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Why Milky Mist is eyeing value-added dairy products to fuel growth ahead of IPO
Bengaluru: Dairy products maker Milky Mist Dairy Food Ltd is eyeing growth in its margin and topline with increased focus on value-added dairy products. The company is preparing for an initial public offering (IPO), and is expected to raise as much as $2.3 billion ( ₹2,000 crore).
The firm finds immense potential in value-added products like probiotic curd, sweetened condensed milk, and protein-rich paneer, as they help create differentiation and target premium consumers who value nutrition over price points, K. Rathnam, chief executive officer of Milky Mist Dairy, said in an interview.
'Protein products are our fastest-growing category, and there is great potential for further growth. The category is evolving and is contributing well to our topline." Products treated at ultra-high temperatures kill bacteria and have an extended shelf life.
'More than 70% of the population does not meet the daily requirement of protein. Post covid, there is a change in the consumption pattern where people look for a good quality product in terms of nutritional value," he noted.
The firm's revenue grew nearly 27% in the financial year ended March 2025 compared to the previous year, while profit after tax grew year-on-year, Rathnam said.
'Despite a slowdown in consumption, our topline grew 27% year-on-year and Ebitda as well as profit after tax also improved," he said.
In FY24, the Erode-based company reported revenue of ₹1,900 crore from ₹1,437 crore a year ago, while its profit declined to ₹19.46 crore from ₹28 crore in the previous fiscal year, according to filings with the ministry of corporate affairs.
Focus from the start
The firm currently has a unit near Erode in Tamil Nadu that can process 12.5 lakh litres of milk per day. The firm is working on expanding the capacity of the existing unit with an investment of ₹620 crore. According to Rathnam, the expanded unit will have a total capacity of 20 lakh litres and is expected to be completed by the end of the calendar year.
'The expansion is going on. We are setting up a cheese plant and have commissioned a newpaneer plant in the same processing unit. We have been spending a lot of money on setting up new technologies in tandem with our year-on-year growth," Rathnam added.
Founded in 1997 by Sathish Kumar, Milky Mist started by selling paneer products and eventually expanded its product line to include other dairy products such as curd, buttermilk, khoya, milkshakes, cheese, and ghee. As part of its long-term strategy, the firm avoided selling milk itself, given its low margins and higher costs. CEO Rathnam previously served as the managing director of Amul Dairy.
'From the beginning, we focused on paneer and other dairy products because processing milk requires a decentralised processing plant. It also needs scale and volume, which later becomes a matter of multiple plants and operation lines. A single processing unit helps us maintain strict control over quality," Rathnam said.
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Even though the production of value-added products can be at least 5x costlier than liquid milk, the growing consumption patterns offer an opportunity for sustained business.
'In a whole life cycle, one may be consuming just 1-2 glasses of milk every day. The scope is limited. But for value-added products, there are multiple avenues for repeat consumption," according to the executive.
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Bright prospects
According to a June 2025 report by Crisil, value-added products are expected to bolster dairy company growth by 11-13% in FY26, thanks to higher margins and favourable user shifts.
'Overall, improved product mix, healthy volumes and rising retail prices are expected to help dairy companies see revenue growth of 11-13% in FY26," the report added.
The dairy market in India is highly competitive. According to IMARC Group estimates, it touched ₹18,975 billion in 2024 and is expected to grow to ₹57,000 billion by 2033, propelled by technological innovation and rising consumer demand for a diversified and quality-focused product range.
Milky Mist competes with Amul Dairy, Heritage Foods and Nandini in the non-milk categories.
Milky Mist converted into a public company earlier this year, according to filings available with the ministry of public affairs (MCA). It also appointed two independent directors—Radha Venkatakrishnan and Mallika S Janakiraman—to its board in April.
CEO Rathnam did not comment on the IPO timeline and size.
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