscal 2007, the 110th
anniversary of our founding, we haveconducted the “Meiden Handicraft Session”
at Hosui Elementary School and otherelementary schools in communities where
we have our manufacturing hubs.
As of fiscal 2012, we were able toprovide hands-on experience in the joy ofmaking things to a total of 4,997 children.

Community Involvement and Development

Donation of “Partner” Personal Lifts to Four Facilities Where Group Has Bases on 40th
Anniversary of Founding of Meiden Kohsan Co., Ltd.
Concern for the environment and coexistence with nature

Conveying a message to young adults and children
For fiscal 2012, here are some examples of Meiden Group’s social
contribution programs that incorporate the key concepts above.

We received an appreciation letter for ourcontribution to the restoration work of theSouth Miyagi Water Processing Center
As disaster relief, we
worked to restore theelectrical facilities of South
Miyagi Water Processing
Center, Miyagi Prefecture,
Japan. In just two years
after the occurrence of the
major earthquake in 2011,
we were able to fully
restore the facilities. This
fast action was highly At the project office of South Miyagi Water Processing
rated by the industry and Center(Meiden Group employees who worked hard to restore theon March 25, 2013, facilities there)
Tohoku Regional Office of
the Japan Sewage Works Agency presented us with a letter ofappreciation.

Green Energy Christmas
Meidensha has been a premier member of a car-sharing program called“Smart Share Club Osaki” since fiscal 2011. The organization undertakes
various initiatives for building a sustainable society in support of its two
key topics: “Build a disaster-proof town” and “Realize a low-carbon
society in the region.”
Smart Share Club Osaki (principal promoting office: “Osaki Area
Management,” an incorporated association), joined Green Energy
Christmas, a project of the Agency for Natural Resources and Energy, anorganization of the Ministry of Economy, Trade and Industry. From
December 1 - 25, 2012, we decorated ThinkPark Tower (our head officebuilding) and the area aroundthe south exit of JR Osaki
Station with beautiful lighting
powered by green electricity
certificates.** Smart Share Club Osaki purchased homesolar-generated power in Shinagawa City
through green energy certificates. During
this Christmas period, we used about
1,800 kWh of green electricity.

A scene of assembling a Scroller IIfrom kits with motor units

In memory of the 40th Anniversary infiscal 2012, Meiden Kohsan Co., Ltd.
donated its “Partner” personal lifts tofour facilities in areas where theMeiden Group has manufacturinghubs. This was to express our
special thanks to the community.
Donations were made to the large
facility institution as well as for auniversity R & D laboratory.

Tokyo area: Graduate School of Information Science andTechnology at The University of Tokyo
Our lift was donated to assist the development of the latest
humanoid robots, including nursing care robots

Ohta area: “Resting Home – Hakkyuen,” a nursing home in Ohta City,
Gunma Prefecture.
Our lift is being used as a supporting system for bathing work there.

We joined the “Tree-Planting Ceremony” in Numazu City
Following on from last fiscal year’s participation, our Meiden Numazu Works
people joined the “Third Tree-planting Ceremony for making a forest in Numazu
City.” This event is one of the forest improvement initiatives as a part of “Eco Town
Numazu” programs promoted by Numazu City Office.
In total about 450 people from Numazu City participated: the local elementaryand junior high schools, companies, environmental groups, etc. We planted tree
seedlings on the grounds of the candidate campus site of Shizuura Elementary
and Junior High School facing Suruga Bay. From Meiden Group, we provided
about 400 seedlings, and 37 employees and their family members joined thisprogram. Following the instructions of Emeritus Professor Akira Miyawaki of
Yokohama National University, the participating members practiced atree-planting technique to plant the tree species rooted in the planting area andplant them in close formation, making the forest disaster resistant.

Kofu Meidensha Electric Mfg. Co., Ltd. gave an Environmental Lesson for Elementary
School Students
Kofu Meidensha Electric Mfg. Co., Ltd. taught an environmental
lesson at Isawahigashi Elementary School in Fuefuki City,
Yamanashi Prefecture.
Our people introduced Meiden Group environmental
initiatives to 38 sixth-graders. Also, we gave them a riding
experience in a pure EV, the “i-MiEV.”
The students listened with great interest to the briefing of
Meiden Group products that were quite new (unknown) tothem.

Promoting CSR Management - Social Report

Through contributing to society by following
the Meiden Group Social Contribution
Policies, we work to maintain goodcommunication with stakeholders that
support the Group’s business, and withmembers of the communities where wehave our business bases.

Business Report

Aiming to realize a Prosperous Future Society throughCommunity Involvement and Development

Financial Statements

43

MEIDENSHA REPORT 2013

Promoting CSR Management

Governance46

Corporate GovernanceCorporate GovernanceThai Meidensha Co., Ltd.: Employees Travel to Plant Coral
Basic Approach
Employees of Thai Meidensha Co., Ltd., a Meiden Group engineering company in Thailand, make a trip every year to “do something forpeople at large.” In fiscal 2012, 200 employees, family members and others planted coral branches in a seaside town called Sattahi locatedat southern tip of Chonburi Province near Pattaya Beach. (In 2011, members did a thorough cleanup and painting of a local elementary
school, had an exchange session with the students there, anddonated educational equipment including PCs. In 2010, theyplanted baby mangrove trees in the seaside.)
The coral planting theme was “Life for sea.” Living coralbranches were fixed to plastic pipe and lowered underwater ata point 200 meters off the coastline. The instructor explained
why planting coral means cleaning the environment of the sea
and what we should do for preserving the naturalenvironment. Each and every participating member planted
the coral and made a wish that it will grow successfully.

Meiden Ohta Works: Clearing Undergrowth in the Red Pine Forest
Members of Meiden Ohta Works cleared undergrowth in a
red pine forest of Mt. Kanayama, Ohta City, Gunma
Prefecture.
The red pines of Mt. Kanayama are a popular symbol ofOhta City among citizens, but the trees have been seriously
damaged by pine bark beetles and lack of care
(undergrowth), etc. As a result, many of these decayed anddead trees are cut down every year. The red pines hate
undergrowth as it takes their nutrients. To preserve the redpine forest, Meiden Ohta Works signed up as the owner of
20 pine trees in 2000 and clears away the undergrowtharound those trees every June.

In order to realize the Group’s philosophy, we view
it is essential to secure self-sustainability and selfgovernance and formulated the “Basic Policy to Improve
the Governance Structure to Secure the Fairness ofBusiness Practices” at a regular Meiden Board of
Directors’ Meeting in May 2005, and thus are promoting
stronger corporate governance.
Basic Policy to Improve the Governance Structure to
Secure the Fairness of Business Practices, which covers:❶ System to ensure the directors’ performance of their duties
complies with applicable laws and regulations and theterms of the provisions in the Articles of Incorporation❷ System to manage and store information relating to thedirectors’ performance of their duties❸ Internal rules and risk management system against
risk-causing losses❹ System to secure directors’ efficient execution of theirduties❺ System to ensure employees’ performance of theirduties complies with applicable laws and regulations
and the terms of the provisions of the Articles ofIncorporation❻ System to ensure the Group conducts its business in afair manner❼ Matters relating to employees who assist theperformance of duties by corporate auditors❽ Matters relating to the separation of corporate auditors
assisting employees from the supervision of thedirectors❾ System of reporting to the corporate auditors bydirectors and employees and a system of reporting to
the corporate auditors by others
Other systems to ensure effective enforcement ofauditing by the corporate auditor

Policy Actions Update *As of June 26, 2013

Topics“Nature Observation Meeting” Program

At a nature observation session“ThinkPark Forest,” a zone in our head office building premises, creates a green spacethat seamlessly connects with the green zone of other nearby companies. The Meiden
Group and neighboring companies started the “Nature Observation Meeting” from fiscal
2012. The meeting invites employees of event-sponsoring companies, and receives
help and advice from the Nature Conservation Society of Japan on the day. We monitor
and record the living matter in the green zone of Osaki Area during the four seasons.
Through the programs, we came to understand that there are various living things
out there even in a metropolitan green zone of Osaki. Going forward, we plan torevitalize this meeting program as a community event and the same time, we would liketo utilize our findings through the meetings for academic purposes.

In June 2003, the Company adopted an executive
officer system. At the same time, we sought to reinforce
the functions of the Board of Directors. For a partof these efforts, we separated the “decision-making
authority and supervisory functions” and the “businessperformance functions” from the Board of Directors.
The former functions were assigned to the Company’s
directors, and the latter to the representative directors
and executive officers who were delegated duties by
the representative directors. As a result, the Board of
Directors is responsible for making decisions from thestandpoint of the entire Group, and for overseeing theoverall management of the Group.
Two of the ten members of the Board of Directors
are outside directors.* This structure is designed toreinforce corporate governance by enhancing theBoard’s supervisory function concerning the executionof duties.

Executive officers appointed by the Board of
Directors comply with the Group management policies
decided by the Board of Directors. They are responsible
for executing their delegated and designated duties
and perform their duties quickly while receiving thesupervision of the related representative directors. The
Company has adopted a corporate auditor system.
The Board of Corporate Auditors consists of four
members, two of whom are outside corporate auditors.
The Board of Corporate Auditors communicates withdirectors, the internal auditing department, and otherrelated departments, while adhering to auditing policies,
the division of duties, and auditing rules for corporate
auditors stipulated by the Board of Corporate Auditors.
The corporate auditors attend Board of Directors
Meetings and other important meetings, and audit theduties of directors by means of monitoring the business
operations and financial conditions of the Group. We
have an Internal Auditors Office to assist the Board of
Corporate Auditors, which works under the direct controlof the Board.
In addition, we have an Internal Auditing Division,
which directly reports to the president, fulfilling the roleof diagnosing the Group’s corporate fitness level in a
regular manner. This Internal Auditing Division conducts
internal audits to check the effectiveness and efficiency ofbusiness operations, the reliability of financial reporting,the status of compliance with laws and regulations, andthe maintenance of assets covering the Company and allGroup companies at home and abroad. It also reports theresults of internal audits to top management, and offers
advice to the related employees on their performance ofbusiness duties.
With respect to requirements regarding theguidance of the internal control system for financial
reporting in accordance with the Financial Instruments
and Exchange Law in Japan, the Company adopted
basic policies that conform to the Implementation
Guidance for Management Assessment and Audit ofInternal Controls over Financial Reporting (ICFR) by
Japan’s Financial Services Agency. The Internal Auditing
Division independently audits the effectiveness of internal
control systems in terms of implementation status andimprovements at the Company as well as at the overall
Group level.
Corporate Governance Structure: Supervision andManagement and Internal Control System
General Meeting of Shareholders
Board of Directors(includes two outside directors)

Accounting Auditor

Representative
Directors
Executive
Officers

Board of Corporate Auditors(includes two outside auditors)

Internal
Auditing Unit

Compliance Committee
Compliance Manager

Each Business Unit
Compliance Hotline

Promoting CSR Management - GovernanceCorporate Governance System

Business Report

We strive to conduct corporate management in a fair, highly
transparent, fast and efficient manner and to improve
the governance structure to secure the fairness of business practices

Financial Statements

45

Governance48

Compliance / Risk Management

Compliance

Risk Management

Compliance as a Major Pillar of Our CSR Activities

Activities to Prevent Various Risks and Minimize Impacts
on Occurrence

Compliance System at the Meiden Group
Compliance Policy and System
The Meiden Group Code of Conduct (COC) defines that
we shall strive to ensure compliance with applicablelaws and regulations of our business operations-related
matters, other applicable laws and regulations at home
and abroad, social and ethical norms, and its underlining
spirit, and we shall conduct our businesses with strong
corporate ethics and good corporate social sense.
Given this policy, Meiden and its Group companies
established a compliance committee at each level asper Meiden Group Compliance Promotion Rules. These
committees actively communicate with each other andpromote CSR programs.
The purpose of our Compliance Committee is todecide on policies for compliance programs, arrange
compliance awareness campaigns, respond to internal
information on COC violations, and compile thecommon committee’s opinions on various events thathave occurred and take action to resolve the issues.
The activities of the Committee are reported to therepresentative director (Compliance) and lawyer and westrongly promote our compliance programs and secure
the transparency of those programs.
Each workplace has a compliance manager, whomakes sure that the Committee’s policies are wellunderstood and the business activities comply withthe applicable laws, regulations and social norms. The
compliance manager also offers consultation to any
employee who seeks advice on some problem and,
when necessary, reports to the head of the workplace
to offer advice to correct the problem. The compliancemanager reports periodically on these activities to theCommittee.
Compliance activities are also in place at overseas
Meiden Group companies. As per the medium-term
management plans, we are planning to select leader
companies in the designated regions and will promote
improvement of internal rules and the establishment ofCompliance Committees for the designated regions.

Meiden Group Compliance System
Meiden Compliance System
Compliance Committee

Meiden Group Compliance System
Compliance Committee

Compliance OfficeCompliance managers

Compliance OfficeCompliance managers

Whistleblower System on Compliance
Meiden has a whistleblower system on compliance. This
is to prevent illegal actions or misconduct and to solve
problems as early as possible if such illegal action or
misconduct occurs.
For this whistleblower system, there are two routes:
an internal hotline system for compliance violations(Internal Hotline System) and a whistleblower hotline forpublic interests (“Public Whistleblower System”).
For the Internal Hotline System, any employee
in Japan can enter the ‘hot-line site on complianceviolations’ on an anonymous basis. For the Public
Whistleblower System, the contact points by phone areavailable at internal telephones and the external thirdparty phone. The third-party phone is located at the law
firm to protect the whistleblower and to secure fairness
in response to compliance violation information.
The Compliance Committee studies informationthat is brought to the above points of contact, and, if
necessary, consults with a lawyer for resolution.

Compliance Education and Information Exchange Meetings
The Meiden Group holds Compliance Information
Exchange Meetings at major business premises inJapan. The purpose is to maintain and raise complianceawareness and receive input from the workplaces fromeach compliance manager. The Compliance Information
Exchange Meetings also serve as education forcompliance managers. The compliance managers andselected employees are trained and exchange views
with the Compliance Committee. These events were
held at 22 locations in Japan in fiscal 2012, inviting a
total of about 1,300, including compliance managers
and selected Group employees. The committees
reported on their companies’ compliance activities, onindividual whistleblower cases and on how the Company
responded. Lectures were given on how to create apositive working environment and participants learned theapplicable laws and regulations, especially focusing on the
Antimonopoly Act and the Act Against Delay in ‘Payment,etc.’ to Subcontractors. For their part, the participants
talked about their workplace conditions, and expressed
their opinions and hopes
to the committees. We
aim to reflect theseparticipants’ ideas andhopes in formulating thisfiscal year’s complianceprogrampoliciesforeven better compliance
Information exchange meeting
activities.

A Stronger Risk Management System
In fiscal 2012, we established a Company-Wide Risk
Management Committee (RMC). Based on the RMC
regulations, we created necessary action lists andcompiled detailed rules. In order to define Meiden Grouprisk management program policies, we formulated the“Business Risk Management Policy.”
Going forward, we will take a consistent approach
to risk management.

Operations of the Company-Wide Risk Management
Committee
Under the guidance of the Company-Wide RMC, eachworking group committee (WGC) in the Company
gathered information about potential serious businessrisks in each business operation. Based on the reportby the WGCs, actions were taken to address urgent andvital business risk matters with top priority.
Going forward, we will collect the latest related
information, especially on serious risk factors such as
earthquake disasters, information security, and any new
influenza virus, and will continuously take measures toprepare for any such occurrences.

Programs for Intellectual Property (IP)Protection and Use
Basic Intellectual Property Policy
The Medium-term Management Plan POWER 5 Phase
III lists “Advancement of craftsmanship for the Meiden
Group’s new solid growth” as a basic policy. To support
this theme of “advancing our manufacturing excellence”
in terms of IP rights, we aim to contribute to the businessof the Meiden Group by reducing IP risks (such as the riskof IP infringements with other firms) and by supporting
IP-related activities at Meiden Group, i.e., supportingR&D programs, protection and effective use of R&D
activities results, etc.

Initiatives in support of Meiden Group Going Global
The Meiden Group lists “Strengthen Meiden Groupoverseas strategy” as one of the key policy topics in
POWER 5 Phase III. The Intellectual Property Division
is promoting patent registrations in many countries andthe effective use of our IP rights in overseas markets.
As a result, our patent applications to overseas patentoffices show an increasing trend every year. In order toavoid IP disputes with other firms in overseas markets,
we are strongly conducting market research on patent
infringement risks.

Topics

Implementation of Total Disaster Reduction Drills

Company-Wide Disaster Response
OfficeNumazu Area Disaster
Response OfficeBusiness Report

Promoting CSR Management

In fiscal 2012, we conducted a disaster reduction drill at key spots in Meiden Numazu
Works. This exercise was based on the worst-case scenario of the Great Tokai Area
Earthquake (estimated to be potentially larger in size than the Great East Japan
Earthquake in 2011). The drills included evacuation to high ground against tsunami,
contacting exercises with other key business hubs in Japan for confirmation of thesafety of designated people, and sharing of updates of disaster information. We also
conducted an emergency relief team loading exercise for relief materials and products.
This additional exercise was made after reviewing the last fiscal year’s disaster reduction
drills to create more effective exercise programs.

Promoting CSR Management - Governance

MEIDENSHA REPORT 2013

Financial Statements

47

MEIDENSHA REPORT 2013

Promoting CSR Management

Governance50

Directors / Corporate Auditors

Directors / Corporate Auditors
As of June 26, 2013

Financial
Statements
PRESIDENT

Junzo Inamura

Yuji Hamasaki

EXECUTIVE VICE PRESIDENTEXECUTIVE VICE PRESIDENT

Kozo Masaki

Akira Wachi

Promoting CSR Management

CHAIRMAN

Business Report

Directors

Director and Senior Managing Executive Officer
Gentaro Kawashima

Outside Director
Hiroyuki Takenaka

Director and Senior Managing Executive Officer
Takeshi Miida

Outside Director
Botaro Hirosaki
Financial Statements

49

Director and Senior Managing Executive Officer
Koichi Yamamoto
Director and Senior Managing Executive Officer
Mamoru Sugii

p.51 • Consolidated Balance Sheets
p.53 • Consolidated Statements of Income

Corporate Auditors
Senior Corporate Auditor
Kazuyuki Tanaka

Corporate Auditor
Masakiyo Inoue

Senior Corporate Auditor
Tetsuo Yamada

Corporate Auditor
Yoshiaki Shinp.54 • Consolidated Statements of Comprehensive
Income (Loss)
p.55 • Consolidated Statements of Shareholders’Equity/Changes in Net Assets
p.57 • Consolidated Statements of Cash Flows

52

Consolidated Balance Sheets

Consolidated Balance Sheets

Consolidated Balance Sheets

MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (as of March 31, 2013 and 2012)

MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (as of March 31, 2013 and 2012)

Thousand of
U.S. dollars (Note1)

Million of yen

Assets

2013

2012

2013

Current assets:

Thousand of
U.S. dollars (Note1)

Million of yen

Liabilities and Net assets

2013

2012

2013

Current liabilities:
7,568¥ 12,748

Commercial paper (Note 7)

26,00023,500276,596

Trade notes

3,618

2,533

38,489Current portion of long-term debt (Notes 7 and 8)

9,597

5,957

102,096

Trade accounts

Payables:Cash and time deposits (Note 19)¥$

80,511

Receivables:

Short-term borrowings (Note 7)

¥

2,201

¥

1,736

$

23,41569,65562,199741,011Loans receivable and advances

596

321

6,340

Trade notes

5,914

6,412

62,915Due from unconsolidated subsidiaries and affiliates

674

895

7,170

Trade accounts

24,54922,751

261,160

(349)

(336)

(3,713)

109

3,863

1,160

Inventories (Note 5)

Allowance for doubtful accounts

38,544

31,571410,043

Advances received from customers

8,949

8,331

95,202

Deferred income taxes (Note 17)

4,681

3,501

49,798

Accrued income taxes

2,618

1,254

27,851Other current assets

2,686

3,153

28,574

Accrued bonuses for employees

5,846

4,798

62,191

127,673

116,585

1,358,223

Provision for product warranties

Total current assets

Due to unconsolidated subsidiaries and affiliates

550

249

5,851

Provision for loss on orders

1,061

659

11,287

Other current liabilities

25,41422,518

270,361

Total current liabilities

112,808

102,028

1,200,085

Long-term debt (Notes 7 and 8)

19,64927,858209,032

Employees’ severance and retirement benefits (Note 9)319,787

Long-term liabilities:
Property, plant and equipment:

30,06024,171

Land (Note 8)

12,714

9,356

135,255

Reserve for retirement allowance for directors and corporate auditors

120

116

1,277

Buildings and structures (Notes 6 and 8)

77,62475,551

825,787

Provision for environmental measures

952

1,070

10,128

Machinery and equipment (Note 6)

60,72854,930646,043

Provision for loss on guarantees

17

12

181

Construction in progress

1,003

1,510

10,670

Deferred income taxes (Note 17)

—

44

—

(85,204)(79,974)(906,425)

Other Long-term liabilities

2,940

3,012

31,276

66,86561,373

711,330

Total Long-term liabilities

53,73856,283571,681

17,07017,070181,596

Less: Accumulated depreciation
Net property, plant and equipment

Business Report

Financial Statements

Promoting CSR Management

MEIDENSHA REPORT 2013

Contingent liabilities (Note 12)
Net assets (Note 10):
Common stock
Authorized

Investments and other assets:
Investment securities (Notes 4 and 8)− 576,000,000 shares

Issued and outstanding − 227,637,704 shares

15,882

13,173

168,957

Investments in unconsolidated subsidiaries and affiliates (Note 4)

191

8,138

2,032

Capital surplus

13,197

13,197140,393Long-term loans receivable

31

29

330

Retained earnings

22,942

19,825244,064

(154)

(152)

(1,638)Deferred income taxes (Note 17)

6,595

6,617

70,160Less: Treasury stock, at cost

Software

4,448

3,471

47,319Unrealized gains on securities, net of taxes

4,432

2,665

47,149

(85)

(90)

(904)

Goodwill
Other assets
Allowance for doubtful accounts
Total investments and other assets
Total assets
See accompanying notes.

882

—

9,383

Unrealized losses on hedging derivatives, net of taxes

2,167

2,440

23,053Foreign currency translation adjustment(295)(1,309)(3,139)(1,181)

Minority interests

970

2,216

10,319

(111)

(93)

30,08533,775320,053¥ 224,623¥ 211,733$ 2,389,606

Total net assets
Total liabilities and net assets
See accompanying notes.

58,07753,422

617,840¥ 224,623¥ 211,733$ 2,389,606

Financial Statements

51

54

Consolidated Statements of Income / Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income (Loss)

MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2013, 2012 and 2011)

MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2013, 2012 and 2011)

Thousand of
U.S. dollars (Note1)

Million of yen

Net sales (Note 16)

2013

2012

2011

2013

2013

¥ 197,733¥ 181,107¥ 167,729$ 2,103,543

Cost of sales (Notes 13 and 14)

150,255

138,890

128,910

1,598,458

Selling, general and administrative expenses (Notes 13 and 14)

39,59735,93833,041

421,245

Unrealized gains (losses) on securities, net of taxes

7,881

6,279

5,778

83,840

Unrealized gains (losses) on hedging derivatives, net of taxes

Interest and dividend income

406

394

415

4,319

Interest expense

(804)

(880)

(901)

(8,553)Equity in net income (loss) of affiliated companies

(314)

286

40

(3,340)Operating income
Other income (expenses):

Income (loss) before minority interests

Share of other comprehensive income (loss) of associates
accounted for using equity method
Total other comprehensive income (loss) (Note 11)
Comprehensive income (loss)

Gain on sales of marketable securities and investment securities(Note 4)

6

7

8

64

Comprehensive income (loss) attributable to:Loss on devaluation of securities

(3)

(440)

(1,121)(32)

Comprehensive income (loss) attributable to owners of the parent

Loss on valuation of stocks of subsidiaries and affiliates—(1,379)

—

—

—

—

(57)

—

Loss on disposal of fixed assets

(129)

(60)

(167)

(1,372)

—

—

(25)

—

Loss on adjustment for changes of accounting standard for asset
retirement obligations
Gain on sales of fixed assets

30

14

7

319

Provision of allowance for doubtful accounts

(17)

(43)

(0)

(181)

Loss on product warranties

—

—

(800)

—

Provision for environmental measures

—

—

(605)

—

Early extra retirement payments

—

—

(270)

—

Loss on termination of a retirement benefit plan (Note 9)

(66)

—

—

(702)

Settlement of contract amendment (Note 15)

(449)

—

—

(4,777)

OthersIncome (loss) before income taxes and minority interests(667)(1,092)(200)(7,096)

5,874

3,086

2,102

62,489

¥

2012

4,209

¥

2011

1,894

¥

2013

1,404

$

44,777

Other comprehensive income (loss)

Foreign currency translation adjustment

Loss on disposal of inventories

Thousand of
U.S. dollars (Note1)

Million of yen

Comprehensive income (loss) attributable to minority interests

1,767

131

(998)

18,798

3

(50)

5

32

1,168

(242)

(363)

12,425

7

11

32

74

2,945

(150)

(1,324)31,329

7,154

1,744

80

76,106

6,811

1,609

(76)

72,457

343

135

156

3,649

Business Report

Financial Statements

See accompanying notes.

Promoting CSR Management

MEIDENSHA REPORT 2013

Income taxes (Note 17):
3,184

1,552

1,399

33,872

Prior year

—

—

239

—

Deferred(1,519)

(360)

(940)

(16,160)

Total

1,665

1,192

698

17,712

Income (loss) before minority interests

4,209

1,894

1,404

44,777

184

215

208

Current

Minority interests
Net income (loss) (Note 21)

¥

4,025

¥

1,679

¥

1,196

42,819U.S. dollars(Note1)

Yen

2013

1,958
$

2012

2011

2013

Amounts per share of common stock (Note 21):
Net income (loss)
Cash dividends applicable to the year
See accompanying notes.

¥

17.74
5.00

¥

7.40
4.00

¥

5.27
4.00

$

0.19
0.05

Financial Statements

53

MEIDENSHA REPORT 2013

Financial Statements

56

Consolidated Statements of Shareholders’ Equity/Changes in Net Assets

Consolidated Statements of Shareholders’ Equity/Changes in Net Assets
MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2013, 2012 and 2011)

Net assets at April 1, 2010

227,637,704

Common stock¥17,070

Capital surplus

Retained earnings¥13,197¥19,244

Treasury stock,at cost(¥145)

Unrealized losses on
hedging derivatives,
net of taxes¥3,530(¥51)

Foreign currencytranslation
adjustment(¥871)

Minority interests

Total¥2,158¥54,132

Net income

1,196

1,196

Cash dividends

(908)

(908)

New Consolidated Investment

(428)

(428)

Change of scope of equity method

(47)

(47)

Acquisition of treasury stock
Disposal of treasury stock

0

(6)

(6)

0

0

Net changes during the year

(1,015)

5

(262)

55

(1,217)

Balance at March 31, 2011

227,637,704¥17,070¥13,197¥19,057(¥151)¥2,515(¥46)(¥1,133)¥2,213¥52,722

Net assets at April 1, 2011

227,637,704¥17,070¥13,197¥19,057(¥151)¥2,515(¥46)(¥1,133)¥2,213¥52,722

Net income

1,679

1,679

Cash dividends

(908)

(908)

(3)

(3)

New Consolidated Investment
Acquisition of treasury stock
Disposal of treasury stock

0

(2)

(2)

1

1

Net changes during the year

150

(44)

(176)

3

(67)

Balance at March 31, 2012

227,637,704¥17,070¥13,197¥19,825(¥152)¥2,665(¥90)(¥1,309)¥2,216¥53,422

Net assets at April 1, 2012

227,637,704¥17,070¥13,197¥19,825(¥152)¥2,665(¥90)(¥1,309)¥2,216¥53,422

Net income

4,025

4,025

Cash dividends

(908)

(908)

Acquisition of treasury stock
Disposal of treasury stock

(0)

(2)

(2)

0

0

Net changes during the year
Balance at March 31, 2013

227,637,704¥17,070¥13,197¥22,942

1,767

5

1,014

(1,246)

1,540¥4,432(¥85)(¥295)¥970¥58,077

Treasury stock, at cost

Unrealized gains on
securities, net of taxes

Unrealized losses on
hedging derivatives,
net of taxes

Foreign currencytranslation adjustment($1,617)$28,351($957)($13,926)(¥154)

Thousand of U.S. dollars (Note 1)
Number of sharesissuedNet assets at April 1, 2012

227,637,704

Common stock$181,596

Capital surplus

Thousand of U.S. dollars (Note 1)

Retained earnings$140,393$210,904

Net income

42,819Cash dividends(9,659)Acquisition of treasury stock
Disposal of treasury stock(0)

See accompanying notes.

227,637,704$181,596$140,393$244,064$23,574

Total$568,318
42,819(9,659)

(21)

(21)

0

0

Net changes during the year
Balance at March 31, 2013

Minority interests($1,638)

Business Report

Number of sharesissuedMillion of yen
Unrealized gains on
securities,
net of taxes

Promoting CSR Management

Million of yen

Financial Statements

55

18,79853

10,787(13,255)

16,383$47,149($904)($3,139)$10,319$617,840

MEIDENSHA REPORT 2013

Financial Statements

58

Consolidated Statements of Cash Flows

Consolidated Statements of Cash Flows
MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2013, 2012 and 2011)

Thousand of
U.S. dollars (Note1)

Operating activities:

¥

2012

5,874

¥

2011

3,086

¥

2013

2,102

$

62,489

2013

2012

2011

2013

(11,597)(46,234)

Financing activities:

Income (loss) before income taxes and minority interests

Increase (decrease) in short-term bank loans(4,346)(1,194)

Adjustments to reconcile income before income taxes to net cash
provided by operating activities:

Increase (decrease) in commercial paper

Depreciation and amortization

7,930

7,008

7,166

84,362Gain on negative goodwill

(252)

–

–

(2,681)

Increase (decrease) in allowances

4,099

976

2,835

43,606

Interest and dividend income

(406)

(394)

(415)

(4,319)Equity in net loss (income) of affiliated companies

314

(286)

(40)

3,340

Interest expense

804

880

901

8,553

Gain on sales of marketable securities and investment securities

(6)

(7)

(8)

(64)

Gain on sales of fixed assets

(30)

(14)

(7)

Loss on disposal of fixed assets

129

60

Loss on devaluation of securities

3

440

Decrease (increase) in receivables(5,531)

Decrease (increase) in inventories

1,163

Increase (decrease) in payables
Other-net
Sub-total

1,500(8,000)26,596980

1,154

16,808

10,426

Repayment of long-term debt

(5,959)(5,604)(5,793)(63,394)

(2)

(2)

(6)

(21)

Cash dividends paid

(908)

(909)

(906)

(9,659)Cash dividends paid to minority shareholders

(51)

(132)

(41)

(543)

Other-net

37

139

(64)

393
(82,436)

Purchase of treasury stock(7,749)(5,048)(9,599)(319)

Effects of exchange rate changes on cash and cash
equivalents

389

(116)

(164)

4,138

167

1,372

Net increase (decrease) in cash and cash equivalents(5,190)639

629(55,213)

1,121

32

Cash and cash equivalents at beginning of year

12,674

11,986

11,180134,830(5,866)(580)(58,840)(1,398)(2,381)

12,372

–

49

177

–

(4,058)

5,188

4,747

(43,170)

1,378

3,715

327

14,661

11,411

13,38815,935

121,394

Interest and dividend received

438

378

426

4,660

Interest expense paid

(759)

(848)

(858)

(8,075)

Income taxes paid

(1,784)(1,475)(793)(18,979)

9,306

11,443

14,71099,000

(1)

(3)

(22)

(11)

(5,215)

(50)

(110)

(55,479)

18

69

28

191

Net cash provided by operating activities

2,500

Proceeds from long-term debt

Net cash provided by (used in) financing activities

Increase in cash and cash equivalents due to addition of
consolidated subsidiaries
Decrease in cash and cash equivalents due to exclusion of
consolidated subsidiaries
Cash and cash equivalents at end of year (Note 19)
See accompanying notes.

¥

–

0

–

7,484

¥ 12,674¥ 11,986–$

79,617

Business Report

2013

Thousand of
U.S. dollars (Note1)

Million of yen

Promoting CSR Management

Million of yen

Investing activities:
Purchase of marketable securities and investment securities
Purchase of investments in subsidiaries
Proceeds from sales of marketable securities and investment
securities
Proceeds from sales of stocks of subsidiaries and affiliates

7,375

–

140

78,457Purchase of property, plant and equipment(7,377)(3,800)(3,727)(78,479)

Proceeds from sales of property, plant and equipment

47

34

121

500

(2,167)(1,661)(1,342)(23,053)

Purchase of investment in consolidated subsidiaries in resulting
change in scope of consolidation

219

–

–

2,330

Proceeds from sale of investment in consolidated subsidiaries inresulting change in scope of consolidation

(217)

–

–

(2,309)Proceeds from subsidy

196

46

1,465

2,085

Purchase of software

Other-net
Net cash provided by (used in) financing activities

(14)

(275)

(871)

(147)

(7,136)(5,640)(4,318)(75,915)

Financial Statements

57

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