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Business

Industrial belt maker Poval Kogyo going public in Japan

NAGOYA -- Poval Kogyo, a maker of industrial belts for production lines, is set to list on the second section of the Nagoya Stock Exchange on June 25. 

     The Nagoya-based company produces resin belts that can be used in tough conditions, such as sub-zero temperatures. The food and steel industries are Poval Kogyo's main markets.

     All products are made to order, since each customer requires different specifications. To meet those requirements, Poval Kogyo chooses the optimal combination from several thousand materials, including sound-absorbing foamed urethane and fluororesin sheet.

     Belt-related products account for 50% of the company's total sales. Abrasives, used for glass processing, contribute 40%.

     Japan's resin belt market is estimated at 14 billion yen ($135 million). Though significant growth is not expected, Poval Kogyo President Takao Kanda wants to increase the company's market share by 1 percentage point a year. He is hoping for a boost from the name recognition that comes with going public.

     Poval Kogyo has five sales offices across the country. On top of two domestic factories, it runs plants in China, South Korea and Thailand. Its overseas sales ratio was roughly 7% in the fiscal year ended March -- a figure it aims to increase.

     Founded in 1957, Poval Kogyo started as a manufacturer of special belts used in continuously variable transmissions for automobiles and motorcycles. In 1974, the company began making polishing pads for Braun tube glass. "Our polishing pads were used for one out of three cathode-ray-tube TVs at the time," Kanda said.

     Poval Kogyo is forecasting a 3% on-year rise in group sales in the year through March 2015, to 2.3 billion yen. It expects an 11% decline in net profit, to 191 million yen, due to the listing cost.

     The listing is projected to raise roughly 200 million yen, most of which will be put toward investment in equipment, such as press machines and boilers. Kanda said the company will "aim for a payout ratio of roughly 20%," with an expected dividend of 30 yen this fiscal year.

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