News Release

June 29, 2018
Hitachi Chemical Co., Ltd.

Inappropriate Entries of Figures in Inspection Reports of Some Products
among Lead-acid Batteries for Industrial Use

Hitachi Chemical Co., Ltd. has ascertained that inappropriate entries of data were made in inspection reports submitted to customers regarding certain products among lead-acid batteries for industrial use manufactured at our Nabari Works (Nabari City, Mie Prefecture). The facts known at the present time and the response to be made by the company are outlined below.
We deeply apologize for the great inconvenience caused to our customers and all other persons concerned.
To ensure that such an incident never occurs again, the Hitachi Chemical Group will speedily set up a special investigative committee including outside experts and thoroughly investigate the causes. At the same time, we will do our utmost to restore customers' trust by conducting a fundamental review of the quality control structure and promoting the further strengthening of compliance.

1. Outline

Regarding certain products among lead-acid batteries for industrial use manufactured at the Nabari Works, suspicions arose that an internal inspection method was adopted that differed from the inspection method agreed with customers regarding the capacity of lead-acid batteries at the time of shipment, and that figures differing from the actual measured values had been entered into the inspection certificates and submitted to customers. The company set up a countermeasures headquarters (headed by Yoshihiro Nomura, Executive Vice President and Executive Officer) and conducted an investigation into the facts of the case. Since this investigation revealed that the above-mentioned suspicions were correct, the company decided to make this announcement today.
At present, the company is making shipments of products together with inspection certificates recording the correct data based on implementation of the method determined together with customers.
At the present time, the failure in performance leading to this incident has not yet been identified. The company considers that there is no problem with the performance and safety of the products themselves.

Products concerned Lead-acid batteries for industrial use: MSE, MSJ-series stationary valve-regulated lead-acid (VRLA) batteries, etc.
(accounting for approx. 6 percent of the company’s industrial-use lead-acid battery sales)
Main uses Emergency backup power source (used during power failures at factories and other facilities)
Production base Nabari Works (Nabari City, Mie Prefecture)
*Shin-Kobe Electric Machinery Co., Ltd., integrated with Hitachi Chemical in January 2016
Period investigated* April 2011 to June 2018
No. of batteries for which inappropriate investigation certificates were issued Approx. 60,000 batteries
No. of customers affected Approx. 500 companies
At present the investigation is at the stage of tracing back data and confirming the recording, etc. of inappropriate values on inspection certificates. The investigation will be continued regarding data prior to March 2011.

2. Response

From now on, together with contacting customers and the government ministries and agencies concerned and providing explanations, the company plans to speedily set up a special investigatory committee including outside experts, which will investigate the facts and causes from an objective perspective. Based on the results of this investigation, in order to restore trust in the company, we will implement measures to prevent recurrence, including a fundamental review of the quality control structure throughout the Hitachi Chemical Group and the further strengthening of compliance.

Special investigatory committee (at present)
Position Name Current occupation
Chairman Akira Takeuchi Lawyer, certified fraud examiner (Proact Law Office)
Committee member Hiroshi Osada Professor Emeritus, Tokyo Institute of Technology
Committee member Junichi Ikeda Lawyer (Nagashima Ohno & Tsunematsu)
Committee member Takemoto Oto Outside Director, Hitachi Chemical (Chairman of Audit Committee)

3. Impact on Business Results

The impact of this incident on the Hitachi Chemical Group's consolidated financial results for the year ending March 2019 is unknown at the present time. If it becomes necessary to revise the forecasts in the consolidated financial results announced on April 24 this year, an announcement will be made at the appropriate time.