STRATEGY FOCUS 1 :
Global & Engineering

We have positioned India and North America as drivers of company-wide growth, as we believe their market environments are well suited to leverage our accumulated strengths.

India is currently in a high-growth period with strong demand from the steel industry, the largest user of industrial gases, and a GDP growing at 7% per year. Government-led infrastructure investment is underway to promote the automobile industry and other manufacturing industries, with the goal of expanding annual crude steel production capacity to 300 million tons by FY2030, more than double the current capacity. Since industrial gas is essential for the growth of the manufacturing industry, there is high growth potential in India, just as it did during Japan’s former period of rapid economic growth. We consider India as our key strategic area where we can demonstrate our advantages in engineering technology and plant operations that Making a presence in the global market as an industrial gas manufacturer we have provided to Japanese steelmakers to date.

North America is the world’s largest industrial gas market, approximately five times the size of Japan. Multiple industries are increasing their gas use, including semiconductor-related manufacturing and cryogenic transport technologies in pharmaceuticals and biotechnology. Also, new usages for decarbonization such as hydrogen and CO2 capture are expanding, and we believe that our experience in the North American market, the world’s most advanced consumer of industrial gases, will make us more competitive in the global market.

We acquired the technology for a largescale cryogenic air separation plant through our joint venture with Kobe Steel, and secured its position as a plant manufacturer as we enhanced the engineering. We also placed manufacturing bases for plants and cryogenic equipment not only in Japan, but in North America, Asia, and Europe to establish a global engineering system that covers demand in all regions. Moreover, we have the operation and maintenance technologies that contribute to stable and safe operations for our customers, which we have cultivated over many years by supplying on-site gas to steelmakers. In India, we acquired business in 2019 from the local subsidiary of a major industrial gas company. It solidified the foundation of our on-site gas supply to steel mills, the first and second largest in India, and our lorry and cylinder business around the eastern and southern parts of India. With such plant engineering technology and expertise, we will develop the ability to compete with industrial gas majors on an equal footing, and focus on our overseas business in India and North America.

Starting in 2022, Air Water and Mitsui & Co., Ltd. have formed a strategic alliance to expand the business in the global market focusing on industrial gases. It harnesses our technology and know-how in gas production/supply and Mitsui’s information network in the fields of chemical/steel/energy, etc. to accelerate our industrial gas business in India and North America. In the future, we will leverage our industrial gas business bases to boldly take on the challenge of expanding into other businesses, such as medical and food products, in the global market as well as in Japan.

• Win new on-site gas supply for steel
• Build an infrastructure network with more gas production bases

After entering India in 2013, Air Water has increased its credibility as a local industrial gas producer and gained the third largest market share in India, starting with a major M&A of steel on-site bases in the eastern and southern parts of the country in 2019.

The Japanese government is strengthening ties with India in many areas, including politics, society, and security. Against this backdrop, in September 2023, we received an order from Steel Authority of India Limited (SAIL), a state-owned steel company in India, for on-site gas supply to its Durgapur steel plant in the eastern part of the country. It makes a significance for the Japan-India Economic Partnership, as Air Water, a Japanese company, will be working on a large-scale project with an Indian state-owned company. We plan to invest approximately 13.5 billion yen to make a cutting-edge, large-scale deep-cooled air separation plant, combining the engineering capabilities of Japan, India, and the U.S. under our global structure, and to start supplying gas in October 2025. This is our first order in India for a large-scale deep-cooled air separation plant and the third on-site gas supply base for the steel industry in India, following Tata Steel (Jamshedpur Plant) and JSW Steel (Bellary Plant). We have taken a steady step toward dramatic growth.

In March 2024, a filling plant will begin operation in northern India, where we have yet to enter, and in October 2024, a liquefied gas production plant will start operation in Chennai, a major city in the south. We intend to continue capital investment in line with demand, expand our business throughout India, and build a network of manufacturing, transportation, and sales infrastructure based on our on-site gas supply business for steel makers. At the same time, we aim to become the second largest gas supplier in India by expanding our gas portfolio to include hydrogen, helium, rare gases, and other gases. In the future, we aim to expand our India business to 100 billion yen by 2030 by developing diverse businesses, including gas and related equipment for the semiconductor industry, which is expected to expand into the country, as well as biogas, medical, and food fields.

• Develop a U.S. version of “VSU” strategy
• Establish value-added helium and green liquefied hydrogen businesses

North America is the world’s largest industrial gas market, about five times that of Japan (about 3 trillion yen), and is not only a center for cutting-edge technologies, but also a market where related new applications, including those related to decarbonization, are being created ahead of the rest of the world. Our strength in developing the North American market is our highly efficient gas purification and separation technology and our engineering capability to design and manufacture deep-cooled air separation equipment. Since entering the North American market in 2016 looking to industrial gas expansion, we have increased our presence in the market while building our business base through acquisitions of cryogenic equipment manufacturers and plant engineering companies, as well as working with local partners.

Through such a process, we started our industrial gas in North America in 2022. Our market development strategy is the “U.S. version of the VSU model,” in which we acquire sales functions through M&As and alliances with local distributors, while establishing our own gas production facilities around these facilities. In August 2023, we acquired our first gas production site in New York State, supplying onsite gas to a large customer. Prior to this, in May 2022, we had acquired an industrial gas distributor based in the same area, which launched an integrated gas supply business from production to sales. In April 2023, we bought out a distributor based in Arizona, where the high-tech industry is located, thereby expanding our business area. Furthermore, in September 2023, we acquired a helium sales company that covers throughout North America. By expanding our handling of high value-added gas types and enhancing our ability to make comprehensive proposals, we will capture demand from semiconductors and other growth industries.

In the U.S., where decarbonization-related demand is growing rapidly, we currently produce and sell liquefied hydrogen tanks that require a high level of technology and CO2 recovery equipment. Also, we invested in FirstElement Fuel Inc., the largest hydrogen distributor for mobility in the U.S., and are building a hydrogen supply chain through supplying liquefied hydrogen tanks and rechargers*. Our vision is to further expand the advanced technology and know-how acquired in the U.S. to other regions, including Japan, as well as to work on CO2 capture and the production and supply of green liquefied hydrogen.