India's largest paneer factory is launching a ₹2,000 crore IPO
"We are setting up a whey-powder manufacturing plant -- that's 60 tonnes per day commissioned, up and running -- and a 100-tonne per-day paneer-manufacturing plant is under commissioning which will begin operations in the next couple of months," says K Rathnam, CEO at Milky Mist, "Our new cheddar manufacturing plant -- a capacity of 100 tonnes per day -- has seen all the equipment ordered and in transit; the plant will be up and running by mid-September or October."
In an exclusive chat with CNBC-TV18, Rantham gave a ring-side view of what a day at the mega dairy plant is like. Owned and operated by South Indian dairy major Milky Mist, the paneer production unit measures a massive 1.67 million square feet, including a constructed area of 5 lakh sq feet.
'Growing at 30% CAGR'
In FY-24, the dairy giant reported revenues of ₹1,900 crore at a CAGR of 30%. Soon after, Milky Mist began planning to expand its distribution network, especially in NCR and Maharashtra.
"Since we're growing at around the range of 25% to 30% year-on-year, our existing distributors need to be strengthened, by way of infrastructure development," explains Rathnam, "Then when we go to new markets and add more distributors there." He adds: "Every year, we should be adding 15 percent to 20 percent distributors in newer markets, which means our 2,000 distributors will increase in the next two or three years."
The company's approach in terms of increasing paneer production, while it expands to newer markets, is along expected lines, given the market data in this segment. According to market analyst, IMARC, the paneer market in India was valued at ₹64,000 crore in 2024 and is projected to grow at a CAGR of 12.85%, to hit a whopping ₹2 lakh crore by 2033.
In pursuit of these targets, Milky Mist's mega-plant will play the defining role in the company's market expansion. After all, Milky Mist wasn't exactly a household name until 2018, before the facility came to be. "Once this plant opened, we commissioned our entire product range and began expanding towards the West," says Rathnam, "Today, we have sizeable numbers in the West, particularly in Maharashtra and Gujarat."
How paneer is made
Within the plant, the process of paneer-production begins by heating thousands of litres of milk, before the dairy is then transferred in batches, into large vats. Production personnel then add a coagulant to curdle the dairy, it is allowed to rest and moved to a conveyor belt.
Years before Milky Mist's state-of-the-art automated dairy plant came to be, the company began as a small family-run business in Erode. This was 1985, when the company was simply called Milk Trading Company, eventually taking on the 'Milky Mist' name only in 1998. The dairy major's growth has been phenomenal, ever since. From Rs 48 crore worth of revenue in 2012 to nearly Rs 2,000 crore today, its growth trajectory is a real-life fairytale.
Humble beginnings
In fact, for the company's chairman and managing director, Sathish Kumar, paneer-making began as a passion project, but remains at the heart of a deeply personal journey of triumph: "When I first introduced paneer those days in very small volumes, the biggest challenge at that time was that there was no brand name and no market size."
This sometimes meant that many from his social and business circles did not know what paneer was. "Promoting paneer in South India was a big challenge. if anybody asked me 'what do you do?' I'd say: 'I do Paneer'," he recalls with a smile, "In the Tamil tradition, paneer is a scent that you apply before attending weddings. So, most of the time they would ask me: 'Are you making this paneer?' I had to explain: 'No, no, no... Paneer is a kind of milk cake'."
Back at the plant, the Milky Mist leadership is busy designing the contours of the company's business expansion. A key piece of the puzzle is distribution - more specifically, the need to increase distributors by 15 percent to 20 percent, ever year. Doing that, however, is a complicated task because it involves big-ticket investments in logistics.
Running a transport company
Making sure its wide range of dairy products reaches distributors in the best way possible requires top-end cold-chain logistics. To make that work, Milky Mist runs 250 refrigerator trucks, 640 cold rooms and 32 chilling centres in order to send products to its network of distributors, who in turn place products at 2.75 lakh retail stores.
"We are the only dairy in the country to own 100 percent of our entire cold-chain logistics," says Sathish, "This is like operating our own transport company." He adds: "In the initial stages of business, we had the challenge of hiring trucks and not having them reach on time, or not bother about temperature control - even switching on the air-conditioning and switching it off when they wanted."
Today, Milky Mist owns its own trucks that are maintained by Daimler India Commercial Vehicles, who service the vehicles on site. The scale of the operation is mammoth. "It's a bit like owning an airline," Sathish adds.
Sourcing is everything
One of the core features of the dairy business is sourcing - procuring milk from dairy farmers and transporting it from farm to factory. At the crack of dawn, just outside the Sathyamangalam Forest, several dairy farmers line up to sell their morning milk supply. Milky Mist partners with 70,000 of these farmers, from whom they procure 8 to 10 lakh litres of milk every day.
The milk is procured through automated milk collection units (AMCUs) before it is stored in giant-sized chillers and shipped to the plant by road. This early-stage process in the dairy supply chain is crucial to keep it going given that Milky Mist is presently looking to spike production of new categories like high-protein yoghurt and ice-cream.
"Protein is a category that is coming up in a major way and we have launched a few products like Greek Yogurt and Skyr, which has about 12% protein per 100 grams of the product," says Rathnam, "Given that we want to build this category and take it to the next level, we are innovating certain product categories, while we keep investing in technology."
The Rs 650 crore capex figure will be deployed towards such investments over the next 30 months as the dairy keeps expanding its plant and navigating the upcoming IPO. What Milky Mist also hopes to achieve in this period is to continue growing while raking in profits and expanding production to include a brand-new cheddar cheese unit. For the moment, it's back to churning out paneer and more paneer, as India's appetite for cottage is only set to get stronger.