December 19, 2003

New Company for Manufacturing of ARONIX to be Established in China

Toagosei has reached an agreement with Dainippon Ink and Chemicals, Inc. to jointly establish a company to be engaged in the manufacturing and sales of ARONIX, ultraviolet-cured monomers and oligomers, in Zhangjiagang, China. Production will begin in January 2005, and sales in the first year of 1 billion yen and sales after five years of 5 billion yen are expected.

Toagosei and Dainippon Ink and Chemicals will jointly establish TOA-DIC Zhanjiagang Chemical Co.,Ltd., a company to be engaged in the manufacturing and sales of UV-cured monomers and oligomers on the site of TOA-DIC Zhanjiagang Chemical Co.,Ltd. to be constructed by Dainippon Ink and Chemicals in Zhangjiagang, Jiangsu Province, China.

The new company will retain capital in the amount of US$ 4.2 million (roughly 500 million yen), and 60% will be owned by Toagosei while 40% will be owned by DIC(china)Co.,Ltd., the parent company in charge of the Dainippon Ink and Chemicals industrial group in China. The amount of the investment will be roughly 1 billion yen, construction will begin in February 2004, and production is scheduled to begin in January 2005. Production capacity will be 10,000 tons annually, and sales are expected to reach 1 billion yen in the first year and 5 billion yen after five years.

UV-cured special acrylic monomers and oligomers are produced and sold by Toagosei under the product name, ARONIX, and currently retain the highest share on the domestic market. In recent years, the market for raw material applications such as UV ink, UV paint, resist ink, cell phone surface coating agents and adhesives for bonding DVD has grown rapidly. In particular, the Chinese market is expected to demonstrate growth of 20-30% annually, and Toagosei and Dainippon Ink and Chemicals hope to jointly develop this potentially lucrative Chinese market.

Through this joint venture business Toagosei can advance into the Chinese market as a part of its efforts to strengthen the acrylic downstream operations, at the same time, Dainippon Ink and Chemicals will be able to ensure stable procurement of ARONIX in China, which it had been purchasing from Toagosei, thereby enabling it to expand its sales of UV products.

Kazuaki Nakagawa, who is currently the manager of the acrylic products department of Toagosei, will serve as director of the new company.