Takiron Seiko Co., Ltd.'s mid-term management plan.

3. Main Policies.

The details of the main policies are as follows:

(1) Optimization of group management.

In terms of optimizing group management, they are planning to eradicate unprofitable group companies, increase income through the implementation of individual growth strategies for related companies, and restructure production systems with a view towards overall optimization. The plan is to eliminate the three unprofitable companies that currently remain through the continued improvement of important monitoring companies' earnings and business structural reform. Specifically, BLX will strengthen sales in the North American market while advancing cost reductions, BAC will promote the development and expansion of environmentally-friendly products and shortened delivery times, and Maverick Partners will work to establish a mass production system for recycled compounds and realize profitability through development projects to overcome business losses. Additionally, they will aim to advance improvements in earnings for other low-profit group companies and strive to generate stable profits. Furthermore, as the integration of group companies has been mostly completed, they will formulate individual growth strategies for related companies and aim to strengthen business structures and enhance profitability. In terms of the overall optimization of production systems, they will aim to consolidate small-scale production bases, such as Miwa Sign Works Saitama, and unify production and sales structures such as Takiron Seei Civil, as well as create an efficient production system for growth and core areas such as plates.

(2) Creation of new products and new businesses.

The strengthening of the creation of new products and new technologies is an urgent issue, and they plan to improve their research and development system and shift to high value-added fields. In terms of the improvement and strengthening of the research and development system, they established a new business development department and a new material and new field development department in April 2024. With the Business Development Department, they aim to expand business based on existing products and technologies such as nano-technology, motor business, and compounds, and with the New Material and New Field Development Department, they aim to expand into new fields such as the acquisition of new technologies and the expansion of mobility and health care. In the mobility sector, They are aiming for early practical application, with a focus on developing products that consider resinification of automotive front glass in response to changes in performance requirements due to the weight reduction of automotive bodies and the spread of EVs and are adopted in cars for experience programs with hydrogen engines. Also, they are steadily making progress, such as considering the introduction of technology from overseas to make nano particles by themselves. In April 2026, they will establish a new comprehensive research institute in Mita City, Hyogo Prefecture, and consolidate research and development functions that are dispersed around the country to accelerate the strengthening and nurturing of focused and emphasized businesses. They will also strengthen cooperation with the intellectual property department in Osaka, such as with the introduction of technology and patent registration. In addition, they will strengthen their marketing efforts, moving away from relying on local distributors to develop new products that meet market needs and contribute to early sales.

In the shift towards high value-added fields, they first conducted an inventory of research and development themes and extracted priority themes. More than half of the development themes were continued or stopped based on considerations such as marketability. Then, from the midstream, such as processed goods and intermediate materials, They expand their areas to more high value-added businesses from the upstream, such as the development of functional materials to environmental responses, and the downstream such as products and solutions. The goal is to sell high value-added materials and products to semiconductor manufacturers, for example, using nanotechnology film and plates they manufacture themselves. They aim at developing content-like business by getting closer to consumers through the acquisition of material technology, etc., and expanding into health care and mobility. Downstream, they are also considering selling, for example, film and plates made using nanotechnology to semiconductor manufacturers.

(3) Thorough strengthening of on-site power.

By thoroughly strengthening the sales, manufacturing, and functional departments, the company aims to first regain its earning power. In the sales department, the policy is to promote tenacious and meticulous sales that directly appeal to users by implementing marketing initiatives on its own, rather than relying solely on agents, and thus promote sales growth. In the manufacturing department, the policy is to gain cost competitiveness that can match other companies by thoroughly reducing manufacturing costs through yield improvement and rationalization/automation utilizing DX. This is also aimed at reducing manufacturing costs in overseas group company factories by dispatching personnel from the parent company. In the functional department, the goal is to aim for risk aversion, governance enhancement, and realization of a small, elite unit. For this purpose, education will be strengthened to cultivate a specialist group that pursues expertise, such as by promoting the overseas stationed staff promotion system newly established and dispatching about 10 people overseas within 3 years. The aim is to shift the purchasing department to Tokyo, which is closer to management, and to build a proactive and strategic raw material purchasing system. As for IT, the company plans to update its core system in collaboration with the IT department of Itochu Corporation, and promote DX by leveraging it to advance efficiency and labor-saving, and accelerate the smartization of its factories. The core system is currently being gradually deployed to all factories through its new production management system, and the accounting system is planned to be completed during the new medium-term management plan period; and the sales/logistics system is planned to be completed by 2030.

(4) Expansion of overseas business

The plan is to accelerate overseas business based on the expansion strategy for each area, following the execution of the withdrawal of the BLA, the improvement of BAC, and the injection into BLX during the fiscal year ending March 2024. The company aims to promote market development through company-wide initiatives such as the development of peripheral products and new businesses, support for the development of sales bases and the dispatch of personnel. In mature Europe, the policy is to promote market development through the introduction of environmentally-friendly products and the development of distinctive products. In the North American market, which is positioned as a growth market, the company plans to enhance its local sales and production capabilities. In the growing China and Southeast Asia, the company plans to aggressively launch market offensives, and strengthen sales in China by enhancing the functions of its Shanghai sales subsidiary.

(5) Acceleration of M&A

The company plans to strengthen its M&A activities for the purpose of enhancing its resin processing technology, expanding its sales channels, and acquiring new markets. For this purpose, the plan is to strengthen the information network, evaluation and review processes, and execution teams to increase the precision of M&A and to advance into the industry undergoing reorganization. The targets are broadly divided into five areas, including resin processing businesses spun off due to the consolidation of major petrochemical manufacturers, same-industry companies expected to yield residual profits, companies with core technologies or value chains in new fields, overseas sales networks or overseas technology/intellectual property licenses, and distributors or sales companies that can expand sales channels, including products of other companies. The company plans to actively consider M&A, although timing is a factor, as evidenced by the fact that they succeeded in inheriting the agricultural polyolefin film business from Sumitomo Chemical Co., Ltd. during the fiscal year ending March 2024.

(Author: FISCO guest analyst Nobumitsu Miyata)