Management Plan

Seventh Medium-Term Management Plan

By being a truly unique and excellent corporate group that operates on a global scale, we aim to be both highly profitable and able to compete successfully in the world market. To this end, we have devised our Seventh Medium-Term Management Plan incorporating strategies for the global expansion of operations.
Our new four-year management plan covers the period from FY2007 to FY2010 (April 2007 to March 2011). Under the slogan of "Challenge 10^*1," we will work to expand our sales of Strategic Products^*2 and other products by further bolstering our research and development capabilities, and aggressively implementing capital investment. By the final fiscal year, FY2010, we aim for net sales of ¥170 billion or higher, ordinary income of ¥18 billion or higher, a ratio of ordinary income to net sales of 10% or higher, and an ROE of 10% or higher.


Notes:	*1.	"Challenge 10" refers to our targets of an ordinary income ratio of 10% or higher, and an ROE of 10%, to be achieved by FY2010.

	*2.	There are a total of 15 items designated as Strategic Products in our Seventh Medium-Term Management Plan. Five products have been carried over from the preceding Sixth Medium-Term Management Strategy, and 10 items are new.

Overview of our Seventh Medium-Term Management Plan

Guided by our Company motto, Let us contribute to building a better society through our corporate activities, we will put into practice the following seven management principles, with the aim of achieving the growth that will enable us to become a truly unique and excellent corporate group that operates on a global scale.

1.		Our individual-based management enables individual employees to maximize their potential. This, in turn, contributes to the realization of a strong and attractive company.

2.		In the course of your actions, keep firmly in mind: without rigorous legal and ethical compliance no company can be an excellent company, and we must also fulfill our corporate social responsibility.

3.		Work with thoroughness to ensure safety. Also seek to maintain harmony with society, as well as the natural environment.

4.		Take pride in the satisfaction your actions will bring to customers. Also, demonstrate a willingness to undertake challenges, and acting with thinking.

5.		Make aggressive R&D investments to expand revenues and profits.

6.		By bolstering management on a consolidated basis, maximize the synergies of Sanyo Chemical.

7.		Make a fair distribution of profits among internal reserves, our shareholders, executives and employees.

1.		Sales target

		Our sights are set on achieving ¥200 billion on a consolidated basis in the near future. In the process of achieving this goal, we aim to realize net sales of ¥170 billion by FY2010.

Main Strategic Products in focus fields
Business fields targeted for their potential to improve our profitability and net sales

Copiers and electronics:

Core components of polymerization toners*, energysaving toner resins, permanent antistatic agents*, materials for flat panel displays (FPDs), electrolytes for electric double-layer capacitors*, etc.

Automobile products:

Thermoplastic polyurethane beads for the interior parts of automobiles*, lightweight seat cushion materials, lubricating oil additives for continuously variable transmission fluid


Note:	Items with an asterisk indicate Strategic Products carried over from the Sixth Medium-Term Management Strategy.

Business development fields targeting next-generation advances

Environmental and biotechnology products:

High-performance polymer flocculants, plasticizers used for biodegradable plastics, materials to stop bleeding during surgery, surfactants for biotechnology applications

2.		Profitability target

		By increasing the sale of Strategic Products, expanding the lineup and reducing costs for other products, as well as by improving the profitability of consolidated subsidiaries, we aim to achieve an ordinary income of ¥18 billion or higher, an ordinary income ratio (Ordinary Income Ratio = Ordinary Income/Net Sales x 100) of 10% or higher, and an ROE of 10% or higher.

3.		Capital investment and R&D expenses

		To achieve the aforementioned targets for sales and profitability, we will undertake the following capital investment under our Seventh Medium-Term Management Plan.

Capital investment
We plan to invest a total of approx. ¥54 billion during a four-year period under the Seventh Medium-Term Management Plan.

Main capital investment plan:

		Approx. ¥11 billion for the construction of manufacturing plants at the Kinuura Satellite Factory

		Approx. ¥6.6 billion for expansion of manufacturing plants for superabsorbent polymers (SAP)

		Approx. ¥2.4 billion for the construction of the new research laboratory at Katsura, Kyoto

R&D expenses
We plan to invest approx. 4% of total net sales on an annual basis in R&D, and a total of approx. ¥25 billion over the four years covered by the Seventh Medium-Term Management Plan.

Net Sales of Strategic Products by Segment

1.	Utilizing individual-based management
	We aim to maximize the potential of individual employees by more effectively utilizing the organizational structure, a wide range of career development and benefits programs, and the technical infrastructure within our organization, as well as through other means.

2.	Strengthening group management
	1) Build an internal control system 2) Optimize the intra-group synergy 3) Create a system for securing and training talented personnel 4) Be proactive in capital investment 5) Withdraw from unprofitable businesses and reconsider the Company's business domains (including M&A strategy)

3.	Improving profitability
	1) Launch new Strategic Products, and expand sales of existing Strategic Products 2) Improve profitability by upgrading the features of the other existing products 3) Pursue cost reductions 4) Secure sustainable profitability for overseas consolidated subsidiaries

4.	Bolstering research and development capabilities
	1) Commence research at a new research laboratory at Katsura, Kyoto and achieve positive results at an early stage 2) Promote development of Strategic Products 3) Expand the core businesses through technological innovation 4) Develop nanotechnology, microfabrication technology and medical technology

5.	Promoting overseas operations
	1) Increase overseas sales ratio to 40% or higher 2) Encourage the hiring of local managers at overseas consolidated subsidiaries, and promote marketing strategies tailored to local markets 3) Strengthen the overseas sales network