News

Status of Approvals

In line with the schedule shown in Table 1, below, Kuraray is steadily making progress in its preparations to obtain the approvals required for the commercialization of the new ballast water management system.

Status of Sales Network

Kuraray is working to complete the establishment of global networks for its sales activities and technical service offerings associated with the new ballast water management system prior to obtaining system approvals. To this end, the Company has entered into a basic sales agency agreement with Kashiwa Co., Ltd. (Headquarters: Minato-ku, Tokyo).

Status of Distribution Network

Kuraray is making progress with the establishment of an overseas network for distributing supplies and parts. To accelerate this process, the Company has concluded a basic business agreement with Fuji Trading Co., Ltd. (Headquarters: Naka-ku, Yokohama City).

Release Schedule and Sales Target

• As soon as it has obtained all the necessary approvals as scheduled, Kuraray will initiate sales of the new ballast water management system from October 2011.
• The market is expected to peak around 2015–2016. At that time, Kuraray is aiming to achieve annual net sales of the system totaling over ¥50 billion.

Trademark

Having named the system MICROFADE, the Company is now in the process of registering this trademark in 11 countries throughout the world, including Japan. The name is derived from the system's function, by which marine microorganisms such as plankton and bacteria fade away.

Key Features of MICROFADE

• Organisms are sufficiently removed during the front-end process through high-precision filtration that employs special filters. This makes it possible to substantially reduce the amount of active substances (chemical substances) used during the post process.
• Energy-saving operation is achieved due to Kuraray's special filters with low-pressure requirements,which enables the MICROFADE system to use existing power generators and ballast pumps.
• Compact design of the system's primary components (filtration unit and chemical infusion unit) allows for conserving space.
• Requiring neither precise temperature control nor a large-sized tank, the system also enables reduction in power consumption and conservation of space. These savings are due to the utilization of solid chemical agents that can be stored at room temperature.

1. Seawater is drawn from overboard
2. Seawater then enters the filtration unit
3. Organisms removed by the filters are discharged
4. Filtered seawater proceeds through the system
5. Active substances automatically injected into filtered ballast water
   The active substance is infused
6. To ballast tank
   Disinfected seawater enters the ballast water tank

1. Ballast pump siphons ballast water from ballast tank
   Ballast water is drawn from the ballast water tank
2. Automatic measurement of residual chloride concentration, neutralizers automatically added as needed
   Neutralizing agent is infused when the chlorine is too high
3. Ballast water discharged
   Ballast water is discharged

Ballast Water and Related Problems

• Ballast water, consisting of sea water that is drawn into a specialized tank in order to maintain balance on cargo ships, is often taken from a port in one country and discharged at a port in another. As a result, the disruption of local ecological systems after the introduction of foreign plant and animal species contained within ballast water has become an international problem.
• In response to this problem, the International Maritime Organization (IMO) adopted what is officially referred to as the International Convention for the Control and Management of Ships' Ballast Water and Sediments in February 2004. This agreement is scheduled to make mandatory the installation of ballast water treatment equipment aboard ships in near future.
• The agreement also stipulates that discharge standards will be applied to ocean-going vessels sequentially, depending on their year of construction and ballast tank capacity. These standards are expected to be applied to all ocean-going vessels by 2017 (applicable to newbuilds starting in 2011 and existing ships in 2015).

Market for Ballast Water Management Systems

• Combining both newbuilds and existing ships, the market for ballast water management systems is anticipated to reach ¥2 trillion.
• Anticipating that market demand for ballast water management systems will start around 2012, Kuraray is expecting demand to peak between 2015 and 2016, just prior to such systems becoming mandatory for all ships by2017.

Company Overviews

	Kuraray Co., Ltd.	Kashiwa Co., Ltd.
Representative	President Fumio Ito	President Yoshiro Yamashita
Headquarters	1-1-3, Otemachi, Chiyoda-ku, Tokyo	4-5-4, Takanawa, Minato-ku, Tokyo
Established	June 24, 1926	March 29, 1947
Capital	¥89 billion	¥200 million
Principal businesses	Manufacture and sales of chemicals and resins, fibers and textiles, high-performance materials, medical products and others	Design, manufacture and sales of marine fire fighting systems, fire prevention equipment and others
Net sales	¥376.8 billion (March 31, 2009, consolidated)	¥8.2 billion (May 31, 2009)
Number of employees	6,909 (As of September 30, 2009, consolidated)	94 (As of May 31, 2009)

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