Pestech grows from trading firm to global power player

There is always a start to things and as the saying goes, the journey of a thousand miles begins with a single step.

So it was for Pestech International Bhd, whose founder and executive chairman Lim Ah Hock explained that the integrated power technology company providing comprehensive power system, engineering and technical solutions started as a trading company in 1991 in Johor with the name Pestech Sdn Bhd.

“We were in the small-scale contracting and trading business. It was extremely challenging for us to grow. We needed a good track record to bid for sizeable contracts but to start with, we had none of that back then,” he tells Metrobiz.

The company, which started off selling electronic components with an annual turnover of about RM1mil, is now a public listed company on the Main Board since 2012 with an unaudited revenue as of Dec 31 last year of RM181.76mil.

In the early days, Lim said it was extremely difficult to raise funds as banks generally did not lend to a company without a good track record.

“I had to pledge all my savings and properties to get the facilities for the company,” he said.

However, the company has moved on since. Prior to listing, the order book stood at RM185mil. Today, it is at at RM707mil while the tender book is at RM1.5bil,

Adding value

As Lim gained industry experience and established Pestech’s presence in the market, he managed to persuade his nephew, Paul Lim, to join him.

“We saw the potential and opportunity to penetrate the electric power transmission and distribution works segment of the industry,” says Lim, who is a mechanical engineer by training.

Being the first local company to venture into the high and extra high voltage sector of the electricity transmission business, the company made a profit after a few years. Subsequently, they started their first office in Subang 2 in a small terraced industrial lot. This enabled them to expand their business model to provide value-added services in Kuala Lumpur.

From simple engineering contracting, the company began selling systems to substation builders and providing engineering input. Subsequently, they set up a design team to work on the integrated telecommunication and control systems, which transformed Pestech into an integrated, power control technology company.

Building a reputation

Soon after this, Pestech secured its first project from Tenaga Nasional Berhad (TNB).

“We proved ourselves through numerous projects from TNB and other private suppliers such as the independent power producers (IPPs). We have a good track record in delivering the projects. Therefore, it enhanced our reputation in the market.”

A joint venture (JV) with Pembinaan Tajri proved to be successful and it changed the company’s business direction after they were awarded a TNB contract to design, supply, build and commission a 275kV and a 132kV transmission substation, as well as upgrading associated bay and protection equipment for TNB substations in 2001.

The company also manufactures its own proprietary power systems components and equipment to complement their business.

“Our products comply with international standards and have been designed so that the majority of the raw materials and components can be found locally. This helps us to be competitive in pricing the products and projects,” Lim said.

Developing talent

Pestech’s engineering capabilities and knowledge are not constrained by geographical boundaries. Lim said the engineering involved in delivering electricity is similar around the world.

“We are located in the region where there is a huge demand for electricity. It gives us satisfaction that Pestech is able to bring power to people where it is needed,” he said.

To do this, Lim said it was important to groom and build the competency of the team.

The company develops its own engineering handbook as well as organisational assets.

“This enables people who join Pestech to learn how to build a substation and understand everything about our company,” he said.

Their first overseas venture began with the export of remote terminal units (RTUs) to North Korea under a project by Australian Agency for International Development (AusAID) in 2002. They also exported RTUs to Vietnam in 2004 and built a 66kV substation and transmission project in Brunei in 2008.

As the company goes global, Lim added that the business needs more credibility and buyer confidence. They also need funding for bigger projects.

Recently, Pestech secured a US$86.07mil contract in Cambodia to design, engineer, manufacture, install, test and commission the 230kV West Phnom Penh-Sihanoukville transmission line and the 230/115/22kV substation extension project from Alex Corp Co Ltd.

The project involves the construction of a 198km transmission line which would take about 32 months to complete, beginning within three months.

The project is to transmit power generated in the Sihanoukville area to existing and future substations in the Phnom Penh city centre.

“This will improve the power supply reliability in the Phnom Penh area and fuel the growth of the city,” Lim said.

Operating through its subsidiary, Pestech Cambodia Ltd, in Cambodia since 2010, it is one of the few companies in the country that offers engineering and design of electric power transmission and distribution systems.

Taking the company from an SME into where it is now, Lim said the entrepreneur has to have self-confidence in his own ideas and dreams.

“A business without naysayers is probably not worth a venture at all,” he said.