Note: This round-table discussion was held on June 18, 2024.
Round-Table Discussion With Outside Directors
Business strategies and human resource development, that utilize the strengths of the Company, are an issue of materiality as we work toward medium- to long-term growth of the Company.


Round-Table Discussion With Outside Directors
Business strategies and human resource development, that utilize the strengths of the Company, are an issue of materiality as we work toward medium- to long-term growth of the Company.
More in-depth discussion is required for long-term growth
In our evaluation of the Board of Directors’ effectiveness in FY2024, more in-depth discussion of important management
issues was designated as a point to be addressed in future.
Tell us about what kind of governance frameworks we should work toward in future.

TaniWith regard to the effectiveness of the Board of Directors, I think that diligent action is being taken to improve effectiveness, and the Company’s governance framework is steadily improving. In terms of issues for the future, I think board of directors needs to focus a little more on long-term growth strategies, discussing the Company’s business portfolio and measures to strengthen profitability based on the Company’s strengths. Initiatives for innovation and a change in awareness about capital efficiency are also important. On that point, there are some areas where outside directors do not have enough knowledge and information about the specifics of the Company’s businesses, so I’d appreciate it if the Company could create a way to supplement our discussions with the Board by providing a venue for free discussion, apart from Board meetings.
SugaI feel the same way. It’s important to gather around the table and exchange frank opinions, so if possible I think the Company should provide a venue for meetings that are informal but make it easy to discuss specific matters.
MichibayashiIf you’ve considered expanding the Company in the medium to long term, considering that there’s no room for increases in the capacity of the Kawasaki Plant, inevitability alliances with other companies become an increasingly likely option. In that case, a major issue will be finding companies who see eye to eye with our company in the course of its management, and companies that are viable partners.
From the perspective of the materials industry, it will be difficult to simply build new businesses. Realistically, what are our options in order to achieve the Company’s growth strategies? It’s important to delve into that.
EtoIn last year’s Integrated Report, I pointed out that having only one production site creates a bottleneck and asked how that issue should be resolved. It’s important for the Board of Directors to properly determine what initiatives need to be taken in the next few years with the next 10, 20, 100 years in mind. For example, the Company has already begun deliberating on points like whether to keep stainless steels as the sole linchpin of its business or whether to broaden its scope and change its portfolio. Growth strategies for the future unquestionably need to be discussed at Board of Directors’ meetings.

Tell us about issues the Company faces in achieving the Medium-Term Management Plan 2024 that commenced last year.
TaniAfter full-scale operation of the new electric arc furnace commenced in2022, other large equipment is set to be introduced, including a new cold
rolling mill.
I think that in order to get the return that was initially anticipated on those capital investments, the first critical step is to build a framework for stable operation.
Then there’s the human issue. With these pronounced worker shortages, I think it is extremely important to strengthen personnel strategies in order to determine what kind of personnel we need to secure and how we should
secure them.
EtoI also think that hiring and training personnel is a major issue. Another difficult issue is gaining the ready-to-work personnel and production site staff needed to grow the Company’s overseas businesses. The Company has begun utilizing DX strategies as an important tool to supplement the staff’s work, but there will always still be areas that need human eyes, so it’s a matter of how to secure those personnel; the Company needs to be one where diverse employees can thrive.

SugaObviously hiring and training personnel is important, but it is also important to be aware of turnover and retention. Going forward, the Company needs to secure personnel while also being properly aware of the productivity per staff member and considering how to improve that.

MichibayashiHaving good personnel throughout the Group and improving the capabilities of the entire Group is a major issue. As the Company transitions to high-performance alloy products, a key measure in the Medium-Term Management Plan, the Company needs to utilize the Group companies that handle downstream processes in its business strategies.
The value of continuing anti-takeover measures
While other companies retire their anti-takeover measures, Nippon Yakin Kogyo got approval at last year’s general meeting of shareholders to keep its measures in place for three years. What are your opinions as outside directors in light of this?
TaniI think that there is some validity to the Company’s anti-takeover measures. On the other hand, the facts are that there is less need for these measures than before since the environment surrounding takeovers has changed and the Ministry of Economy, Trade and Industry has issued guidelines on takeovers.
So I think it is important to have another discussion about the options the Company should take, including emergency measures against takeovers.
With that said, it goes without saying that as a rule, the first consideration should be to present a solid vision and strategies for the future to the Company’s shareholders, increase share prices through sustainable growth, and improve the Company’s value. I think that is the best measure.
SugaAs I understand it, the Company needs to consistently take the view of whether its current medium- to long-term growth plan and business operations are suitable from a third party’s perspective or whether there is a better approach. I’d say it’s important to take an objective view and not consider a takeover an inherently bad thing.
EtoI think the value of having anti-takeover measures is that it provides enough information and time for the shareholders to make a proper, reasoned decision. By no means is it because the members of the current management lineup want to stay as managers here forever. If a company that can grow these businesses more than this company appears, I think we should consider their proposal with a positive view.
MichibayashiWe are no longer in an age where having measures like these provides security. I think we need to probe further into how much point there is in maintaining these measures. With that in mind, it will be useful to have a system in which the matter is discussed at Board of Directors’ meetings each year to decide whether to continue these measures.
Note: A decision to continue the anti-takeover measures this year was made at our Board of Directors’ meeting in June 2024.
Looking to the future of Nippon Yakin Kogyo
Tell us your expectations for Nippon Yakin Kogyo in future.
MichibayashiAll kinds of things have happened in the eight years since I was appointed as an outside director. I am pleased to see that we have rebounded from those difficult times and are now at a point where we are aiming for a PBR of 1. I think everyone giving 120% is the reason why we’ve been able to increase profitability this much and increase wages, and are finally at a stage where we can manage the Company with a view to the future.
SugaI think the Company has a lot of multitalented employees who can handle many different roles. But if we take a more big-picture view, the Company has a monoculture. Basically, the Company specializes in the production and sale of stainless steel.
Going forward, the Company needs to hire people with different ways of thinking and different values. When an organization has the stimulation of views you never knew existed, that makes the organization stronger.
EtoI can see that the Company has come through those difficult times and is now looking forward. But if the Company remains satisfied with the way things are now, it will regress, so I want the Company to work toward new growth with different ideas from those it has acted on so far.
TaniI have high hopes for the young generation who will be our next managers. I want them to think carefully about the next 100 years, things like how they want the Company to be and how it should contribute to society. I don’t want them to just do their jobs; I want them to use their heads and create new things. I want them to build a culture of taking on new challenges without fear of failure.
Message from a new officer
Toward sustainable growth of society and the Company
Mariko Ogawa, Outside Director
In addition to my experience in finance both inside and outside Japan, I have worked in
an advisory role at consulting companies, providing advice on infrastructure-building
and finance in public-private partnerships. Through discussions with central and regional
governments and companies in Japan and various other Asian countries, I have
experienced the differences in the stances and ways of thinking of the public and private
sectors, and learned that when both sectors work together to build a business, that is
when you get a sustainable business.
I have heard that Nippon Yakin Kogyo is working on initiatives such as improving
the effectiveness of its management’s governance, the transparency of its governance
processes, and enhancing its human capital. I think that our various activities aiming for
provision of materials that will be useful for future society and creation of a company
where the next generation can work with satisfaction will be improved by an
environment where diverse personnel can thrive and everyone can share their opinions. I
will utilize the diverse perspectives I have learned inside and outside Japan to contribute
to sustainable growth of society and the Company.



