Milky Mist posts Rs 928 Cr revenue in FY21 with 4 fold jump in profit

Dairy businesses have stayed away from modernisation and largely relied on traditional supply chains. However, things are changing with the emergence of brands such as Country Delight which has been leveraging modern techniques and direct-to-consumer (D2C) channels for distribution.

Besides new startups in the space, legacy dairy companies such as Milky Mist are also laying great emphasis on D2C and digital channels. To ramp up new initiatives, the purely bootstrapped company is now looking to raise its first institutional financing round. While it reportedly clocked over Rs 1,300 crore in revenue, its operating revenue crossed Rs 925 crore in FY21.

According to the annual financial statements filed with the RoC, the sale of products was the only source of revenue for Milky Mist which shot up 28.2% to Rs 928.3 crore in FY21 from Rs 723.8 crore in the previous fiscal year (FY20). The company also made Rs 1.17 crore from bank deposits and gains on financial instruments which pushed its total income to Rs 929.5 crore in FY21.

In line with revenue, the total cost of the company also grew 26.4% to Rs 886.6 crore in F21 from Rs 701.4 crore in the preceding fiscal year (FY20). 

As the company is more into manufacturing and supply of dairy products, cost of materials naturally emerged as the largest cost center, contributing 67.5% of the overall cost which shot up 30.2% to Rs 598.19 crore in FY21 from Rs 459.3 crore in the previous fiscal year.

The Erode, Tamil Nadu-based company has a total indebtedness of Rs 460 crore in FY21. Being a leveraged firm, finance cost was the second major cost followed by cost materials constituting 5.3% of total cost sheet which grew 7.2% to Rs 46.7 crore in FY21 from Rs 43.6 crore in FY20.

Employee benefit cost expanded by 14.6% to Rs 43.43 crore in FY21 from Rs 37.9 crore in FY20. Directors of the company Sathish Kumar T, Anitha S, and Rathnam K took a combined remuneration of Rs 4.93 crore annually.

Last year, Milky Mist acquired ASAL Food Industries for an undisclosed amount. Asal manufactures and supplies ready-to-cook foods such as half-cooked chapati, parotta, idli and dosa batter, among others. 

Expenditure on advertising and promotion grew 34.2% to Rs 40.65 crore in FY21 from Rs 30.3 crore in the previous fiscal year (FY20). The logistics chain is fully owned by the company itself to get better control over quality and distribution. Logistics & vehicle running expenses grew nearly 30% to Rs 34.06 crore in FY21 from Rs 24.17 crore in FY20.

As the scale went up with controlled expenses, Milky Mist managed to grow profits 4X to Rs 23.13 crore in FY21, where the figure stood at Rs 5.81 crore in the previous fiscal year (FY20).

Cash inflow for Milky Mist expanded 2.3X to Rs 135 crore during FY21. With so many positive points, ROCE and EBITDA margin were recorded at 17.83% and 15.49% respectively. On a unit level, it spent Rs 0.96 to earn a single unit of operating revenue.

For many industry watchers, it has been fascinating to track the emergence of increasingly large desi firms making a dent in the dairy business. From the massive looming presence of GCMMF-owned Amul which is at over Rs 52,000 crore to the multiple 1,000 crore plus firms carving out spaces, the space is no longer about Indian firms at risk from MNCs. VC and investor money, besides smarter entrepreneurs, have changed the market. The game today is all about margins and value addition. As the world’s largest producer of milk, India has an opportunity to raise at least a few homegrown unicorns in the over $70 billion dairy market.