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‘We will be using our synergies within to consolidate our project business under Aster’

Tuesday, December 12, 2017, 15:09 Hrs  [IST]

Set up by few technocrats in 1990 as a professional kitchen equipment manufacturing company, Aster Technologies, has come a complete circle over the decades to be a one-stop-solution provider for commercial kitchens in the country and overseas. While many Indian equipment manufacturers close shops and become traders over the years, Aster diversified their business into many sub-sets of the kitchen business like Consulting, Contracting, Servicing and Manufacturing to support their core. Sunil Khanna, Director, Aster Technologies in an interaction with P Krishna Kumar explains how Aster managed to weather the market challenges and find their niche in the professional kitchen space in India.

Q Can you explain briefly how Aster Technologies has evolved since its inception?
Aster was started in 1990 with the idea of manufacturing kitchen equipment and look into setting up hotels later on. We quickly realised that commercial kitchens are made as per plan and design, done by kitchen designers. We, being a group of technocrats with good knowledge of detailed engineering, we got into design consulting as well with HotelConsult Orient. Following that, we set up another company for contracting business called Constel.

After 1996, business of kitchen equipment hit badly and didn’t take off as we expected. Even today kitchen equipment business is very small. But still, way back in 1995, we were the only company which was prequalified by big brands like KFC, Pizza Hut, TGF Friday, etc. for their stainless steel equipment. Although it looked

very large for a brief time, it didn’t last long. Then we went back to our traditional clients. But, there also, we realised that those traditional markets were not looking for quality products. Also, our products were expensive by 12 -16% compared to competitions in the market as there was an excise duty component. That was a deterrent for our growth. Big Hotels on the other hand were importing directly using EPCG.

In 1995, Hobart made an offer to acquire our company, but despite two years of negotiations, nothing happened. After 2002, the industry scenario improved again. So we decided to strengthen our equipment manufacturing division once again. We started manufacturing of dish washers, impinger ovens and combination ovens. Impinger ovens are manufactured at many places even today. Our impinger ovens are used by thousands of customers in India today. We have two types of ovens, one gas and another electric ovens. We were the first company to manufacture combination ovens in India in 2004. We stopped manufacturing it after few years, as technology changed globally. But we will definitely relaunch ovens little later with updated technology.

Simultaneously, we started manufacturing dishwashers and ice-cubers. These were ambitious projects which nobody in India attempted thus far. We set up a dedicated company for dishwashers called Washmatic India Pvt. Ltd. Our dishwashers are international quality preferred by many hotels and restaurants in India. We also set up an ice-cuber plant, but later on converted into a refrigerator business considering the consolidation that was happening globally in ice-cuber business. We got rid of our old Stellar utensils business and rebranded it to Stellar Gastronom and started manufacturing international quality refrigerators, blast chillers, chillers, etc.

Then we set up our sixth business vertical, Ken-Fixit which offers after-sales-service for our customers as well as for anyone who require our service. We also got into fire suppression business with Ansul, which commands almost 70% of the market with our automatic fire suppression solution. Recently, we got into hygiene lab business as well.

Besides all these, we are also into coffee business through our arm Koffee Hubb which is a complete coffee solution provider from renting to servicing, etc. We are also having a super market concept for kitchen equipment – Grydle & Sync which is not yet fully operational.

Aster is also the preferred vendor for Subways in India as part of the Subway KES India program. We pack the whole store in a container and ship it to the client.

Q How GST has changed your business focus and what is your strategy going forward?
From 2000 to 2010 we have been focusing lot on the design business through HotelConsult Orient, and thereafter, for the last seven years, on our new businesses like Washmatic, Stellar, etc. Now, we are going back to Aster. We have come a complete cycle. GST is quite favourable for us. We are able to claim back the service tax, which we were not able to in the previous service tax regime. We paid a lot of service tax, never got it back. Only HotelConsult and KenFixit could claim back the Service tax to certain extent.

Why we are going back to our Aster business is that the kitchen business has become big now, which was not the case earlier. We want to capitalise on it. So far, we were selling everything individually, now we will package everything under Aster. We have been able to create brand awareness in the market about Washmatic, Stellar, etc. Therefore, if we are able to increase our project business now, all components which make up the Aster Group can benefit. With this objective we have strengthened our sales and marketing team as well.

Q What changes you expect in the EPCG with the advent of GST?
Now the benefit is only 10% under EPCG. But going by our past experience, we expect that large chain of hotels would continue to avail EPCG even if the benefits are only in thousands. Therefore, I don’t see hotels will stop using EPCG in future as well with the new GST regime. Imported products have become cheaper under GST. At the same time excise duty has gone for Indian manufacturers as well, reducing the disadvantage Indian manufacturers had in the past. But other than few indigenous manufacturers like us, vast majority of Indian manufacturers were not competing with international products in India.

Even traders of imported goods are happy as duties have gone down. They can sell more. Even we are also benefiting in that vertical of ours like Ansul. Although the Indian manufacturers still have the disadvantage over the foreign manufacturers, the input tax credit will nullify that disadvantage to a large extent. Overall, GST is beneficial to everyone in the industry.

Q There has been a lull in fresh investments coming into the hotel industry for the last few years. How much has that impacted your project business?
That is not true. The maximum investment was happening in the QSR till few years ago. But fast food business has hit a low in recent years. But on the other hand, restaurants are booming, then the cafeterias, hospitals, hostels, base kitchens, etc. are all booming. As far as hotels are concerned, they are now happening beyond the traditional markets. We have signed a number of hotel projects in the last one year. Currently, we have 100 projects signed and underway across India. Even those projects that got stalled in between, have resumed after a while.

We do get a lot of international consultancy business from Mauritius, Maldives, Bangladesh, Macau, Sri Lanka, etc. Clients in these countries generally cannot afford to work with international consultants in the U.S., etc. because they charge fancy sum. So, they come to us. We are in business for the last 22 years and have expertise in all areas related to projects.

We have done more than 3,000 kitchen projects so far. Besides that we have also done more than 600 Subways. We are the only vendor who remains unchanged in Subway in India.

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