SME Spotlight

Running on diesel power

Diesel may be a 'dirty' business and the Volkswagen diesel scandal last year may have given the fuel a bad name, but the fuel has provided home-grown Interion with an opportunity to expand beyond Singapore. Toh Yong Chuan speaks to the company's business development manager Ryan Peh about how it became Singapore's first company with its own brand of a chemical liquid that cleans diesel fumes.

Interion is a family business run by Mr Peh Chee Kiong (right) and his sons Khian Hui (left) and Ryan. The company, which is in the diesel and lubricant business, made the jump from distributor to manufacturer last year by producing AdBlue, a chemica
Interion is a family business run by Mr Peh Chee Kiong (right) and his sons Khian Hui (left) and Ryan. The company, which is in the diesel and lubricant business, made the jump from distributor to manufacturer last year by producing AdBlue, a chemical used to reduce pollution, at its Senoko factory. ST PHOTO: DESMOND FOO

Q What is your company about?

A My father Peh Chee Kiong started the company in 1995. He was a mechanic and decided to venture into the diesel and lubricant business.

The company focuses primarily on the distribution business by buying and reselling fuels and lubricants.

My brother Khian Hui, an electrical engineering graduate from the National University of Singapore (NUS), joined the business in 2005. I joined in 2009, right after I graduated from NUS with a business degree.

The business grew steadily over the years. But as the Internet becomes more prevalent, where buyers and sellers are easily matched and markets become more competitive, we knew our position as distributors would be threatened.

So we made the jump from distributor to manufacturer last year, by making AdBlue at our Senoko factory. It is one of our sources of sustainable growth. Last month, we launched our own AceRev brand of the product. We are the first made-in-Singapore and made-in-South-east Asia brand of AdBlue.

Q What is AdBlue?

A It is a chemical used to reduce pollution. It is used in diesel vehicles' exhaust systems to remove harmful gases to prevent them from being released into the air through the exhaust fumes.

Q How important is AdBlue to your business?

A It currently contributes only 5 per cent of total revenue. But by the end of 2019, we expect this to grow to 10 per cent.

Singapore will introduce tighter Euro-6 emission standards from 2018. We estimate that around 13,000 diesel vehicles here are currently using AdBlue. By end-2018, that number will double to around 26,000. In Singapore, our customers are mainly those who operate fleets of diesel vehicles.

Outside Singapore, as more countries regulate vehicle emissions, there is large potential demand for AdBlue for years to come.

We are focusing our growth on South-east Asia, where we have a location advantage with Singapore's proximity and branding advantage.

Q What are the advantages of a Singapore brand?

A There is very high confidence in the made-in-Singapore label. Singapore businesses are perceived as reliable, trustworthy and having a high standard of quality assurance.

A made-in-Singapore brand represents a dedication to get things right the first time and keep doing it well in the long run. This is what we are committed to doing.

Q How much did you invest to make the leap to manufacturing?

A We invested close to $5 million: about $1 million in technology and the rest to expand the factory.

The biggest challenge was the lack of technical knowledge, so we partnered an equipment manufacturer to gain the know-how.

We also had to make sure that the quality of our product met international standards. Last year, an automotive industry expert from the German Association of the Automobile Industry came to audit us and test the quality of the AdBlue we produced. We passed the stringent assessment and received the international certifications.

Q What are the plans for the future?

A We have plans for manufacturing, retailing and expansion through mergers and acquisitions.

We produce up to 400,000 litres of AdBlue per month. It is sufficient for the Singapore market, but not enough for the South-east Asian market. We plan to increase production capacity to one million litres per month by 2017.

For retail, we sell AdBlue in 10- and 20-litre bottles. The 10-litre bottle is just enough for a typical diesel vehicle while the bigger bottle is for commercial vehicles. When diesel cars with smaller engines become more common in Singapore, we will consider launching a 5-litre pack.

To sustain our growth, we may acquire small businesses that complement our core business.

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A version of this article appeared in the print edition of The Straits Times on May 04, 2016, with the headline Running on diesel power. Subscribe