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Milky Mist ropes in PE cos for expansion

The Rs 300-crore round will shed about a fifth of the stake in the company fully owned by founder and managing director Sathish Kumar and his wife.

, ET Bureau|
Jul 22, 2017, 10.12 AM IST
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Agencies
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The Rs 300-crore round is Milky Mist's first-ever private placement.
Erode-based dairy products manufacturer Milky Mist is in the final round of discussions with consumer-focussed private equity players for a Rs 300-crore fund-raiser that will predominantly help build a large factory, expand into western and eastern markets and launch new products.

Milky Mist will build a greenfield unit in Erode that will convert 10 lakh litres of milk procured directly from farmers every day into paneer, curd, cheese, yoghurt and other dairy products. The new factory will contain a separate 70-tonne-a-day unit for making paneer, which has been a consistent business driver for over two decades for the company.

The Rs 300-crore round is Milky Mist's first-ever private placement, shedding about a fifth of the stake in the company fully owned by founder and managing director Sathish Kumar and his wife. The deal values the company at an estimated Rs 1,600 crore, according to sources aware of the development. With plans for a 30-tonne whey powder plant firming up now, the company has taken the discussions to the term-sheet stage with the three PE firms chosen out of 12 potential investors.

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“The talks are at an advanced stage. I think we should be able to conclude this very soon. The purpose of the equity deal is not just funds for expansion.We are looking at a transformation to be a full-fledged national player in dairy products,“ Kumar told ET.

A high school dropout, Kumar entered the family dairy business to turn around losses in a floundering milk business his agriculturalist father had begun. He pulled the venture out of milk retailing and decided to produce paneer. That move, in 1995, led to brisk sales and paved the way for successive market entries into curd, cheese, butter, yoghurt, ghee and more. Still, Paneer is Milky Mist's bread and butter: It manufactures 20 tonnes of paneer every day.

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