Haresh Karamchandani says quick commerce could account for up to 50 per cent of the company’s total sales within the next two to three years
Emphasising that the Indian market is picking up in terms of convenience frozen food options, Haresh Karamchandani, Managing Director and Group Chief Executive Officer (CEO) of HyFun Foods, stated that the company is looking to cross Rs 1,600 crore in revenues in the current financial year. Karamchandani noted that they are looking to clock Rs 70 to Rs 80 crore revenue on the domestic retail front in FY26.
In an exclusive interaction, Karamchandani said HyFun Foods is very optimistic that quick commerce will help drive the consumption of frozen products. The MD added that quick commerce can reach up 50 per cent of the total sales of the company in the next two to three years. Edited Excerpts:
Who do you consider your core consumer today and why?
It is mostly business-to-business (B2B). We supply to Horeca (hotels, restaurants, cafes, caterers) channels and also to quick service restaurants (QSRs) like Burger King and KFC. Those are all food service establishments, who from there onwards serve to consumers. So, it is not directly with consumers. That is the major part of our business. Now, within this again, we are in the total sales, where 70 per cent is exports and 30 per cent is the domestic market. When it comes to consumer segments, we call it retail. Because the cold chain infrastructure is mostly in the bigger cities, it is mostly the urban households.
A slowdown was observed in urban consumption last year. Do you see the signs of recovery this year?
In our business, with our brand, we have recently entered the consumer space. We recently entered the retail segment, which is almost one and a half years old. We have been in business since 2015. For the first nine years, we were focusing only on B2B, and now we have started retail.
Ours is a category that is growing. There is a shift from making food freshly and shifting to convenience options. For example, our product category, which is frozen, is considered to be one of the best in terms of convenience options because frozen is made without any preservatives and you get a shelf life. Because we are in that space where there is a shift towards convenience foods, we always see there is an uptake in demand. We have not seen that the demand is slowing down.
You also talked of investing Rs 1,100 crore to set up three manufacturing plants earlier. What is the status on that?
Last year, we already invested over Rs 300 crore. We have already started two plants and are establishing the third one. It will take almost 12 months from now for that plant to come into operation. We are increasing our capacity because of the large-scale consumption of our products, especially French fries and potato specialities, in the export markets, and also India is now picking up. We are improving on our efficiencies and also bringing in the economies of scale benefit.
In terms of retail presence, the company has scaled from six to 50 cities. What is the target for this going ahead?
If we talk about our food service sales, we are already present in around 300 cities and towns in India. When it comes to retail, we are adding year on year. Because of the cold chain aspect, we need to ensure that we gradually increase our presence in the number of cities. This year, we have touched around 50 cities. By next year, we should be there in around 80 to 100 cities.
What are the revenue expectations for this fiscal year and in the near term?
In the current financial year, we will be crossing around Rs 1,600 crore. Last financial year, we did over Rs 1,400 crore and this year, we will be crossing Rs 1,600 crore of sales. On the domestic retail front, it will be around Rs 70 to 80 crore in the current financial year.
You expanded the ready-to-cook frozen snacks portfolio with your Indian street-style flavours with the Mumbai Aloo Vada. What is happening in this space, and what is driving this decision?
We have primarily started with western products, which are French fries, then hash browns and so on. We have also now developed products for the Indian market, which are Aloo Tiki, Mumbai Aloo Vada, Sabu Dhana patty. While we have kept the Indian palette in mind in the other range of products for the domestic sales, we are also adding a lot of products which are suited to the Indian consumer.
Our plan is that now that the Indian market is also picking up in terms of convenience frozen food options, we are introducing a lot of new products for the Indian consumers. We feel that Indian consumers need a lot of variety in food, and hence, in addition to the potato-based products we are into, we have also introduced frozen pizza, and soon we will also be launching onion rings.
While entering into the B2C segment from B2B, what are the key challenges that you have experienced so far?
Cold chain infrastructure is not yet at its best in India. While it is improving day by day, there are certain challenges. In the smaller stores, especially, many times it so happens that in certain areas the consistency in supply of electricity is not there, and sometimes, because there is no right awareness, the freezers are also sometimes shut down during the night. Now that impacts the quality of the product.
I would also like to mention that in general trade, the freezer space is also very limited. These are products which need to be kept in the freezer, while there are ice creams and other dairy products already stored there. But with the coming up of modern trade stores, especially the large format stores, the freezer space has increased. That is giving some traction for consumers and also a larger space for storage.
How is quick commerce aiding the company to mitigate these challenges? How is it proving beneficial?
Especially in our category, we are very optimistic that quick commerce will help drive the consumption of frozen products. This is because in the case of quick commerce, they operate from dark stores. They do not invest in very high real estate. Because they are operating from dark stores and then they reach the consumer within 10 to 15 minutes, that also helps, so even if the cold chain is not maintained, there is no impact on the quality of the product.
Because consumers can call the product whenever they would like to consume it, it also solves the cold chain infrastructure problem. Now, because of quick commerce, even if you have limited freezer space, consumers can order frozen products whenever they would like to consume. They do not store it in the freezer. We foresee that quick commerce can reach up to 50 per cent of the total sales in the next two to three years.
As 70 per cent of your revenue comes from exports, what are the areas that you are trying to improve on to increase that figure and also what are the new markets that you are trying to explore?
Within frozen foods, our main focus is on potato-based products. In our business, a large part of our business comes from the sourcing of fresh produce, the raw potato. We source through contract farming and a large number of farmers. Our anchor product is frozen French fries and hash browns… These are global products which are now being manufactured in India, and India is also exporting to markets in Asian countries.
Today, we have reached 40-plus countries. Our focus area is all the markets in Southeast Asia, far East, Gulf Cooperation Council (GCC) and others. Earlier, all these countries were relying on imports from Europe and the United States (US). Now India has emerged as an alternative supplier. India is picking up in these markets and h replacing Europe and the US gradually because it is closer to these markets. So our focus, in exports, is mainly in these regions right now. Because we have increased our scale and have larger capacities now, we are also reaching newer geographies. But then again, out of our overall sales, our focus will be primarily on Asian countries.
What is the biggest myth that is hampering the growth of the industry that you deal in?
There are a lot of myths around frozen food. Indian consumers feel that frozen food is not healthy, and they have a misconception that it is filled with preservatives and so on. If you talk to any consumer in the West, they are well aware that they believe frozen is better than fresh. This myth needs to be broken. One benefit of buying this kind of product for a consumer is, of course, that we take care of the best of food safety, hygiene when it comes to manufacturing the products and also no preservatives are added. It is the freezing technology. Now, this technology is called IQF (individual quick freezing). Because of this technology, we get that kind of a shelf life of 18 months and 24 months without any preservatives.
