The fizz of success
Albertus Weldison Nonto | May 01, 2011

Aneka Gas products are in everything from Coca-Cola to light bulbs so it is no surprise the former state-owned company is poised for solid growth in the future. 

Have you ever wondered how carbonated drinks get their fizz? One of the important ingredients is carbon dioxide (CO2), widely used in baking soda and for maintaining the pH level of swimming pools. In hospitals, the vital gas oxygen is given to patients with breathing difficulties, while other gases such as argon, hydrogen and sulphur dioxide are used in light bulbs, antibiotics, dried fruit and even wine.

Such are the diverse uses of gas produced by PT Aneka Gas, one of Indonesia’s largest industrial gas producers.  “Most people think we sell and produce LNG or gas for cooking, but we sell a wide range of products,” says 31-year-old Rachmat Harsono, Aneka’s executive vice president.  

Diverse usage

Given the multiple uses of industrial gases, Aneka supplies a varied range of companies such as Indofood, Coca-Cola, steel producer PT Cakra Kembar and Japanese glass producer Asahimas. The company produces at least 12 different products including dry ice and sulfur hexafluoride (SF6), which can be mixed with speciality gas, says Rachmat.   

“We continue to research new product derivatives to anticipate the demands of modern business people,” he notes, adding the company is currently looking into derivatives of nitrogen to increase the efficiency of fish and shrimp exports. The ingredient is expected to help traders snap-freeze their products in just three minutes.

While there are several players in the industrial gas industry, five currently dominate the market and two of those, Aneka Gas and Samator Gas, are owned by the Harsono family. The other big three are France Airliquid, US Air Product and German's Linde Group. “In terms of market share, our two companies control the market,” says a confident Rachmat, explaining that the top five players operate in different markets and regions within the country.

“All in all, the pie is equal,” he adds. Aneka controls 18% of the market and together with Samator it has a 30% share. It’s a strong position that promises solid future returns.  

Public to private

Aneka Gas has been operating in Indonesia since 1916 and is one of the oldest industrial gas companies in the country. Formerly Dutch-owned, in 1971 the company was bought by the government before being sold to German's Tira Austine and the Harsono family. The Harsono family gained full ownership in 2004, a move that Rachmat fully advocated.

“We had to acquire Aneka; it was our main competitor,” he states, displaying some of the business acumen acquired from his studies in marketing and business at Marquette University in Milwaukee. Since 2004, Aneka and Samator have been privately run by the family. “The two run separately despite being in the same business,” explains Rachmat.

In order to change the state-owned mentality of the company, when Rachmat took the reins he initiated what he calls the “talent pool,” a policy to identify star employers. “We adjust salaries according to the work standards of each employee,” he explains. That was a necessary move to boost morale and take on the fight to maintain market share in the competitive industry. In Indonesia alone, there are more than 70 industrial gas producers: inevitably, not every company will succeed.

“Many players believe the business is easy, but they forget that you have to deliver excellent operations on all levels such as customer service and technology,” notes Rachmat. A medium-sized plant, he explains, requires about $15-20 million in investment to cover machinery costs, although this varies according to capacity.

Aneka’s biggest mills, such as Samator’s Bekasi mill, can produce more than 7,000 cubic meters per hour. According to research by GlobeAsia, current market prices for Aneka’s gases is between Rp1,000 and Rp3,000 per cubic meter. While Rachmat is coy about the company’s balance sheet, one industry source says the strength of Aneka can be determined from the number of its distribution channels, something Rachmat is more than happy to discuss.

“When we took over the company, it only had 15 networks or filling stations and it now has 70,” he says proudly, adding that the company’s compound growth in terms of revenue and profitability is around 20% per year.

“The most valuable asset in this company is its distribution network. We have stores and filling stations,” he stresses.

To add to the existing 70 distribution channels, Rachmat says he plans to expand the company’s reach beyond Java. While the distribution channels are owned by the company, Rachmat admits Aneka is looking at the viability of a strategic partner.

“We are thinking of a strategic partnership because they know the market well,” he says, adding that an IPO is also on the cards for 2012. Aneka is unique in the Southeast Asian region in that it is the only private player among a swathe of multinationals and state-owned companies.

With a well-established market share, Rachmat dismisses the benefit of merging the sister companies. “Samator has been popular as a brand name, so why would we change it? Each company is strong in different regions and markets and we want to maintain our brand equity. For example, Aneka is well known in Kalimantan, Aceh and Sumatra, while Samator is strong in Java,” says Rachmat, also the sole distributor of Mazda vehicles in East Java.

In addition to producing gas, the Samator Group is also in chemicals, construction and engineering, general trading, property and financial services. The company also sponsors Surabaya Samator, the local volleyball team, of which Rachmat is a member. As well as enjoying a game, his mind is never far away from a business opportunity. “My father loves the sport and it helps promote the Samator brand,” he says with a smile. GA  

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