Sankyu : Value Creation

What is Sankyu's vision for an ideal company?

A company that creates universal value by aiming to play an indispensable role for society and customers,

anytime, anywhere, any industry

Since its founding, Sankyu has constantly provided indispensable value to industries through its manufacturing, transporting, and repairing operations,

even as it has changed form over time. We have been expanding the value we provide across eras, national borders, and industries.

The source of our value is trust, based on safety and quality,

as well as the underlying power of our people. This has never changed.

We will adapt to changes in society, but we will also enhance the power of our people, continuing to improve and refine ourselves so that we can support all kinds of industry and contribute to the development of society.

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Sankyu's

Value Creation

11 A History of Value Creation

15 Businesses and Competitive Advantages

17 Sankyu's Value Creation

19 Special Feature 1

Sankyu's Business Continues

to Support Nippon Steel

-What does a long-term partnership spanning a century entail?

23 Special Feature 2

Meeting the Challenge of Aging Social Infrastructure

with Frontline Capabilities and Digital Technology

-Renewal of a 70-year-old hydroelectric power station without the original design drawings

25 Special Feature 3

Taking Up the Challenge of India's Giant Market

-Frontline capabilities build unshakable trust through safety and quality

Sankyu's Value Creation A History of Value Creation

Sankyu's Value Creation

Management Strategy Business Report

Sustainability

Governance

Data Book

A History of Value Creation

A history of continually growing by meeting diverse needs

Since its founding in 1918, Sankyu has expanded its business areas from port cargo handling to overland transport, on-site operations and logistics, and the construction and maintenance of equipment. The Company responds flexibly to changes in society and industry, and continues to create new value. Now, it is making inroads in the new domains of social infrastructure and renewable energy.

Sankyu started in maritime transportation Expanding into the business domains of logistics and plant engineering

1905-

Establishment of the Company's founding organization, Nakamura Gumi

1918-

Founding of Sankyu Transportation

Entry into port cargo handling

1923-

First step toward an integrated operation structure

1945-

Achievement of integrated land-sea transportation

［ Changes in society ］

Through the First Sino-Japanese War and the Russo-Japanese War, self-supply of iron became important as a core industry for Japan.

The Company's founder, Seishichiro Nakamura, established a maritime transport company named Nakamura Gumi, having realized the importance of a country having its own supply of iron. In 1907, the Company took on delivery of iron ore to the state-run Yawata Steel Works, providing an opportunity to build its business foundation. In 1909, the Company became involved in fuel resource transportation, including a contract for all aspects of transporting anthracite coal, used as fuel for households and ships. The Company expanded its routes to Taiwan and North America, and established its own position in the maritime shipping industry, building

the cornerstone of its current business pillars in the core steel- and fuel-related fields.

［ Changes in society ］

During wartime, due to shortages of equipment and personnel needed to deal with ships in port or the loading and unloading of freight, inefficient cargo transfers became a social issue.

To solve this problem, Nakamura Gumi secured port cargo handling personnel at Wakamatsu, Yawata, and Tokuyama, and took on the loading and unloading of raw materials at Yawata Steel Works and the loading, storage, and on-site operations of anthracite coal at the navy's Tokuyama fuel depot. Then, in 1918, Sankyu Transportation Co., Ltd.

(later Sankyu Inc.) was established in Moji City (now Kitakyushu City), Fukuoka Prefecture, and it was there that Sankyu was born.

［ Changes in society ］

As the main focus in the energy domain shifted from coal to petroleum, securing petroleum supplies became a national strategy in terms of munitions as well.

In light of the shift to oil as the main source of energy, Sankyu strengthened its services for oil-related operations, and won a contract for petroleum transport operations as a designated naval contract for the Kure Naval District. With the expansion of the fuel depot, the Company started a civil engineering contracting business for land preparation and quay wall construction, creating the foundation for a unique integrated operation structure covering transportation, construction, and on-site operations. It was around this time that the Company started transportation and installation of heavy equipment, which form the basis of its postwar reputation as a specialist in heavy load transportation.

［ Changes in society ］

During the tumultuous post-war period, many companies suffered functional deficiencies after receiving orders from the General Headquarters, Supreme Commander for the Allied Powers (GHQ/SCAP) to halt operations, and rebuilding Japan's industrial base became an urgent task.

Sankyu was also under pressure to review its business base. In particular, there was an issue with truck transportation operations, which the Company was unable to handle, because they had been directly provided by factories or consigned to specialist contractors, leaving a disconnect between on-site operations and port transport. With the expansion of on-site operations at Yawata Steel Works, the Company launched a truck transportation operation, and built its own transportation system. With this, it realized an integrated land-sea transportation system able to handle all steps from conveying raw materials to on-site operations and overland transport, forming the base for the comprehensive services that came later.

A bust of the founder at the Sankyu Hirado Training Center (Nagasaki Prefecture)

Press advertisement commemorating the Company's 100th founding

anniversary (October 1, 2018) Front gate of the navy's Tokuyama fuel depot The Kurosaki Branch depot, a forerunner in truck transportation

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Sankyu's Value Creation

A History of Value Creation

Sankyu's Value Creation

Management Strategy Business Report

Sustainability

Governance

Data Book

Expanding the breadth of value provision with skills and technological capabilities to become a company that can reliably support all industries

1950-

Building a foundation for globalization through business model transformation

1980-

Development of the maintenance business and the birth of 3PM

2010-

And into the future...

Becoming the best partner for customers developing original business models

Entry into new fields and expansion of service development

［ Changes in society ］

Japan shifted rapidly from its post-war recovery to a high economic growth period. Large-scale projects and plant exports surged.

Sankyu supported a large number of projects with integrated land-sea transportation. In 1954, Sankyu became the first in Japan to export a plant after the war, to Yugoslavia, earning a reputation as a specialist in plant exports. In 1959, the overseas export operation entered full swing with the Usiminas

Steel Plant construction project in Brazil. As it expanded globally, the Company took the approach of establishing local subsidiaries in other countries with the intention of

［ Changes in society ］

As demand for plant construction in Japan approached its peak, the Company entered a period where the focus shifted from new builds to preservation and maintenance of existing facilities.

By undertaking all aspects of plant maintenance, the Company worked to make a contribution in terms of both quality and cost. In 1991, the Company launched maintenance services as a prime contractor. From the 2000s onward, the Company began to promote maintenance services at full scale, trademarking

Sankyu 3PM (Third-Party Maintenance) in Japan. The Company established a comprehensive maintenance system from a neutral position as neither a plant owner nor an equipment

［ Changes in society ］

Companies' ability to cope with globalization and environmental change is tested in this era, and they are required to demonstrate flexible business development and an ability to deliver solutions.

In 2010, the Company expanded the 3PL business and focused on the maintenance business, based on the three businesses of logistics, plant engineering, and operation support. It also advanced into the electricity and energy fields. By combining the ability to handle all industries with frontline capabilities, the Company strengthened its systems for supplying unique value. It has also increased its presence as a priority partner for customers.

supporting their development.

Shipping a plant bound for Yugoslavia

manufacturer.

Compressor replacement maintenance operation overseas

Strengths developed over our history

Skills and technological capabilities

Sankyu has enhanced its skills and technological capabilities by refining the abilities of its employees, guided by the management principle of valuing people. The reason we remain the preferred choice of customers is the efforts of our individual on-site personnel to face challenges and meet customers' expectations. These skills and technological capabilities have been built up over many years through training and sincerely responding to customers.

Work execution and management capabilities

We emphasize frontline work execution and management capabilities. Our highly skilled and technically capable human resources are dispatched all over the world. Our strength lies in using this approach to deliver high performance on any site and enable provision of trouble-free and reliable support for customers' businesses.

Ability to adapt to changes

We have built up a top-tier ability to adapt to changes by responding flexibly to shifting demands, challenges, and needs through numerous projects. Sankyu's history of responding to all kinds of customer demands has earned it a reputation as the company to call when in need.

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Sources of strength

Flexible response capability for coping with change

From logistics to engineering and maintenance, we have redefined our business fields according to the times and customers' needs. We have the flexibility to drive the evolution of our businesses across the organization.

Proposals that anticipate the social environment

We rapidly grasp social changes such as carbon neutrality and DX, and leverage our existing human resources and technologies in new areas.

Sources of strength

Flexible coordination with partner companies

Through subcontractors, we have strengthened our coordination with reliable partners. We maintain stable mobilization and coordination capabilities.

Integrated operation structure and mobilization capabilities

We have established an integrated system that includes transport, construction, and maintenance, while also developing mobilization capabilities to rapidly supply engineers in large numbers. From new construction to maintenance and operation support, we can provide a flexible and reliable response to any front line.

Sources of strength

Focused effort on education over many years

We have training sites in Japan and overseas, where we provide spaces for practical learning about technology, safety, and quality, and develop human resources by helping them acquire globally relevant skills.

Carefully designed education curriculum

We have put together an education curriculum that equips employees with vital skills and technical capabilities for frontline operations and business expansion to enhance their competitive advantage.

Sankyu's Value Creation Businesses and Competitive Advantages

Sankyu's Value Creation

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Businesses and Competitive Advantages

A wide range of business domains spanning logistics and plant engineering

Logistics Business Plant Engineering Business

Meeting customers' needs by maintaining physical and psychological proximity with them

Sankyu provides services that fuse the Logistics and Plant Engineering Businesses. In particular, in our on-site services, we are right beside our customers and deeply embedded in their frontline operations. In the logistics division, we undertake raw material and product transportation as well as supporting operations for production processes, while the plant engineering division deals with daily maintenance. This proximity enables us to rapidly pick up on customers' needs, such as introduction of new equipment, countermeasures for aging equipment, and production line changes, and to realize one-stop solutions covering all aspects from

Transporting a wide range of goods and materials using reliable technological capabilities over land, sea, and air

Providing a full range of services

from plant construction to maintenance

design to transportation, construction, and even operation support and maintenance. Using on-site operations as a starting point, we provide multifaceted services that go beyond the scope of simple logistics and maintenance.

On-site operations and logistics

• See the right hand page Daily maintenance

• See the right hand page

Supporting production front lines

Daily maintenance

International logistics

One-stop services connecting the world

Design Embodying customers' plans

We embody customers' plans by proposing

alongside customers

of plant equipment

to support stable operations

We combine multiple modes of transport, including overland, maritime, and air freight, to deliver all manner of items anywhere in the world. We provide a comprehensive range of one-stop logistics services to meet customers' needs.

specifications and construction of plant equipment and machinery and creating design drawings that look ahead to safety, durability, and operations. We meet customers' needs from a comprehensive perspective including construction, installation, and maintenance.

Our staff are stationed on-site at customers' plants to provide wide-ranging support for the entire production process, from receiving of raw materials to operation support for manufacturing lines, shipment preparation, and product warehouse management, as well as transport and materials handling operations on-site. Through our daily operations, we keep track of the frontline operation

status and changes in real-time and work closely with the

We conduct systematic daily inspections, cleaning, lubrication, light repairs, and so forth at plants such as steel mills, petrochemical plants, and electric power stations. Personnel responsible for daily maintenance are stationed on-site, enabling them to continuously monitor changes while directly checking the operation

Domestic logistics

Transporting anything and everything

Procurement and fabrication

Procurement and fabrication to support manufacturing

customer. We can accurately pick up on issues and needs whose detection requires a physical presence on the

status of equipment, machinery, and so forth. By constantly sharing information with the customer, we

In addition to transport services using trucks, rail, and coastal shipping, our warehouse operations also use high-performance equipment and systems to handle a wide range of freight types, from general to special items. We are also

We procure the necessary materials, machinery, and components based on the design specifications, and we also fabricate the machinery and plant equipment, either in-house or using a contractor. By rigorously managing safety, quality, delivery schedules, and costs, we support customers' manufacturing.

factory floor, such as operational efficiency issues and the aging of equipment, which allows us to provide optimal proposals.

can quickly detect abnormalities and respond rapidly, supporting stable operation of equipment and safe plant operations.

actively engaged in environmental initiatives, such as the introduction of a modal shift.*

Construction

Rigorous management of safety, quality, and construction

* Refers to an initiative to reduce environmental impact by switching to the use of rail and vessels such as ferries for transporting cargoes usually carried by automobiles such as trucks.

We install and assemble equipment and machinery that we have designed and fabricated, rigorously managing safety, quality, and

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3PL

Providing optimal supply chains

work execution. By providing comprehensive frontline support with consideration for processes and costs, we realize high construction

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We can propose the most efficient logistics solutions and provide the

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services in place of customers' own logistics divisions. In production

quality that customers can rely on.

logistics for major industries, we have earned high praise from our customers for providing optimal solutions across the entire supply chain

Maintenance

Supporting customers' stable operations

Logistics

Plant

starting from on-site operations.

Operation of ports, the gateways

We provide maintenance services-inspection, maintenance, and repair-

Business

Engineering

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Port logistics

for maritime transportation

for plant equipment and machinery in service. We support customers' stable

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With bases at almost all of the main ports in Japan, we conduct

operations including directing and overseeing on-ship and onshore cargo handling operations, shipping

agent services, and port warehouse operations handling import and export cargoes. We support port logistics with wide-ranging operations as a cornerstone of international logistics connecting Japan to the world.

operations by providing systematic maintenance activities, such as turnaround maintenance,* and flexibly responding to trouble to enhance equipment service life and productivity.

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* Turnaround maintenance refers to periodically shutting down all or part of a plant to conduct inspection, cleaning, and replacement of components, etc. with the objective of checking the soundness of the equipment in various kinds of plants including petrochemical, general chemical, oil refining, electricity generation, gas, and ceramics.

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Sankyu's Value Creation Sankyu's Value Creation

Sankyu's Value Creation

Management Strategy Business Report

Sustainability

Governance

Data Book

Sankyu's Value Creation

Since the founding of the Company, we have refined the abilities of the human resources who generate value on our front lines and expanded our business domains into logistics, construction, and maintenance, under our management principle of valuing people. In this rapidly changing environment, we aim to grow by meeting new needs of society and customers, and strengthening the value we provide. Going forward, we will continue to enhance the capabilities of our human resources and accelerate value creation toward realizing our purpose.

Acquire human resources

We have built a system that can mobilize human resources in Japan and overseas in coordination with our Group companies and partners. To establish a global human resource network, we are working together with cooperating companies in Japan, and overseas we are using training facilities to actively dispatch local engineers to workplaces in Japan.

Value creation on the front lines

The Company remains closely attuned to customers' businesses and provides solutions for issues on the front lines. Through our earnest efforts to address issues, we have continuously honed skills and technological capabilities, advanced work execution and management capabilities, and cultivated an ability to adapt and respond to needs on each front line. Human capital is the source of Sankyu's value creation. Through relationships of trust, we discover new customer needs and expand our business. We also work to resolve social issues and provide new value.

Enhancement of skills, technological capabilities and services (DX)

Strengthening value provided through growth investments

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Strengthen the Group's capability to

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e mobilize workers

Collaboration with partners

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Develop human resources

Recognizing that it is human resources that are the source of value creation, we have placed human resource development at the core of management. We operate four training facilities in Japan and two overseas, where we conduct level-specific training

Ability to adapt to changes

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Human capital

Skills and

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Win trust from customers

Sankyu Group's growth

Purpose

Thank you from our hearts.

SANKYU for life on our Blue Planet.

We at SANKYU are always grateful to the people around us. Together with our like-

based on participants' visualized levels of skills and technological capabilities. We aim to raise the overall level of skills and technological capabilities.

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Providing reliability, safety, and high quality

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Work execution and management capabilities

technological capabilities

Rebuilding

of supply chains

minded partners, we strive to continuously create new value to support the world's industries and protect this blue planet for all living beings.

Provide value on the front lines

Stationed at plants of various industries, including steel, petrochemical, electricity, automobiles, and daily necessities, our human resources conduct wide-ranging onsite operations, on-site logistics, construction, and maintenance. Human resources with a high level of skills and technological capabilities, who have accumulated expertise in response to the different process and management requirements at each worksite, provide value to front lines in each industry.

▶ For information about the strengths developed over our history, lease see A History of Value Creation on P11-14.

Use of digital technology

New societal and customer needs

Securing labor force

Reduction of environmental impact

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Special Feature 1

Logistics and Plant Engineering

Skills and technological capabilities

Work execution and management capabilities

Ability to adapt to changes

Our relationship with Nippon Steel since our founding

Sankyu's Business Continues to Support Nippon Steel

- What does a long-term partnership spanning a century entail?

Sankyu's journey began with its relationship with Nippon Steel's predecessor, the state-run Yawata Steel Works. For over 100 years, we have closely supported the growth of Nippon Steel while enhancing our execution capabilities on the production front lines.

1907	Sankyu's founding organization, Nakamura Gumi, started delivering iron ore to Yawata Steel Works by maritime transportation. Focused on streamlining on-site operations.
1918	Sankyu Transportation Co., Ltd. (now Sankyu Inc.) founded in Moji City. Started full-scale on-site operations at Yawata Steel Works.
1932	Established the Yawata Steel Mill Contract Logistics Providers Association and supported the integration of Yawata's subcontractors as a charter member.
1961	Solely received an order for construction work for Higashida No. 1 Blast Furnace from Yawata Iron & Steel Co., Ltd.

Today, we are involved in every process at multiple Nippon Steel sites, providing a full range of services including logistics, construction, and maintenance.

Broad scope of operations at multiple sites

〈 Operating Sites 〉 〈 Scope of operations 〉

Wide-ranging support for production front lines at a steel mill

Sankyu's business with Nippon Steel Corporation began in 1918, the

Hyogo Branch Plant Engineering

Setouchi Works, Hirohata Area

East Chugoku Branch, Kure Office

Setouchi Works, Kure Area

Plant Engineering

Ironmaking process

Logistics

• Raw material receiving and dispatching, raw material transport, and operation management

• Blast furnace and coke oven operational support

  Plant Engineering

  year Sankyu was founded. Starting with on-site transportation of raw materials such as iron ore and coal for Nippon Steel's predecessor, the

  Shunan Branch Logistics Plant Engineering

  Yamaguchi Works (Shunan)

  • Turnaround and daily maintenance of equipment

  • Construction and modification of equipment*

* Coke ovens, sintering plants, blast furnaces, and belt conveyors

state-run Yawata Steel Works, we became involved in operations such

Hikari Branch

Logistics Plant Engineering

Kimitsu Branch

Logistics Plant Engineering

as on-site operations and equipment maintenance, and today we are deeply involved with general operations at the production front lines of six steel mills in Japan.

Steel mills produce a basic material that is essential to daily living and industry. Blast furnaces operate continuously, 24 hours a day, 365 days a year, for decades. Giant production lines spread across a wide area, and the process for producing steel materials is operated with meticulous control.

Sankyu's operations play an important role that is directly connected to the stable daily operation of these constantly working steel mills. We conduct everything from handling cargoes of raw materials, operating yards, and cleaning and inspection of transportation equipment to on-site operations and logistics including operation support for blast furnaces and coke ovens, secondary processing such as grinding work on products, refining, and product inspection and shipment. In addition, Sankyu's Logistics and Plant Engineering Businesses offer frontline support for production at each steel mill. We offer services ranging from daily maintenance to turnaround maintenance, including performing corrosion checks and repairs for conveyor equipment and responding rapidly if issues suddenly arise. We are also involved in all aspects from construction to modification of equipment in each process of ironmaking, steelmaking, and rolling.

Our continuous, long-running services at multiple sites are

backed by Sankyu's distinctive strengths. These include skills and technological capabilities to carry out the contracted services, the ability to operate and manage production sites, and a positive, cando approach to requests, no matter how difficult. Furthermore, in an industry where operations tend to be separated by steel mill location or process, Sankyu has created an organizational culture and operating structure that enable us to flexibly deploy personnel from our branches throughout Japan. Having the mobilization capability to flexibly redeploy human resources across sites gives us a unique competitive advantage over other companies. We are often the company that clients turn to when they are in need, and in fact, in gaining trust by taking on projects that other companies shy away from, in many cases we have expanded our scope of operations into new areas.

Leveraging our comprehensive capabilities to undertake all operations from logistics to construction and maintenance, we work with customers daily as part of their frontline production team, continuing to meet their diverse needs. This approach has steadily built trust, helping to expand our scope of operations.

Yamaguchi Works (Hikari)

Yahata Branch

Logistics

Plant Engineering Kyushu Works Yawata Area (Tobata)/ (Ogura)/(Yawata)

Oita Branch Logistics Plant Engineering

Kyushu Works, Oita Area

East Nippon Works, Kimitsu Area East Nippon Works, Kashima Area

Tokai Branch Plant Engineering

Nagoya Works

Kansai Branch Logistics Plant Engineering Kansai Works, Osaka Area (Sakai) Kansai Works, Wakayama Area

Setouchi Works, Hanshin Area (Sakai)

Steelmaking process

Rolling process, finishing process

Logistics

• Handling of semi-finished products, ancillary casting operations, slab grinding, shipment inspection, heavy transport

  Plant Engineering

• Turnaround and daily maintenance of equipment

• Construction and modification of equipment*

  * Basic oxygen furnaces and continuous casters

  Logistics

• On-site product transportation and shipment

• Product packaging, secondary processing, finishing, and inspection

  Plant Engineering

• Turnaround and daily maintenance of equipment

• Construction and modification of equipment*

* Rolling mill, plate mill, and cold rolling mill equipment

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CASE East Nippon Works, Kimitsu Area

Support for the production front line across the entire site at a steel mill

An operation of approximately 3,000 personnel supporting the production front line in the East Nippon Works Kimitsu Area

Sankyu is currently providing services on-site in the East Nippon Works Kimitsu Area, with an operation of approximately 3,000 personnel, comprising approximately 1,400 Sankyu employees and 1,600 employees of cooperating companies. We contribute to stable operations from the areas that are closest to the production front line, covering on-site logistics from raw material handling to rolling facilities and a wide range of production processes including patrol inspections, cleaning, and repair of facilities, as well as turnaround maintenance and construction work.

The start of this operation goes back to construction work in 1964, with the work on the cold rolling plant starting the following year in 1965. Since then, we have built a long-standing relationship while having staff stationed on-site in the Kimitsu Area, and steadily expanded our scope of operations. In 2017, we rejuvenated an aging coke oven, and this led to our involvement in construction work to renew coke ovens and facilities.

Generally, there is a structure where on-site operations at

steelworks are allocated to partner companies by area. Even within this structure, however, Sankyu has responded flexibly to customer requests concerning operations outside of its allocated area. This kind of response capability means that people in charge of production sites find it extremely beneficial to ask Sankyu to handle operations. We have intimate knowledge of frontline operations and the ability to continue responding steadily during difficult phases. The accumulation of these efforts over time has established Sankyu in a position of trust and responsibility in the Kimitsu Area.

Sankyu's frontline capabilities keep steelworks in continuous operation

In the Kimitsu Area, there are many cases in which highly difficult jobs suddenly occur, depending on the status of operations. Sankyu has established a structure for handling these situations in which the frontline personnel autonomously consider the best approach to handling the job and take action immediately. For example, when trouble suddenly occurs late at night, personnel in charge of logistics and plant engineering come together from all departments, restoring operations on the front line in several hours. This flexible

approach is made possible by the daily face-to-face dealings with customers by supervising personnel, such as workplace managers and leaders, and a frontline-led culture where judgment, proposals, and execution are all carried out to completion on the front line. We have an entrenched culture on the front line of taking responsibility and acting with initiative, rather than simply waiting for instructions. Furthermore, we have also prepared systems for calling for assisting staff from other branches as needed, so that even when we are unable to completely handle an issue within the Kimitsu Branch, we can draw on human resources and expertise from all over Japan. Our cross-divisional, multi-site operating structure for handling everything from daily operations to urgent responses is one of Sankyu's main strengths.

Challenges and outlook for responding to changing needs going forward

In the Kimitsu Area, the on-site operations environment is changing dramatically. In particular, with human resource shortages expected to accelerate at Nippon Steel and all of our partner companies, Sankyu expects to see even higher demand for its mobilization

capabilities. On-site operations cannot be mastered overnight; they require several years of experience. Therefore, continuously securing and developing human resources is an urgent task. To continuously execute a wide range of operations on-site without stopping, it is essential to have a stable personnel structure, so there is a need to create recruitment and training systems with an eye to the future. In addition, it is also necessary to respond to social demands, such as carbon neutrality. To maintain operations in a working environment that includes high temperatures, 24-hour operation, and outdoor work, with aging on-site equipment and limited personnel, mechanization and automation using the latest technologies, such as AI and robots, are essential. In the Kimitsu Area, we have already introduced small-scale heavy equipment for cleaning the area around belt conveyors and started trialing remote operation. We plan to expand the areas for application of these technologies going forward.

Sankyu will differentiate itself from other companies by leveraging its mobilization capabilities, skills and technological capabilities, and adaptability to changes, to further enhance the value of its presence in the Kimitsu Area. In addition, we will aim to further expand our scope of operations by utilizing our partnerships.

〈 Scope of operations in the Kimitsu Area 〉

Comment from frontline employees

Receiving raw materials smoothly to support operation flow

Imported iron ore is temporarily stored in a yard. My job is to manage the storage location and amount of raw materials brought in from the port. Weather and machinery trouble can necessitate sudden changes, and we respond flexibly according to the situation on-site in each case. I

Detecting abnormalities before anyone else to prevent trouble

I am responsible for inspecting the belt conveyors that carry the raw material iron ore. If even one of the almost 300 belt conveyors stops, the entire production line stops. Therefore, we have a day and night patrol to check for unusual noise, heat, and other signs of abnormality, and to ensure that

meet with the customer twice a day to align work plans

and ensure smooth receipt and dispatch operations at the yard.

Responsible for Yard Measurement

Yuya Aki

sediments are not overlooked. Early discovery and initial

response prevents trouble and maintains operation without stopping raw material supply.

Responsible for Operation Inspection

Yukio Shirai

• Vehicle management

Maintenance and support of a wide range of special vehicles for exclusive use on-site, such as tank trucks and scrap-hauling vehicles and including both Sanyku's vehicles and those of partner companies, are conducted.

• Operation management

Under a 24-hour system, work instructions and requests for transport are received and coordinated by frontline operators. Those fielding these orders play an important role that provides background support for the on-site logistics of the overall Kimitsu Area.

Rolling mill

Source: Nippon Steel Corporation's official website

Ironmaking process Steelmaking process Rolling process, finishing process

Raw material handling

Yard operations Sintering facility

Coke oven

Blast furnace Basic oxygen furnace

Source: Nippon Steel Corporation's official website

Source: Nippon Steel Corporation's official website

Courtesy of Nippon Steel Corporation

Courtesy of Nippon Steel Corporation

▶ Raw materials

Logistics Plant Engineering

▶ Sintering facilities and coke ovens

Logistics Plant Engineering

▶ Blast furnace

Logistics Plant Engineering

▶ Steelmaking

Logistics Plant Engineering

▶ Rolling and cold rolling mills

Logistics Plant Engineering

Handling a wide range of operations from raw material handling to receiving and dispatching at the yard, raw material truck transportation, environment maintenance, mechanical equipment maintenance, and equipment renewal construction

Handling operations from inspection and repair of ancillary operation equipment, environment maintenance, measurement of coke oven temperature, and maintenance operations for mechanical equipment to equipment renewal construction

Handling runner maintenance work, including construction and maintenance of blast furnace hot metal and slag runners, as well as mechanical equipment maintenance

Handling transport of molten steel ladles by heavy trailer, transport of slag by truck, maintenance operations of basic oxygen furnace equipment and secondary processing and finishing equipment

Handling maintenance and inspection of steel pipes, processing operations, equipment maintenance/ daily inspection/spare parts maintenance, and cold-rolled coil crane operation in the cold rolling process

Supporting areas related to the overall steelworks

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Special Feature 2

Plant Engineering

Skills and technological capabilities

Ability to adapt to changes

Meeting the Challenge of Aging Social Infrastructure with Frontline Capabilities and Digital Technology

- Renewal of a 70 - year- old hydroelectric power station without the original design drawings

Site management for safety and efficiency

Operational safety was another important issue for this construction project. In particular, welding operations inside the penstocks required the introduction of equipment with a stopper function to prevent workers from falling, and a system was set up to enable rapid rescue in the event that a fall occurred. We took rigorous safety measures, including the installation of ventilation equipment to protect workers from organic solvent and welding fumes.

Furthermore, we also used Building Information Modeling (BIM) for this project to smoothly coordinate the many processes and relevant personnel. When conducting complex operations such as the restoration of concrete inside the power plant, a high-precision digital recreation of the structure enabled all of the people involved to grasp the situation on the site with the same perspective. As a

An image of the completed project created with augmented reality was able to be confirmed using a smartphone.

result, we achieved an even deeper understanding of the site and were able to proceed with construction as planned.

Positioning of the social infrastructure business in Medium-Term Management Plan 2026

Sankyu is working to enter new business domains as a basic strategy

electricity for approximately 60,000 households, it is an important lifeline for the local community.

However, after long years of operation, the facility had aged and required renewal work. The renewal work was located half-way up the slope of a rugged mountain range with poor ground conditions, and the

Using accumulated experience and technology to step out in a new direction

of Medium-Term Management Plan 2026, with a focus on the social infrastructure domain.

As Japan's social infrastructure ages, under-resourced local governments are increasingly outsourcing maintenance to the private sector. Sankyu is leveraging skills and technological capabilities cultivated through plant construction and maintenance to create a structure that will help us to realize early commercialization in the social infrastructure domain. We aim to expand into diverse fields using our existing strengths to take on the challenge of new business domains.

Using the latest technology to revive a 70-year-old power plant without the original design drawings

Sankyu received this order as an initial foray into a new business domain. It was our first hydroelectric power plant facility renewal project. Hydroelectric Power Plant A is located in a mountainous area of the Kyushu region, and has supplied 85% of electric power demand in the area for over 70 years since its construction in 1950. As the supplier of

work was carried out over elevation differences of up to 70 m. Moreover, since none of the original design drawings or photographs from the time of its construction remained, it was a huge challenge that presented a number of difficulties.

To overcome these issues, Sankyu first used a 3D scanner and a drone to conduct a high- precision survey, then used the data obtained to create 3D renderings. Before beginning construction, we made a detailed assessment of the site, and created a safe and efficient construction plan. Furthermore, long pipes, approximately 120 m in length, had to be laid at a steep angle of 45° for installation of penstocks, which use the elevation difference to carry water taken from a river down to the power plant. However, due to the mountainous location, heavy machinery could be installed at just one midpoint position. Sankyu met this challenge by adopting a special wire pulling system, wrapping heavy items in wire so that they could be winched up and down, as well as side to side.

This system made it possible to install the penstocks under constrained conditions, and also achieved a significant cost reduction.

3D rendering

The project was the first full-scale hydroelectric power plant facility renewal project for Sankyu. Renewing a 70-year-old facility without the original design drawings was an extremely difficult challenge. Junior employees played a central role in developing and executing detailed construction plans tailored to the actual site conditions. The full renewal of the power plant, from the sluice gate through the

generator to the water discharge, was executed successfully without any accidents or incidents. Thanks to the creative ingenuity of the project team members and cutting-edge technologies, we were able to revive an essential part of the electricity infrastructure for the local community. This successful project was a valuable experience for Sankyu in its challenge to enter new business domains.

Project period: August 2022 to April 2025

Project overview: Installation of an access bridge, renewal of penstocks, renewal of overhead crane, renewal of a debris removal building, restoration of power station concrete

Since the original design drawings for this site had been lost, and the ground formation was unclear, we had to start from zero with surveying. The hardest part was eliminating risks at the construction planning stage. Due to the characteristics of the construction site, the machinery we worked with entailed some risks, but we focused on countermeasures for falls and for welding ventilation, and we were able to complete the project without any accidents or incidents, which was an excellent result. Moreover, in addition to Sankyu, multiple cooperating partner companies were also involved with the worksite, necessitating meticulous adjustments to plans. If a process was shifted by just one day, it could cause a double-up with another company, so it was extremely important to create a schedule and keep to it rigorously. Going forward, we believe the experience we have gained through this project will be extremely useful when dealing with renewable energy-related facilities, and we intend to make widespread use of the knowledge that we have accumulated.

(From left)

Atsumi Inoue, Yahata Branch (responsible for renewal of penstocks, renewal of overhead crane)

Hiroki Suenaga, Civil Engineering Dept. (responsible for renewal of penstocks, installation of access bridge)

Makoto Shiotsuka, Civil Engineering Dept. (responsible for renewal of penstocks, renewal of debris removal building, restoration of power station concrete)

Comment from frontline employees

After the construction

Structure of a typical hydroelectric power station

Sluice gate

Generator

Penstock

Turbine

Water discharge

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Special Feature 3

Overseas and Logistics

Work execution and management capabilities

Taking Up

Ability to adapt to changes

Comment from the local subsidiary president

Outlook for the Indian market and Sankyu

the Challenge of India's Giant Market

- Frontline capabilities build unshakable trust through safety and quality

Business development

Trust in quality supported

SANKYU INDIA LOGISTICS & ENGINEERING PRIVATE LIMITED

Mikito Kanda

India's manufacturing industry is expected to continue growing at an accelerating pace. Japanese companies considering entry into the local market must make a wide range of preparations

in the growing Indian market

With the world's largest population, exceeding 1.4 billion people, India is expected to become the world's third-largest economy by 2027. The advance of the manufacturing industry and the emergence of the middle class are bringing the country into a period of unprecedented growth. With a multitude of global corporations entering India at an accelerating pace, Japanese companies also continue to invest aggressively, and India is gradually establishing its position as one of the world's leading manufacturing hubs. Sankyu has positioned India, with its rapidly growing economy, as one of its key markets for expanding its overseas business, a basic strategy in Medium-Term Management Plan 2026.

Since entering India in 2008, Sankyu has leveraged its quality and frontline capabilities to support the local manufacturing industry. Currently, we have a network of 10 locations including Delhi and Chennai. We provide one-stop services covering everything needed from plant construction to operation, including transportation and installation of heavy machinery and equipment when setting up a plant, and after the plant has started operation, maintenance, transportation of raw materials and components, transport and export of products, warehousing operations, and operational support for production lines involving several hundred personnel.

A strong local operation base

To ensure the successful manufacturing operations in India, it is essential to establish a stable human resources system that can compensate for challenges such as absenteeism. Sankyu has 477 regular employees and a corps of approximately 1,150 temporary employees throughout India, forming an operation base that can respond flexibly to changes in production plans and demand for increased production during busy periods.

In addition, in line with local conditions, we are implementing strategic human resource placement in designated areas. In certain areas of southern India in particular, such as Sri City, we have concentrated around 500 personnel, enabling us to immediately dispatch supporting personnel when absenteeism occurs at a manufacturing site in the surrounding area, or if a rapid increase in production is needed. This agile mobilization capability and continuous human resource supply not only supports stable operations locally, but also helps with trust-building and new customer acquisition, which are creating a competitive advantage for Sankyu's India business.

by Japanese manufacturing

While many Japanese logistics companies have partnered with local firms through M&A, Sankyu is building its own independent structure to enable direct deployment of its expertise cultivated in Japan. Japanese staff share their expertise directly with local staff, as they build Sankyu's business base in India. As a result, Sankyu is working to embed the fundamentals of Japanese manufacturing, including standardization of operating procedures aligned with Japanese quality standards, rigorous safety management, and introduction of systems for improvement proposals from the front lines. These have earned high praise from our customers. In the Indian market, where quality standards are different, we are building our own procedures to suit Indian manufacturing front lines based on the approaches used in Japanese manufacturing.

for starting up operations, such as selecting a site for a plant, acquiring various licenses and permits, and securing human resources.

We have accumulated extensive practical experience in India. Drawing on this experience, we share practical expertise with companies entering India for the first time, not only on logistics operations, but on aspects such as specific steps for setting up a plant, license and permit application processes, and even how to create systems for local human resource development. One of our main strengths is our ability to go beyond simply explaining procedures to provide concrete advice on a practical level.

In 2024, we established a large-scale logistics center to serve major Japanese manufacturers. The facility serves as a logistics infrastructure that supports production and sales sites in India's domestic market, while also functioning as an export base for Africa and the Middle East. Going forward, it will also serve as an export hub for other overseas markets, contributing to the building of our customers' global supply chains.

We are pursuing new opportunities in this growth market together with Japanese manufacturers, leveraging our work execution and management capabilities, as well as our ability to adapt to changes. In the complex and challenging Indian market, we will continue to contribute to our customers' business success by making full use of our frontline capabilities.

Rigorous application of operating procedures and safety management based on Japanese standards

Comment from frontline staff

Sankyu's culture fosters strong trust

I work as a manager in the warehousing and transportation division of the Garhi Harsaru Warehouse. At this warehouse, we manage over 4,000 diverse products and handle just-in-time deliveries for automotive parts manufacturers. We have not been late on a single delivery since the operation started. I see the Company's strength as its "ability to adapt to changes." We have earned trust by continuing to meet customers' exacting demands properly, and we now have a reputation as a reliable provider of services that other companies would

struggle to provide.

As a result, our current customers are also expanding their requests. I think this growth is underpinned by the culture of close cooperation between management and the front lines. In this way, the culture has been promoted even among contract employees, with the overall organization working as one with a dedication to safety and quality. I hope to continue delivering Sankyu's quality to an even wider area going forward.

Division Manager

Devprakash Sharma

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CASE Unicharm Corporation

Supporting stable supplies of

"We cannot operate

Client Voice

hygiene products in India

Unicharm Corporation has achieved outstanding growth in the Indian hygiene product market. At a plant operated by a local subsidiary, Unicharm is manufacturing products around the clock, with over 1,000 employees supporting the production line day and night. However, on India's manufacturing front lines, high rates of absenteeism are common, presenting a huge challenge to stable operations.

the factory without Sankyu."

Reliable execution capabilities supporting stable operations

Sankyu manages around 1,000 personnel at our factory, working under a 24-hour system. Ensuring that the fundamentals are carried out properly is actually very difficult to achieve in India. Sometimes we suffer from high rates of absenteeism after holidays, but Sankyu helps to minimize the impacts on production through its links with partner companies.

India has extremely large fluctuations in seasonal demand. The winter cold drives high demand for paper diapers, while in summer, the heat causes them to be used less frequently. In summer, the volume of diapers used decreases as people feel it is OK not to use them during the heat of the day. Production adjustments are needed to cope with the seasonal fluctuation, and the obstacle to this is securing human resources. During the winter busy season, other companies also need human resources, creating competition to acquire them in the areas around the factory. Moreover, since high absenteeism rates can be an issue, it is extremely important to ensure that the necessary numbers of workers are secured.

We put the highest priority on safety, and Sankyu shares this value with us. Sankyu implements Japan-level safety standards in India, rigorously minimizes losses in our production process, and takes an uncompromising approach to quality. This has contributed significantly to improving our productivity.

Unicharm India Private Limited Director

Takuya Matsumoto

An indispensable partner

People on the front line maintain that we cannot operate the factory without Sankyu. I have heard this from a number of managers at our factory, and I wholeheartedly concur with them. Sankyu is more than a simple cooperating company; it works alongside us to identify issues and find solutions. We highly value this approach to partnership.

At our No. 3 Factory, which started operation in January 2025, we are also asking for Sankyu's assistance on aspects from on-site materials management to the manufacturing area. What we value most about Sankyu is their efforts on safety management and human resource development, while keeping a balance between quality and cost. Their frontline operations are supported by thorough education and training, and they engage with problem-solving sincerely. This comprehensive approach makes them an indispensable partner for our factory operations.

Company profile

Popularization and spread of hygiene products in India

Initiatives for safety and quality

Unicharm Corporation

Sankyu provides on-site logistics and operational support services

The top priority on the factory floor is of course safety. Drawing on

A hygiene product manufacturer established in 1961. The company has a wide range of products, such as the Moony and Mamypoko range of paper diapers, Lifree adult diapers, Sofy period products, and a pet care range. It has a high global market share. Unicharm established an Indian subsidiary in 2008. Currently, it is expanding its operations with a focus on Asia.

Unicharm India's Sri City Factory

at Unicharm India Private Limited's Neemrana Factory and Sri City Factory. Approximately 550 workers at the Sri City Factory and approximately 100 workers at the Neemrana Factory perform a wide range of services to support the overall manufacturing process, from raw materials reception, storage, inventory management, and supply to production lines to assisting with packaging operations. Sankyu employees are required to manage the situation effectively, remaining focused on future developments at all times, amid a sense of urgency that any stoppage of a production line could lead directly to delayed plans and significant losses.

Furthermore, human resource management is an essential theme when talking about manufacturing in India. Companies cannot afford to overlook issues such as the rise in personnel costs each year driven by economic growth, as well as strike risk, and securing human resources. In this situation, Sankyu has leveraged its strength in being able to reliably mobilize the necessary human resources to provide long-term support for Unicharm's production sites. By centrally managing a large number of cooperating partners and handling recruitment, training, and

Displaying rules to be observed inside the factory

shift arrangement, Sankyu has built a system that prevents confusion on the front lines and can cope with sudden worker absences or demand fluctuations. Significantly reducing the complexity of management leaves customers free to focus on production operations. We are also focused on building relationships with villages in the areas close to factories. Since much of the recruitment in India is done through personal networks, we have been able to increase retention rates significantly by having repeated conversations with village leaders and providing environments that make it easy to work, such as setting up dormitories. It is only through these links with local communities and attentive human resource management that we can achieve stable operations capable of supporting production plans that

fluctuate with each season.

its past experience, Sankyu has developed rigorous safety measures that address both physical and non-physical aspects. We place particular emphasis on education, striving to increase employees' awareness of safety through regular safety education and training. In addition to daily safety patrols inside the factory, we pay particular attention to fire countermeasures, sharing the importance of initial fire extinguishing measures and conducting regular training with the aim of strengthening employees' ability to stay calm in an emergency.

Quality control is another aspect where we are working to incorporate rigorous expertise cultivated in Japan in alignment with local specifications. We have established standard operating procedures and a system of quality checks, and we are striving to ensure that the fundamentals are carried out properly. A key element of this initiative is our Indian assistant managers, who correspond to section manager level personnel in Japan. They lead the front lines, and conduct personnel interviews four or more times per year with a view to raising employees' skills and motivation. Such continuous, steady efforts support the front lines of stable operations.

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