FNB News - “We’ll look at generating revenues to tune of Rs 50-60 cr”

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F&B SPECIALS

“We’ll look at generating revenues to tune of Rs 50-60 cr”

Wednesday, 16 January, 2013, 08 : 00 AM [IST]

The bakery equipment market is expanding with demand for equipment to simplify many of the baking processes on an upward spiral. Interestingly, the demand is for both Indian made equipment as well as those sourced from abroad. Prashanth Jairam, manager, domestic and international operations, CS Aerotherm, discloses details to Nandita Vijay. Excerpts:

How would you describe the current scene for bakery equipment?
Ample scope and opportunities prevail for the manufacture of bakery equipment in India. The present market indications show robust growth prospects for sale of bakery equipment. Therefore, we are gearing up to not just manufacture but also to source the required equipment from global companies.

In such a scenario, where there are promising prospects for growth what is your action plan for growth?
We are looking to maximise our presence in the sector. Being in the market for the last 25 years, we have seen the transformation in the sector. Compared to the phase between 1985 and 1995, where the market was largely disorganised and from 1997 to 2008, where the market was stagnant, there is considerable traction in the bakery equipment segment as the present market is seen as largely corporatised and organised. This is where CS Aerotherm will be able to garner a sizeable presence going by the growth of the modern bakery outlets.

In the wake of these growth prospects, what are the visible trends that you see?
It is globalisation, young working population and dual income homes which are responsible which have created a need for modern bakeries. People who have had international exposure have tasted and experimented different varieties of bakery products and frequented leading bakery formats. This category of consumers expect a quality and variety in terms of breads, buns, rusks, biscuits, among other small snacks. It is only expected that the bakeries today are looking for wide spectrum of equipment for product development. The outlets also carry out research on recipes and looking for equipment which would simplify many of the baking processes. Only good recipe plus good equipment can only help produce a desired high quality product. There is demand for high value but low volume products like croissants, cakes and puffs. All these only provide a platform for growth for companies like ours which offer a range of equipment.

What are the challenges in the sector that are hampering the growth?
In the last two, three years we are witnessing labour problems in the bakery sector and this has led to increased mechanisation which is again good for companies like CS Aerotherm. There are bakery product manufacturers which are doubling capacity. But the pitfall here is that cost of equipment is rising as it is driven by raw material prices like stainless steel and MST (mild steel) which are now have recently hit the roof. The gas and diesel costs are also rising.

Could you give us a background of your company.
Our operations commenced in 1987. We adopted the F&N Aerotherm proprietary design in all the baking technology. In fact, F&N approached us through DANIDA (Danish development assistance) programme where we inked a technical collaboration for rotary tracks, ovens, and corresponding provers for rotary track ovens.

We are an ISO-certified unit. While we have a strong manufacturing base, yet we are engaged in import of gas decks, moulds and trays and electric deck ovens. Present equipment range includes electric deck ovens, spiral mixer, bowl lifting & tilting device, long moulder, dough sheeter, medium bakery equipment, ovens, bread slicers, crusting machine, semi-automatic bread plant and automatic bun divider to name a few. All these are manufactured with superior quality raw material. We have been a much-sought after supplier not just to the bakery sector but also to the hospitality segment and industrial kitchens.

We are also engaged in sourcing equipment from global majors and this makes us a comprehensive single source supplier. The company has entered into technical collaborations with global majors in 2006. These included Gostal-Gopan, Slovenia, and companies in the south-east Asian region. The collaboration was for the production of a completely automated bread plant at Bommasandra Industrial Area, Bengaluru, which is the location of its existing facility. For the development of certain planetary mixers, the company has also teamed up with a bakery equipment major in Taiwan.

Provide us details of some of your customers.
Today, the bakery industry is one of the largest food industries in India. With globalisation, India is being viewed as a potential growth market. There has been a profusion of bakery chains springing up across the country. Of our leading customers are Britannia, Nilgiris, Cremica Agro Foods, Monginis, Modern Foods, and Karachi Bakery to name a few. There are also companies like Venky’s Chicken which are opting for our range of equipment as they expand into ready-to-eat products.

What is your growth plan for 2013-14?
Now we are Rs 30 crore company and will look at generating revenues to the tune of Rs 50-60 crore in 2015-16. We are also engaged in providing customised industrial ovens for Saint Gobain and Fosceco, USA, for different applications for the manufacture of steel wool. In the bakery equipment space, we will look at increasing our market reach with rotary rack ovens and automatic bread plant. We will look at expanding our exports to the countries of Africa and the Middle-East where we have seen promising prospects of new orders. Since margins in India are low we will work to increase global market share.

Give us a snapshot of the bakery equipment space.
The big names in the segment are Arun Laser in Coimbatore; Nagpal, New Delhi; Prithul, Orange, at Mumbai; HCS Faridabad; and Chamundi Spiral Mixers in Kumbakonam. The fastest selling product for us is the rotary rack oven because of its robustness and fuel consumption. We are also one of the best in the semi-automatic bread plant. We will soon look to offer the completely automatic bread plants by 2015. This gives a snapshot not just of the industry but also the importance of CS Aerotherm in this space.