Services-and-manufacturing company, Thejo Engineering plans to raise Rs 21 crore price through an IPO in the band 402-430 and Crisil has rated the IPO the highest grade of 5. VA George, president and CEO, Thejo Engineering explains to CNBC-TV18 that the funds will be used to invest in the expansion of R&D and manufacturing facilities.

George also adds that a major portion of the funds will be invested in the company's services venture in Australia which will be used to sell products manufactured at its facilities in India.

Below is an edited transcript of the interview on CNBC-TV18.

Q: You are raising only Rs 21 crore. What do you intend to do with the money?

A: The funds will be used to increase our investment - for expansion of our R&D and production facilities. The funds will be mainly will be used for our wholly-owned subsidiary in Australia which has very high potential for future growth.

Q: You plan to invest only Rs 6 crore into the Australian venture. Will the rest of the funds invested in India?

A: Yes. We are not just a manufacturing company- we provide services also. Our Australian venture is a foray into the services sector. The manufacture of the products for Australia will be carried out in India and then exported. So the basic thrust on the Australian subsidiary is entirely to expand our service network.

Q: Why did you choose to launch your IPO in such depressed market conditions and when your PE valuation is just 5?

A: It is a very interesting question. I look at it in a different way. The current situation seems ideal as there not too many IPOs that are being launched and this is the first IPO on the SME platform from NSE. The amount that is being raised is not too high. And for investors who are temporarily divested from the secondary market, a performing company with strong fundamentals, offers a wonderful opportunity.

Q: What stake will the promoters have?

A: After the issue, the promoters will have 69.5%.