How HyFun Foods Leverages AI and IoT for Efficient Potato Processing in the Frozen Snacks Industry

How HyFun Foods Leverages AI and IoT for Efficient Potato Processing in the Frozen Snacks Industry

Founded in 2015, HyFun Foods has swiftly established itself as a key player in the frozen food sector, particularly in frozen potato-based snacks. With a deep commitment to quality and innovation, the company has partnered with major quick-service restaurant (QSR) brands like Burger King, KFC, Pizza Hut, and Domino's, while expanding its export reach to over 40 countries, including the US, Canada, and Japan. The company has positioned itself at the heart of India’s rapidly growing frozen food market, capitalizing on shifting consumer preferences and urbanization trends.

The frozen food market in India, valued at Rs 14,618 crore in 2023, is expected to experience substantial growth in the coming years, with projections estimating a compound annual growth rate (CAGR) of approximately 15.72% between 2024 and 2029. This surge in demand for ready-to-eat, processed foods is largely driven by the convenience offered by fast food outlets and busy lifestyles. Among the companies that are tapping into this growing demand is HyFun Foods, a Gujarat-based company that specializes in producing frozen potato snacks like French fries, burger patties, and cheese poppers.

The Vision of HyFun Foods’ Founders

HyFun Foods’ story is rooted in a family legacy of potato trading. Haresh Karamchandani, the founder and Group CEO, comes from a family involved in the potato business, but his parents initially steered him away from the trade, encouraging him to pursue other career opportunities. However, in his third year of college, Karamchandani felt a calling to return to the family business. His journey wasn’t a straight line—he explored various ventures, including owning a multiplex theater chain and managing a Maruti dealership, before finally turning his attention to the food processing industry in 2010.

At the time, India had only one major potato processing company, and the equipment used for this sector was largely imported from countries like the US and Europe. Seeing a gap in the market, Karamchandani traveled to Europe, specifically the Netherlands, to study farming techniques, cold storage methods, and the processing equipment available. With this newfound knowledge, he launched HyFun Foods in 2015, a decision that marked a significant shift from potato trading to large-scale potato-based food production.

In the early days, there was considerable skepticism about whether India could produce high-quality frozen products like French fries on a large scale. However, by focusing on quality and building strong relationships with farmers, HyFun Foods has not only succeeded in producing premium products but also become a key supplier to major international QSR brands.

HyFun Foods’ Business Model and Growth Strategy

HyFun Foods’ approach to growth is centered around a ‘seed-to-shelf’ business model, starting with contract farming for seed multiplication and crop procurement through a buyback agreement. This approach helps the company control the quality of the potatoes it processes, which is vital to ensure consistency and high standards. The company started with just 200 farmers and now works with 7,500 farmers across Gujarat and Madhya Pradesh, with plans to expand to 10,000 farmers by FY26. The long-term goal is to reach a network of 30,000 farmers by FY29, encompassing several key potato-growing regions in India.

The company’s growth is not only driven by an increasing supply of high-quality potatoes but also by a focus on cutting-edge infrastructure and technology. HyFun Foods has invested heavily in advanced cold storage infrastructure and digital tools to streamline operations and improve farm productivity.

Embracing Technology for Efficiency and Sustainability

HyFun Foods has embraced technology at various stages of its supply chain, making use of Internet of Things (IoT) devices, artificial intelligence (AI), and digital tools to optimize its operations. One of the key challenges the company faces is managing the procurement process efficiently, especially given the seasonal nature of potato farming and the large number of farmers involved.

To tackle this challenge, HyFun Foods introduced a tech-based solution for farmer engagement, including a dedicated farmer app. This app helps streamline interactions between farmers and the company, ensuring that procurement and payment processes are efficient and transparent. Furthermore, to enhance agricultural productivity, HyFun Foods launched the HyFun Paathshala initiative. This platform serves as a knowledge hub that educates contract farmers on regenerative farming practices and modern agricultural techniques.

IoT and AI for Precision Farming

HyFun Foods is leveraging advanced technologies like IoT sensors and AI to optimize resource utilization on farms. For instance, the company has introduced soil moisture sensors that help farmers monitor soil conditions in real time, reducing water wastage and improving crop yields. This is particularly important given the erratic weather conditions in some regions. Additionally, AI-driven tools are used for weather forecasting through the Weatherways system, which helps farmers plan their activities more effectively.

Another significant innovation introduced by HyFun Foods is Soilala, a soil monitoring system that uses IoT to provide detailed insights into soil health and moisture levels. These insights allow farmers to make informed decisions about irrigation, fertilization, and other critical aspects of potato farming. The company has also developed an AI-based harvest quality assessment tool, which helps evaluate the quality of potatoes during procurement. This tool ensures that only the best-quality potatoes are selected for processing, which is essential for producing premium frozen snacks.

HyFun Foods’ Global Expansion and Future Plans

HyFun Foods is on a robust growth trajectory, with the company reporting a turnover of Rs 1,200 crore in FY24, with exports contributing 70% of its sales. The company is focused on increasing its domestic market share, with plans for domestic sales to account for 50% of total revenue by FY29. To achieve this, HyFun Foods plans to scale its operations by investing an additional Rs 1,000 crore in production capacity and infrastructure over the next few years.

Looking ahead, HyFun Foods plans to diversify its product range, moving beyond frozen potato snacks to include other processed foods such as pizzas, kebabs, momos, and processed vegetables. This diversification will allow the company to tap into a broader consumer base, further accelerating its growth.

HyFun Foods is also exploring new frontiers in onion processing. The company plans to launch a trial plantation for onion crops in November 2025, with the aim of producing frozen onion cubes and slices for the HoReCa (Hotel, Restaurant, and Catering) and QSR industries. This new venture builds on the company’s successful model for potato processing and is expected to add significant value to its business.

Investment in Innovation and Future Growth Prospects

HyFun Foods has already invested Rs 1,000 crore in its infrastructure and operations, and with the goal of scaling production, it plans to invest an additional Rs 1,000 crore. While the company has largely relied on debt financing to fuel its growth so far, it is exploring private equity funding to accelerate its expansion plans. In the next two to three years, HyFun Foods also plans to launch an initial public offering (IPO), marking a significant milestone in its journey.

The company’s impressive growth trajectory and its commitment to innovation in food processing, technology adoption, and agricultural productivity make it a leader in India’s frozen food industry. By focusing on quality, sustainability, and efficient operations, HyFun Foods is well-positioned to continue its expansion both domestically and internationally, contributing to the evolving food landscape in India and beyond.

Conclusion

HyFun Foods is a prime example of how technology and innovation can transform traditional industries. By leveraging IoT, AI, and other advanced technologies, the company has been able to revolutionize potato processing for frozen snacks, ensuring high-quality products that meet the demands of global markets. With its commitment to growth, sustainability, and product diversification, HyFun Foods is poised for continued success in the coming years, cementing its position as a leader in the frozen food sector.