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On the ‘milky’ way
Milk Mantra is India’s first venture capital-funded start-up in the agro-food sector.

In 2009, the year when the UPA won a second term, Srikumar and his wife Rashima boarded a flight out of London that would take them to Odisha. By itself, it was no big deal. Every day, hundreds of passengers leave England for India. What marked the present one as different was that Srikumar, a mechanical engineer with a Harvard certification, was throwing a top corporate job as director of M&A operations at Tata-Tetley to become a doodhwallah. Rashima, an XIMB graduate, would be leaving her day work in London’s United Learning Trust to join her husband in pursuing a dream. The Misras wanted to set up a dairy plant, Milk Mantra, that they wished would one day be world-class. 

Twenty months on, the husband-wife team still hadn’t found the money to set operations going. Were the words of their well-meaning London friends that it would be difficult to do business in a third-world state coming true? Was it too audacious a project for even the battle scared venture capitalists to fund? Should the Misras throw in the towel? And then, as it usually happens, the tide changed.  Srikumar, now managing director,  turned to angel funding. Friends chipped in by his name and the business plan he carried. Aavishkar the private equity house showed interest. Between the twenty-two angels and Aavishkar, Milk Mantra raised Rs 11 crore.  The bank gave a matching debt, Srikumar put in Rs 3 crore, and the journey was on. In those cash-starved days, government subsidy was essential and substantial, but the Misras could not access it.


An opportunity beckons

How did the duo stumble on milk? It wasn’t as though it was a burning childhood fascination. In fact, Srikumar doesn’t drink milk, and instead prefers black tea! The motivation “was to build a brand given the considerable consumer trust deficit towards the white drink.”  Mark it, the consumer takes home milk and heats it, suggesting that the fluid he bought is not immediately consumable.  If the husband-wife duo could arrest that trust-deficit, he would have a natty business model on hand.

At a different level, Sri says, “farming provides an income once a year and is the equivalent of a job, which does not pay you a salary but may give you a bonus.” In sharp contrast, you consume milk all through the year.   When searching for business ideas, dairy made sense. The national average of the farmer to ‘farmers in the organized network’ in India is around 50%. In Odisha, it was less than 10%.  The white revolution of the Verghese Kurien hadn’t made a splash in eastern India.  It opened for Srikumar an opportunity to make a difference in his milk-starved home state. 

Of course, there were early troubles. The state government’s milk outfit, Omfed, was a strong name. Consumers either bought from milkmen’s cans or Omfed bottles. When Milk Mantra opened, the booths refused to sell their products. Left with no other choice,  the company recruited 50 delivery boys and 20 door-to-door campaigners asking people to subscribe. Initially, 500 people chipped in, aggregating 1000 liters a day. The uniformed boys driving bike-vans created a buzz. Word of mouth began to happen. The delivery boys created the ecosystem and “became our ambassador.” Then the retailers voluntarily stepped in. Watching volumes go up at retail shops, the whole sellers queued up. The distribution mechanism had made conventional system stand on its head. “We had worked backward from delivery boys to wholesalers,” says Srikumar with a smile.  And better still, the products command a price premium of 10-20% over the market. 


Growing prospects

Milk Mantra introduced its flagship product, Milky Moo, in 2012. It became one of the fastest growing consumer brands with a CAGR of 50 percent over the last three years. In 2015, the start-up launched MooShake, a milk-based health beverage blended with curcumin, which the company wants to promote as an immunity booster. Developed in-house, MooShake has a shelf life of 180 days. 

The Misras’ startup is a case where the farmers supply milk, the company either increases the liquid’s shelf life or converts it to another product, to make a profit.  At the first meeting of farmers in 2009, 100 were expected to turn up. Ten did! Six years on, “we have 50,000 registered farmer in the network.” In the next three years, the farmer network “another 50,000 farmers will be added bringing it to 100,000.”

The footprints are beginning to expand. The company is looking at both organic and inorganic growth. It acquired a processing unit in Sambalpur in western Orissa. The combined of its units in Konark and Sambalpur is 320,000 liters per day. The emerging milk major is planning to up the collection centers from 300 to 1,000 and procurement from 1.2 lac to 4 lac liters of milk per day. It has stepped into Bengal, Chhattisgarh, and Jharkhand.  Of the existing 7,000 stores where it sells 6,500 are in Odisha. By FY-18 the target is 10,000 stores. Seventy percent of the company’s revenue comes from toned milk and 30 percent from other products such as probiotic and plain curd, lassi, and buttermilk sold under the Milk Moo brand.

Milk Mantra entered the dairy products market and took it to other cities. In 2015, it launched MooShake in Bengaluru, followed by Bhubaneswar, Hyderabad, and Kolkata. To create brand differentiation, MooShake banked on curcumin, a turmeric extract. Initially, the product didn’t do too well.  The company later added probiotic and mango-flavored sweet curds, as also litchi-flavored lassi. Rising incomes will spur demand for milk-derived products. Consumption has been growing at 25 per cent year over year. Diary derivatives are more profitable than fresh milk, pulling in margins of up to 18 per cent. The demand for flavored milk and shakes too has been expanding at a fast clip: from Rs 500-crore in 2008 to Rs 2,500 crore ten years later.


Of innovation and way forward

A significant product innovation was the packing. Milk Mantra uses a 3-layered packing, with a black film (middle layer) preventing the damage of milk due to exposure to light, extending the life of the liquid by three days. Milk can now be drunk straight from the pack. Today, Tripak has become the default packing in the industry. For paneer, it uses German packaging technology Multivac, which increases its shelf life by 21 days. The company has developed the world’s first milkshake with curcumin as it’s active ingredient. Curcumin is rich in antioxidants and has several health benefits right from improving immunity to maintaining an excellent cardiac system. 

Moo was marketed with élan.  Says Rashima,  Executive Director, “our social marketing was powerful. We played around the word moo.” So ‘move’ became ‘moove,’ momentary became ‘moovementary’ etc.

As part of ethical sourcing program, the company focuses on transparency in payment and pricing. It has a defined rate chart. It buys from the farmers at Rs 27 and sells to the consumers at Rs 40. Mantra along with LabourNet, an NSDC partner, will educate dairy farmers on healthy dairy farming practices. Incidentally, it has been running such programs with its network farmers since the start of the venture. The grind has been long but eventful. The company has thus far spent Rs 60 crore on plant and Rs 90 crore in the brand. Milk Mantra will break even in fiscal 17-18 with a turnover of Rs 200 crore. From Rs 4 crore in 2011-12, the rise for sure is meteoric.  It plans a five-fold increase in the next four years.

Well-meaning parents ask the founders if they can talk to their kids working in the McKensies and Microsofts of the world to return to India to set up their enterprise. “When we returned people asked: ‘Why?’ Today they are asking us to speak to their children to give up global jobs to set up business in Orissa,” says Rashima with a twinkle in her eye. The pride is justifiable. 

“One day we wish to become the top brand in East India. And one day we will do an IPO,” say the Misras.    

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