Milky Mist Plans IPO to Expand and Compete with Amul

Milky Mist, the well-known dairy company from Tamil Nadu, is preparing for an initial public offering (IPO) to raise funds for its expansion. According to sources reported by MoneyControl, this move is aimed at broadening its dairy product portfolio and challenging its main competitor, Amul.

Company Background and Growth

Milky Mist, founded in 1985 as a milk trading company in Erode, gained prominence in 1994 when it started producing paneer (cottage cheese). Over the years, the company has diversified its product range to include curd, butter, cheese, yogurt, and ice cream. This expansion has helped Milky Mist tap into a wide dairy consumer base across India.

Leadership and Management

The company is run by its founder, T Sathish Kumar, who is a school dropout. He is supported by his wife, Anitha Sathish Kumar, and the CEO, K Rathnam, who previously served as the managing director at Amul Dairy. Their combined experience and expertise have been instrumental in Milky Mist’s growth and success.

IPO Plans and Fundraising Efforts

Milky Mist’s decision to go public follows unsuccessful talks with WestBridge for raising funds. WestBridge had valued the company at around Rs 6,000 crore last year. However, the upcoming IPO is expected to value the company at approximately Rs 20,000 crore. This substantial increase in valuation reflects Milky Mist’s ambitions to expand its product offerings, including chocolates and ice creams, and to enter new markets.

Several prominent Indian investment and merchant bankers, such as Kotak, HDFC, Nuvama, 360 One, and Axis, are reportedly pitching to manage the IPO. The company has also engaged with these bankers to gauge market interest and prepare for the public offering.

Financial Performance

Milky Mist has demonstrated strong financial performance in recent years. In the financial year 2023 (FY23), the company reported a revenue of Rs 1,437 crore, a significant 42 percent increase from Rs 1,015 crore in FY22. Despite this impressive revenue growth, the company’s profit dropped by 13 percent, from Rs 32 crore in FY22 to Rs 28 crore in FY23.

For the year ending March 31, 2024, Milky Mist reported a revenue of approximately Rs 1,950 crore and a profit of Rs 50 crore. This growth highlights the company’s ability to scale its operations and increase profitability, making it an attractive prospect for investors.

Challenges and Future Plans

While the company has shown remarkable growth, it has faced challenges in raising private capital. Milky Mist has attempted to secure private funding at least three times in the past decade, engaging with investors like Peak XV Partners (formerly Sequoia Capital India) and others. Despite these efforts, it has not been successful in securing the desired funds. The company was advised by Spark Capital on its first two fundraising attempts and by Veda in the latest round involving WestBridge in 2023.

Looking ahead, Milky Mist plans to use the funds raised through the IPO to expand its product range and market reach. The company aims to introduce new products such as chocolates and ice creams and to strengthen its position in the dairy industry. This strategic expansion is intended to help Milky Mist compete more effectively with industry giants like Amul.

Conclusion

Milky Mist’s planned IPO marks a significant milestone in its journey from a small milk trading company to a major player in the Indian dairy industry. By going public, the company aims to raise the necessary funds to fuel its ambitious growth plans and to enhance its competitive edge against rivals. With a solid track record of financial performance and a clear vision for the future, Milky Mist is poised for continued success in the ever-evolving dairy market.

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