Perundurai (Erode)/Chennai: Sathish Kumar T., chairman and managing director of Milky Mist Dairy Food Ltd, is a habitual learner. He keeps a diary, jotting down anything of interest during the day—data, best practice, a new development or even a new word. He then spends two hours or more each night reflecting, diving deeper into what he had noted.
For someone who has not had a formal education—he is a school dropout—and does not believe in consultants, it is this process of learning that has helped him build a sizeable company, one knocking on the doors of an initial public offering (IPO).
“My decision to move away from raw milk to value added products, focus on scale and quality came from this exercise,” Kumar told Mint.
Today, Milky Mist is one of India’s fastest growing milk product brands with a 30% compounded annual growth rate between FY23 and FY25. Last fiscal year, the company clocked revenue of ₹2,350 crore with a product range that spans the entire milk spectrum—paneer, ghee, butter, cheese, yogurt, ice cream, chocolate and more.
It is this exercise that has also emboldened him to try something few private sector dairy players have attempted so far—become a pan-Indian brand.
The lion’s den
The milk sector in India is dominated by strong regional players, almost all of them backed by state governments. They include Mother Dairy (Delhi), Nandini (Karnataka), Saras (Rajasthan), Aavin (Tamil Nadu), Milkfed (Punjab), Milma (Kerala) and Parag (Uttar Pradesh), to name a few. Amul, a brand of the Gujarat Cooperative Milk Marketing Federation, is the only one with a national recall. These brands are so well-entrenched, both in distribution and brand loyalty, that dislodging them is a tough ask in their respective markets.
Four years ago, Kumar noted in his diary about a new trend. Consumers in India were beginning to look for choices and were beginning to explore new brands that offer a differentiated experience. As he mulled over, he saw an opportunity to break the stranglehold of the regional brands. Indeed, the biggest national brand.
Kumar took Milky Mist to Gujarat, the home of Amul.
“People warned me against entering the lion’s den. No brand, they said, had succeeded there,” he recalled.
The company proved sceptics wrong. It not only survived but is growing. Last year, its revenue from Gujarat crossed ₹125 crore, accounting for 20% of the company’s turnover generated beyond South India.
All its milk products are made at a single location—in Perundurai near Erode in western Tamil Nadu. In FY25, 71% of the total revenue came from the south (see chart) and it procures almost 99% of its milk from farmers in Tamil Nadu. A pan-India play will de-risk the company’s operations.
“This concentration is quite normal in the milk business,” explained K. Rathnam, chief executive officer (CEO), Milky Mist. “Most regional brands have a similar model.”
But the company wants to widen its operations. “We will increase our non-south revenue from the present 26% to 40% by 2030,” he added.
That will involve significant investments in new capacities and expanding the retail footprint, which includes supplying coolers and freezers to retailers. The bootstrapped company is already stretched as it funded its expansion predominantly through borrowings. It has, thus, piled up a debt of ₹1,376 crore. Its debt-equity ratio is 4.2 times as of March 2025. High interest cost is eating into its profit margin. Its net profit margin of 2% is the lowest in the industry.
The IPO, expected later this year, has thus become inevitable. About ₹545 crore from the IPO proceeds will be used for expanding capacity and the retail network. Also, ₹750 crore from the offering will go towards paying off the loans.
“It is important for us to deleverage the balance sheet and be ready for future opportunities,” Rathnam added.
Success in this exercise could well determine Milky Mist’s success as a national dairy player.
Paneer to cheese
From his very young days, Kumar dreamt of becoming an entrepreneur. But he never thought he would start so early. Family circumstances forced him to discontinue his education after the 8th standard and plunge into the family business of supplying milk to vendors in Bengaluru. “I was not good in studies and did not miss school much,” he said. This was the early 1990s.
Some time in 1993, the vendors he was supplying milk to faced difficulties in procuring paneer. They asked Kumar whether he could supply. “I had no clue what paneer was,” remembered Kumar. In fact, that was his first exposure to a milk product. He began his research.
Soon, he leased a 2,000 sq. ft facility to make paneer. Initially, it was just a few kilograms a day. He struggled with quality. The output was not consistent with weather and milk quality playing havoc. His search for technical knowhow yielded little result. He persevered.
In 2005, Kumar borrowed ₹50 lakh from the banks and set up a manufacturing facility on a one acre plot at Chithode near Erode. Even as the business grew by 30-40% every year, his struggle for consistent quality continued. By 2009, Milky Mist’s revenue grew to ₹13 crore. Soon, other challenges emerged. Very few households in South India consumed paneer, and Kumar realized that high growth rates cannot be sustained unless they start consuming it. He began promoting the product through television advertisements. But, there was yet another challenge. Paneer, being a cold-chain product, needed retailers to refrigerate the product. Not many retailers wanted to invest. And it did make sense for Milky Mist to supply coolers for just one product. The company needed to increase its product offerings.
A visit to Germany for a dairy fair in 2009 exposed Kumar to the technologies available in Europe. He imported a reconditioned plant from Europe. Milky Mist soon launched cheese and butter.
“At that stage, my quality concerns eased and I was confident of making it big,” said Kumar. He expanded the retail presence beyond southern metros and began offering chillers to retailers.
By 2013-14, the company processed 200,000 litres of milk a day and its revenue totalled ₹235 crore. That year, it acquired 17 acres at Perundurai to establish a modern manufacturing facility at a cost of ₹500 crore. It sought private equity funding but it did not materialize. The expansion was then funded by debt. It was a three-phase expansion and when it became fully operational in 2019, the milk processing capacity touched 2.2 million a day. As capacity increased, the company reached out to a wider market and broad-based its product offerings to include yogurt, ice creams, chocolates and ultra-high temperature milk.
“Milky Mist is a unique brand that has come up very quickly,” said N. Chandramouli, CEO, TRA Research, a brand analytics and consumer insights company. “Quality, availability and communication have been its strengths.”
Experts attribute five distinct strategies for this success.
Focus on value
Even as most dairy players focussed predominantly on raw milk, Milky Mist went against the tide and focused on value-added products.
“We understood the inherent challenges in the liquid milk segment and the advantages value-added products offered,” explained Rathnam.
Raw milk suffered from volatile procurement costs and seasonal fluctuations in supply. Its shorter shelf life meant poor pricing power. Value-added milk products, on the other hand, had a longer shelf life and offered scope for premium pricing. This meant a healthier profit margin. Milky Mist, as a company, has never suffered a loss thus far and has always benefitted from strong cash flows.
Best of technology
Kumar’s visit to Germany was a turning point. When Milky Mist set up the Perundurai facility, he went for the best available technology even if it cost more.
“For instance, a curd-packaging machine was available from Taiwan at ₹2 crore, but the best machine from Europe came at ₹20 crore. We went for the European machines,” Kumar explained.
Focus on technology helped the company offer quality products and packaging. “Efforts like these have ensured that the brand has the spunk to stand out in the crowd,” said TRA’s Chandramouli.
Capacity at scale
When Milky Mist expanded, the team planned 5-10 yeas ahead and created capacity. In a capital intensive sector, this is the right strategy even if it meant initial lower capacity utilisation. In FY25, capacity utilization of the ice cream plant was just 19% and chocolate 10%. But Rathnam explained the advantage of this strategy. “Our ice cream capacity can deliver a revenue of ₹900 crore. Today. we are at ₹200 crore. In the case of paneer, the capacity can deliver revenue of ₹2,000 crore as against the present revenue of ₹900 crore,” he added.
Focus on quality
Kumar understood early that consumers expected the best quality at an affordable price. By following this value proposition, Milky Mist has been able to export to over 22 countries.
Kumar instructed his team that the quality benchmark for the Indian market should be the same as those in the toughest export market.
“Milky Mist is seen as a purity player thanks to its ability to maintain quality. Consumers swear by the brand,” said Harish Bijoor, a brand and business strategy specialist. The brand’s rapid rise, he added, was fuelled by this attribute.
Risk taking
The company, meanwhile, took risks when and where it mattered. Take the case of ₹40 crore it invested to create a Greek yogurt line five years ago. At that time, demand for this thick, creamy dairy product was still tepid although the market had been created by Indian startup brand Epigamia, which launched Greek yogurts in 2015.
Kumar went with his gut feeling—if it worked elsewhere in the world, it should work in India, too. Today, Greek yogurt is popular among the health-conscious Gen Z audience.
The way forward
Milky Mist has drawn up a three-pronged strategy for the future. It will focus on protein and introduce products such as whey protein and lactose. India, after all, is a protein-deficient nation. The company is also looking at a decentralized manufacturing strategy. It may involve its own facility—the company has bought land in Maharashtra for setting up a plant)—or through third-party manufacturing.
“We will produce low shelf life and low-value/high-volume products in such facilities,” said Rathnam. “This will make operations more efficient.”
The company is also looking for facilities outside India. Today, exports account for 4% of the total revenue. “Setting up a facility in Europe will open up huge markets for us including in Europe and Canada, which are today out of bounds for India exports. We are looking for organic and inorganic opportunities in Europe,” said Shanjay T.S., manager, retail and exports, Milky Mist.
To expand in the domestic market, it has adopted multiple go to market strategies. In Gujarat, it used quick commerce to make inroads. In Maharashtra, it was more of modern trade and distributors. In Uttar Pradesh and Bihar, kirana stores are at the forefront of their operations. Non-south revenue in FY25 touched ₹682 crore.
While the company has advantages we have mentioned before—like the consumption shift to high value diary products and healthier alternatives—the path ahead is unlikely to be easy.
Market leader Amul is also expanding, both its national presence and its product portfolio. Strong regional brands like Nandini and Mother Dairy are investing in value-added products as well while expanding beyond their home states. And then there are startups such as Akshayakalpa in Karnataka. “Competition is going to be heavy going forward, especially from the more nimble smaller players,” warned Bijoor.
Kumar, nonetheless, remains confident. The jottings in his diary have increased. The process that has helped him in the last 25 years will serve him well going ahead as well, he believes.