Air Water : Overseas business strategy(2Q FY2019)

Second quarter financial results briefing topics

Overseas business strategy

1. Industrial gas business in India
2. Overseas engineering business in North America
3. High-powerUPS (uninterruptible power supply) business

November 8, 2019

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Business strategy 1: Industrial gas business in India

To establish a strong position in India's industrial gas market: About 12% share

Acquisition of business from Praxair India

• Date of business acquisition: July 2019 (included in the scope of consolidation from

■ Scale of business:	the 2nd quarter of fiscal 2019)
Sales of about ¥7.9 billion/year (in the year ended
■ Company-owned facilities:	December 31, 2018 )
3 on-site ASUs for steel plants (in Jamshedpur)
■ Main supply destination:	2 cylinder-filling stations (in Parbangla and Asansol)
Tata Steel Ltd.

Acquisition of business from Linde India

• Date of business acquisition: December 2019 (schedule)

■ Scale of business:	Sales of about ¥ 5.7 billion/year (in the year ended
■ Company-owned facilities:	December 31, 2018 )
1 on-site ASU for steel plants (in Bellary)
■ Main supply destination:	2 cylinder-filling stations (in Hyderabad and Chennai)
JSW Steel Ltd.

Establishment of an "upstream business" through the acquisition

of on-site supply bases and liquefied gas production bases

Ellenbarrie Industrial Gases Ltd.

■ Established in:	1973 ※ Made into AWI's subsidiary in 2013 (equity stake of
■ Scale of business:	51%)
Sales of about ¥2.6 billion/year (in the year ended March
■ Company-owned facilities:	31, 2019)
3 ASUs (in Ulveria, Vizag and Hyderabad)
	5 cylinder-filling stations (above-listed 3 hubs with ASUs +
■ Business outline:	Kolkata and Kalyani)
Gas lorry/cylinder supply business in eastern and
	southeastern India

Expansion of a "downstream business" through lorry and

cylinder supply

(Air separation gas production capability)

New Delhi

Asansol filling station

Kalyani filling station

Jamshedpur ASUParbangla filling station

Ulveria ASU Kolkata filling station

Hyderabad ASU
Hyderabad filling station	Vizag ASU

Ballary ASU

Chennai filling station

● Prax India

● Linde India

● Ellenbarrie

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Business strategy 1: Industrial gas business in India

Growth strategy in India's industrial gas market where high economic growth continues

Response to growing industrial gas demand associated

1 with expanded steel production

• Take advantage of AWI's extensive operation know-how for steel plants accumulated in Japan

Promote maximized efficiency to reduce production energy consumption rate

• Build a trust relationship with customers who are leading blast furnace manufacturers
  Capture further business opportunities such as construction of additional and new plants

Acquisition of new projects for on-site supply service

2 from small- and medium-sized plants

• • Allows AWI to implement the business through the acquisition of back-up and maintenance functions
• The above-mentioned growth strategies 1 and 2 will be implemented based on the plant engineering technology (large- to small-sized cryogenic air separation plants) which was acquired after AWI made SAC (Shinko Air Water Cryoplant, Ltd.) into a wholly-owned subsidiary.

Expansion of the lorry and cylinder supply business through

3 synergies created with Ellenbarrie Industrial Gases Ltd.

• Expansion of business in eastern India (where steel industries are concentrated)
• Advances to southern India (where auto and electronics industries are concentrated)
• Acquisition of the argon supplier allows AWI to implement sales expansion

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Business strategy 2: Overseas engineering (North America)

[Structure of overseas engineering business]

Air Water Inc.

Ryosuke Matsubayashi

Corporate Director

Overseas engineering

department

Industrial gas-related engineering and equipment business

(Sales for fiscal year 2019: approx. 11 billion yen)

High-power UPS Engineering and equipment business

(Sales for fiscal 2019: approx. 20 billion yen)

	January 2018
	Air Water America
Location:	New Jersey, the U.S.

Business outline: Planning and promotion of business strategies Business management of subsidiaries under control

April 2019

Air Water Asia

Location: Singapore

Business outline: Provision of industrial gas engineering to Southeast Asia group bases

Engineering and gas businesses			Cryogenic equipment business
Ishmael Chalabi			Eric Rottier

Steven Wong		Garrett Forde
Pee Chee Kiang

May 2018

Air Water-AMCS

Investment ratio: 51%

Location: Bedminster,

New Jersey, the U.S.

Business outline: Industrial gas plant EPC and on-site supply, production and sale of industrial gas

November 2018

TW America

Investment ratio: 100％

Location: Houston, Texas, the U.S.

Business outline: Manufacturing and sale of cryogenic transport equipment

February 2016

February 2018

TOMCO2

Investment ratio: 100％

Location: Atlanta, Georgia, the U.S.

Business outline: Manufacturing and sale of cryogenic equipment for beverage and food

June 2019

	August 2018		July 2019
	Power Partners			Hitec Holding BV
Investment ratio: 60%		Investment ratio: 100%
Location:	Singapore		Location:	Almelo,
Business outline: Engineering			the Netherlands.
	maintenance, and		Business outline: Development, design,
	after-the-sale service			assembly, installation,
	related to high-			maintenance and
	power UPS			overhaul of DRUPS

	TW Malaysia			Dohmeyer
Investment ratio: 100％		Investment ratio: 49%
Location:	Kuala Lumpur, Malaysia		Location:	Gent, Belgium
Business outline: Manufacturing and sale		Business outline: Manufacturing
	of stationary cryogenic			and sale of liquid
			nitrogen freezers
	containers

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Business strategy 2: Overseas engineering (North America)

Establish an industrial gas-related engineering and equipment business base, with

an eye toward deploying industrial gas supply business in North America

Industrial gas market in the U.S.

• Market size: Approx. 2.3 trillion yen
• Demand is also buoyant in sectors of food including beverages and bio-science
• About 85% of the US industrial gas market is monopolized by major companies
• About 750 dealers exist in the region

Increase the recognition of Air Water Group Establish a partnership with dealers

Engineering and cryogenic equipment areas

Engineering and gas businesses		Cryogenic equipment business
■ Air Water-AMCS		■ TW America	■ TOMCO2

Cryogenic transport container	Carbonic acid trailer
■ TW Malaysia	■ Dohmeyer

Cryogenic air separator

Stationary cryogenic containers

Liquid nitrogen freezer

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Business strategy 3: High-power UPS (Uninterruptible power supply) business

Entry into the high-power UPS system business

To promote the commercialization of "utility solutions" that are crucial to customers' BCPs (business continuity plans) and aim to become the world's top in the field of high-power UPS systems and peripherals.

What are dynamic rotary uninterruptible power supply systems? (DRUPS) ※ ※Dynamic Rotary Uninterruptible Power Supply

• An uninterruptible power supply (UPS) suitable for high-power band over an output of 1,500 kVA.
• Introduced at data centers, large semiconductor and pharmaceutical factories and critical infrastructure such as airports.
• An important device to prevent facilities and products from damage caused by voltage drop and blackout and maintain stable operations.

Hitec Holding B.V. (Hitec)

• Date of stock acquisition: July 2019 (to be included in the scope of consolidation

■ Sales:	from 3Q FY2019)
12.6 billion yen (in the year ended December 31, 2018)
■ Head office:	The Netherlands
Overhaul service hubs:	The Netherlands, the U.S., Taiwan
Business bases:	9 locations worldwide
Sales regions:	40% in EMEA, 6% in North America, 17% in China and
	Taiwan, 37% in APAC

EMEA: Europe, Middle East and Africa

APAC: Asia Pacific

Power Partners Private Limited (Power Partners)

• Date of stock acquisition: August 2018 (included in the scope of consolidation from April 2018)

■ Sales:	3.9 billion yen (in the year ended December 31, 2018)
■ Head office:	Singapore

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Business strategy 3: High-power UPS (Uninterruptible power supply) business

Hitec Head Office

The Netherlands

PP Ltd.

• Overhaul service facilities
• Hitec business bases

• Countries having partner hubs

• PP Ltd. hubs

[Growth strategies ]

1 Global market for high-power UPS is about 160 billion yen, and is expected to continue to grow over 6%.

• To aim for the global No. 1 by effectively utilizing the worldwide network of our business partner hubs
• To accelerate global expansion of the business by reducing equipment procurement costs, etc. through integrated operation of Hitec and PP.

To create group synergies between industrial gas business for electronics applications and Air Water Safety

1. Service, Inc.
2. • To target semiconductor manufacturers which are customers of our industrial gas business.
   • To create synergies between businesses by combining the business of Air Water Safety Service Inc. which has a high domestic share in nitrogen extinguishers for data centers.
3. To cultivate the Japanese market by utilizing the group's hubs
4. • To increase the market share of DRUPS through a maintenance system that utilizes our group's engineering hubs.

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The forecasts, future prospects, business plans, etc. presented in this document were prepared based on the judgement of our company from information currently available and involve various uncertainties. Therefore, the reader should note that actual business performance may differ from the projections made herein due to changes in various factors, such as economic conditions.

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