Thejo Designing: An Uncommon Find - Like a Tough to find little item! Designing firm Thejo sets out on ₹70-cr. extension plan

Thejo Engineering Ltd is one of the companies shortlisted for Moneylife’s first-ever Corporate Governance Awards that are based on direct nominations from active investors, rigorously processed and analyzed to eliminate biases.

The manufacturing facility in Chennai expanded at a cost of ₹45 crores, will now be able to produce 3,600 tonnes of moulded products from the previous 2,400 tonnes. City-based Thejo Engineering Ltd., (Thejo), an engineering solution provider to the crore sector, has embarked on a ₹70 crore expansion plan. 

“We have expanded our existing manufacturing facility in Chennai at a cost of ₹45 crores taking the annual production capacity of moulded products from 2,400 tonnes to 3,600 tonnes,” said M.D. Ravikanth, CFO, in an interaction.

The expansion has been done to take Thejo to the next phase of growth,” he said. Thejo group has five facilities in Chennai, two in Australia, one in Saudi Arabia, and warehouses in Chile and Brazil. The ₹25 crores expansion work in Saudi Arabia will start soon. Typical controversies arise about the oversight shown by the independent directors towards the family owners, the standards of financial disclosures, remuneration levels of family members, and related-party transactions.

It is a fact, and many consider it a strength, that most Indian enterprises are family-owned and managed. In this milieu, Thejo Engineering Ltd, based in Chennai, comes across as an unusual instance of a small-sized company, little-noticed, essentially family-owned, and not part of the new start-up frenzy, having transformed itself within a decade, to become an exemplar in governance practices.

The transformation started with the induction of a professional managing director (MD) in the first decade of the current millennium to helm the company and drive the agenda of growth, governance, and grooming. At the time of his induction as MD, professor VA George had nearly three decades of experience in oversight roles in the corporate sector and a rich experience of training and learning in top global management institutions.

Eschewing the trend of the times to court private equity, Thejo chose public funding that carried greater accountability to a wider set of investors than the captive and the limited agenda of a single or a couple of short-term oriented private equity (PE) funds, who themselves often fall short on the governance grid. While the two founding families still hold about 55% of the equity, the striking feature is that individual investors hold close to 33% of the capital creating a very diverse pool of investors compared to most listed companies that have a dominance of the local or foreign institutions.

Most such individual investors seem to hold a meaningful larger stake as per the data in the annual report, elevating the level of scrutiny and accountability which gets spread among a larger group of serious and professional investors like family offices and high net worth individuals (HNIs). 

A feature that would stand out as the most unusual for any public company, on the governance side, is the fact that all the committees of the board are chaired only by an independent director; the two most critical committees being the audit committee, and the nomination and remuneration committee, comprises only independent directors! 

Unlike many Chennai companies that have close friends and relatives (other than those excluded under law) of the promoters count as independent directors, the choice here, going by the profile on the website, indicates diversity and inclusiveness. This is still a work in progress on the part of the Securities and Exchange Board of India (SEBI) to get this accepted and implemented in most of the family-owned listed companies in India.

A recent controversy that has impacted some of the listed companies has been the lack of proportionality in the remuneration of the managerial personnel belonging to the promoter group.

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