I think the issue was by ths following , It would still create minimum number of instances the moment you create the autoscaling group. Reason being that the autoscaling policy will create its own instances, and won't consider the instances already in the process, so one will have to get rid of the old ones and let the new ones be.
Getting a list of instances in an EC2 auto scale group?
This might help you EC2 instances offer a feature called User Data meant to solve this problem. User Data executes a shell script to perform provisioning functions on new instances. A typical pattern is to use the User Data to download or clone a configuration management source repository, such as Chef, Puppet, or Ansible, and run it locally on the box to perform more complete provisioning. As @e-j-brennan states, it's also common to prebundle an AMI that has already been provisioned. This approach is faster since no provisioning needs to happen at boot time, but is perhaps less flexible since the instance isn't customized.
Why does Azure Auto-Scale scale go lower then minimum amount of instances?