Erode-based Milky Mist Dairy Food Ltd, a leading producer of value-added dairy products, has received approval from the Securities and Exchange Board of India (SEBI) for its ₹2,035 crore initial public offering (IPO), according to people familiar with the matter.
The public issue will comprise a fresh issue of equity shares worth ₹1,785 crore and an offer-for-sale (OFS) of shares valued at ₹250 crore, to be sold by promoters Sathishkumar T and Anitha S. The company has also reserved the option for a pre-IPO placement of up to ₹357 crore, which would proportionally reduce the fresh issue size if executed.
JM Financial, Axis Capital, and IIFL Capital Services are the lead managers for the issue.
Partial Promoter Exit in Focus
As earlier reported by Moneycontrol, the OFS will see Milky Mist’s promoters — founder Sathishkumar T and Anitha S — partially offload up to 1.5 crore equity shares. Sathishkumar, who launched Milky Mist in the 1990s as a small dairy business in Erode, will continue to hold a significant stake post-listing and remain actively involved in operations.
The limited OFS component highlights that most of the IPO proceeds will be directed toward the company’s growth and financial strengthening, rather than a promoter cash-out.
Utilization of IPO Proceeds
Milky Mist plans to use the majority of the IPO proceeds to repay or prepay borrowings, reduce leverage, and finance capacity expansion.
Out of the total fresh issue, ₹750 crore has been earmarked for debt reduction, with the remaining funds to be used for general corporate purposes, capital expenditure, and working capital requirements.
As of May 31, 2025, the company’s total consolidated borrowings stood at ₹1,463.59 crore, including both secured and unsecured debt. Reducing leverage remains a core priority as the company prepares for its next phase of growth.
Key Business Risks Highlighted
Milky Mist’s draft red herring prospectus (DRHP) underscores several operational risks:
- Single manufacturing facility: The company’s entire production is dependent on a single plant in Erode. Any disruption due to natural disasters, equipment failure, or labour issues could severely impact supply, as no alternate facility exists.
- Distribution concentration: Milky Mist relies heavily on a limited number of super stockists and distributors, increasing concentration risk. Despite a growing national presence, over 70% of revenue still comes from Tamil Nadu and Karnataka, making its business geographically concentrated.
- Volatility in raw milk prices: As milk is its key raw material, fluctuations in procurement prices can affect margins — especially in competitive categories like curd, paneer, and cheese, where price hikes are difficult to pass on to consumers.
- Intense competition: The dairy market is dominated by Nestlé India, Britannia, Amul, Hatsun Agro, Dodla Dairy, and Parag Milk Foods, all of whom enjoy stronger financial positions and wider brand recall.
Despite these challenges, Milky Mist’s leadership team — including CEO K. Rathnam, a dairy industry veteran and former Amul executive — brings deep expertise and operational experience that could help steer the company through the next stage of its journey.
Milky Mist’s Strategic Growth Path
Milky Mist’s SEBI approval marks a significant milestone for one of India’s few large-scale homegrown dairy brands built without private equity or institutional backing. Over the years, the company has carved a niche in the value-added dairy segment, offering premium-quality products and maintaining strict end-to-end supply chain control.
The IPO is expected to strengthen the company’s balance sheet, improve liquidity, and enable capacity expansion, even as it continues to face raw material cost pressures and stiff competition in the dairy sector.
With SEBI’s clearance, Milky Mist joins a growing list of consumer-focused and food-sector companies — including Curefoods — gearing up to test investor sentiment in India’s buoyant primary market.
Outlook: From Creamy Growth to Wider Horizons
The success of Milky Mist’s IPO could be pivotal in determining its ability to scale beyond southern India and sustain profitability in a sector known for thin margins and high competition.
Whether Milky Mist can maintain its “creamy growth story” will depend on its execution strategy, brand expansion, and ability to balance cost pressures with profitability as it transitions into a listed entity.
Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or trading advice. Readers are advised to consult with a qualified financial advisor before making any investment decisions. Legal Parivar and its authors are not responsible for any losses arising from investment decisions based on this content.
