In an exclusive interview with SME Times, V.A. George, President and CEO, Thejo Engineering Ltd, the first company listed in National Stock Exchange (NSE) said that they will utilize the funds that have been raised from the market for expansion plans such as setting up an Australian subsidiary, Research and Development (R&D) center in Chennai, expansion of their production facility and also setting up a corrosion protection plant in Chennai.

                                                                              Excerpts of the interview...

You have listed your company in the National Stock Exchange (NSE). How have been your experience and what are your plans from now?
V.A. George: Being the first one on the EMERGE platform we had to start from the scratch. It has been a very good experience as I have mentioned earlier. Once NSE starts their due diligence and certifies us with our accounting, etc., then they will handhold us through the whole process. It has been a good experience but not a simple one. It is a little lengthy being the first one. In the SME listing, the cost of the issue is relatively less compared to the normal listing. But it also provide opportunities to all the companies to go to the main platform in two to three years time where they (SMEs) can grow and make their capital. What is required is the two-third of the down promoter shareholders for going to the main board. And, the capital should be Rs 10 crore.

Did you plan earlier or gave a thought to list your company in the national exchanges?
V.A. George: We had plans earlier but the cost of the issue was actually a problem. But when the SME platform was coming in, we wanted to list there. And that is why we could get in as an early entrance.

Now you have finally listed your company in the NSE. So, what are your plans from here?
V.A. George: Yes, that is what I have said. We have plans to go to the main exchange in another two to three years time.

Could you tell our readers something about your company like what kind of products do you manufacture?
V.A. George: We started our company more than three decades back and we were into Service Sector, maintaining conveyors of industries like Steel, Cement, Mining, Port, etc.  We had a technology called "Cold Process" which could reduce the downtime of the breakdown of conveyors.   Normally it takes 10-12 hrs for a conveyor belt repair but by this process we have reduced the downtime of the work to 3 to 4 hours which has enhanced the productivity of the client and us. Initially product for captive consumption was outsourced but later we were compelled to start our manufacturing to ensure quality and timely delivery.  Hence, we have set up a plant to manufacture these products.  But, as there was mismatch between the installed capacity and the utilization then we thought of manufacturing conveyor related products and sell it to our customers.  We are today into Mineral Processing, Corrosion protection & other conveyor related products made both in Polyurethane (PU) and rubber.  These products are sold in India & we also exports to Africa, Australia &  Middle east.  We have set up a Joint venture company named Thejo Hatcon Industrial Services Company in Saudi Arabia where 51% stake is owned by us. It has just started functioning.  Also, two months back we have started our wholly owned subsidiary in Australia named Thejo Australia Pvt Ltd. Initially we will be into Services of Conveyor belt what we do in India. The products for the same will be sent from India.

How much exports growth have you witnessed in the last financial year? What kind of demand growth is there for your products in the African markets?
V.A. George: Last year, our exports grew by 63 percent. There is a very good demand for our products in all these markets and due to the cost advantages we are manufacturing in India.

Are you planning for joint venture with the African companies?
V.A. George: No, not as of now. We are only selling our products in the African markets. There is no question of any joint venture.

What kind of exports growth have you witnessed in the Australian market last year?
V.A. George: Our exports to the Australian market grew substantially last year. It has been good. Now, we have stretched the wholly owned subsidiary for services as well.

Are you tapping any other markets?
V.A. George: We are also looking in South America such as Chile and Brazil as the mining is booming there now. We have business associates in Brazil with whom we will be associating to sell our products in those markets. This is our immediate plan. This is likely to happen by the end of the current financial year.

What about the North American and European markets, are you exporting there as well?
V.A. George: As of now the industries i.e. Cement, Steel, Mining and Port are not growing in fast pace there. There are environmental issues. This is a reason why we are looking at markets that are growing very fast.

Why did you choose the National Stock Exchange (NSE) and not the Bombay Stock Exchange (BSE)?
V.A. George: I do not know and I have not compared both. But what I understand as a layman is that, today, NSE has maximum market share in the capital market. Their platform is technically well-standard. Also, we have not gone to BSE for this as NSE's platform has been there. We may go to BSE if it helps our shareholders. As of now the size is not big and it will not be viable to go to both the exchanges. There are administrative costs as well as cost benefits. We can go to the main board and we will look at it.

How do you plan to utilize the capital that has been raised?
V.A. George: We have raised capital for our expansion. The fund is flowing into our account. I am now more focused on implementing the projects. We are going to implement it into four ways. One, for setting up the Australian subsidiary. It (the subsidiary) has just started and we want now to complete it. We have started the subsidiary but it is a six month process for settling down the entire thing. The Australian subsidiary costs will be funded from the issue. Second, we are also setting up a Research and Development (R&D) center in Chennai, which will be funded from issue. Third one is expansion of our production facility and streamlining the whole process so we are able to supply to the global market. Finally, we want to set up a corrosion protection plant in Chennai. These are the four purposes for which we are going to use the issue.

What kind of business growth have you witnessed?
V.A. George: The initiative which we are trying to implement will double or triple our present turnover. We had a growth of 22 percent in turnover in the first quarter of this fiscal compared to the corresponding period previous year. In the last financial year, we had a growth of more than 25 percent.

(Namrata Kath Hazarika can be contacted at namratakh@tradeindia.com)