President and Representative Director, Chairman of the board Natsunosuke Yago

We want to thank you for your interest in EBARA CORPORATION and the EBARA Group. We would like to take this opportunity to summarize EBARA’s corporate philosophy and management objectives.

The corporate philosophy of the Ebara Group is “to contribute broadly to society by offering superior technologies and optimal services in the areas of water, the air, and the environment.” The Group is committed to responding to a wide range of social needs by minimizing the impact of its activities on the natural environment and engaging in corporate activities that contribute to the creation of a sustainable, recycling-oriented society. Moreover, the Group aims to be a corporate entity in harmony with the natural environment, giving full consideration to environmental management to minimize the burden its corporate activities place on the environment, both directly and indirectly. In addition, the Group’s basic management policy is to endeavor to strengthen its management base and increase profitability through selectivity and concentration in the allocation of its resources and increase its corporate value and the value of its shares by managing its corporate resources efficiently.

The Group will implement its business activity in accordance with new medium term management plan “E-Plan 2010” which began in fiscal 2009. The Group has defined the period of this management plan, extending from fiscal 2009 through fiscal 2011, as “a period for restructuring the Group’s management foundation,” when it will review its overall business implementation system and address and resolve the issues identified. The period of the plan is positioned as a time for preparing for the next management plan (extending from fiscal 2012 forward), which will be “a period for taking up the challenge of business expansion.”

Medium-to-Long Term Management Policies
　(1) aims for sustainable growth in earnings,
　(2) works with its customers to achieve growth, and
　(3) wins the confidence and trust of society in general.

Under this plan (E-Plan 2010), the Group will maintain the following basic stances:
・	Work to further increase the profitability of existing businesses that have a strong operating base and work to make an early withdrawal from those businesses that have no prospects for improvement in profitability,
・	Give priority to improvement in profitability in the allocation of limited human resources, and
・	Make effective use of the Group’s assets, allocating them on a priority basis to those businesses that are generating profits and employing the resources necessary to withdrawing from unprofitable businesses.

Under this plan (E-Plan 2010), the Group will implement its management with the following concerns.

1.	The Group’s Concerns as a Manufacturing Enterprise
		The Group is aware that manufacturing and marketing superior hardware and providing top-quality supporting services are the keys to business growth. The Group will further polish its capabilities in the areas where it is strong and will aim to be one of the world’s leading manufacturers of industrial machinery.
2.	Concern for Improving the Natural Environment
		By continuing to provide products and services that conserve energy and contribute to preserving the natural environment, the Group intends to contribute to improving the earth’s environment and assist in passing this improved environment on to the next generations. At the same time, we will endeavor to improve our own work environment, which is the place where we work to achieve self-fulfillment.
3.	Concern for Internal Control Systems and Improvement in Operating Efficiency
		To create a culture that emphasizes compliance, we are continuing to work not only to enhance our internal control systems and enhance management transparency but also to improve operating efficiency.
4.	The conceptual origin of the Group’s business activities is “meeting customer needs,” and devoting our efforts to meet customer needs is the way we have grown. We will aim to accurately identify and anticipate customer needs, which change from one era to the next, and, by responding to these needs, will work to enhance customer satisfaction and, at the same time, work toward the further development of the Group. Under this plan (E-Plan 2010), the Group as a whole will focus on the following two fundamental items.
5.	Strengthening the Business Base for Sustained Growth
		Going forward, the Group positions strengthening of its business base as a priority issue for sustained growth. To this end, the Group has planned and will decisively implement the following measures.
	i)	Promote Selectivity and Concentration
	・	The Group will withdraw from unprofitable businesses without prospects for improvement and businesses that require an extended period for recovery of invested capital. This will apply to such business whether they are within the parent company or subsidiaries.
	・	The Group will allocate capital on a priority basis to those businesses that have the potential of attaining annual sales in excess of ¥100 billion and a ratio of operating income to sales of greater than 7% (the standard pump business, custom pump business, compressor business, and precision machinery business), with the aim of attaining further increases in sales and improvement in product profitability.
	ii)	Establish a Business Base from a Global Perspective
	・	The Group will enhance the efficiency of its systems for international marketing and support services for its product groups that are marketable globally.
	・	For those product groups that lack international marketability, the Group will ithdraw from such businesses or projects in overseas markets and will have them continue their operations focusing on the domestic market.
	iii)	Improve Cash Flow
		With the exception of those new products and businesses where the Group will make developmental investments looking to the next medium-term plan in fiscal 2012 and later, all companies will be expected to generate positive free cash flow within two years.
6.	Implementing Corporate Activities that Emphasize Compliance
		The Group will emphasize compliance and implement its corporate activities through appropriate and legal business processes. To this end, the Group will strengthen and upgrade its internal control systems and will implement a range of measures on a Groupwide basis that will enable a spirit that truly emphasizes compliance to take root in its corporate culture. In addition, the Group will review its individual business processes and strengthen internal controls, with the objectives of eliminating waste and duplication in its operations and improving efficiency. Under this plan, the Group will establish concrete action plan to achieve objectives of management for sustained growth, and will decisively implement these measures so that satisfaction may be ensured for stakeholders and will aim for maximization of corporate value and stock value.

We look forward to your continuing support and encouragement.

2008.06