Milky Mist Dairy Food Limited IPO

The company's manufacturing operations are dependent on the supply of large amounts of raw milk, with the majority of the company's raw milk procurement being from the state of Tamil Nadu (97.68%, 99.62% and 100.00% of the total raw milk procurement in Fiscals 2025, 2024 and 2023, respectively). The company's inability to procure adequate amounts of good quality raw milk, at competitive prices, or any adverse development in the state of Tamil Nadu affecting the milk supply, may have an adverse effect on its business, results of operations, financial condition and cash flows.

The company significantly depend on the company's manufacturing facility which is located in Perundurai, Erode, Tamil Nadu as it is dedicated to producing value-added dairy products which contribute to the majority of its revenues. Any adverse developments affecting this region or any slowdown or shutdown in the company's manufacturing could have an adverse effect on its business, results of operations and financial condition.

The company derives a significant portion of its revenue from the sale of the company's products in South India. The company's aggregate revenue from the sale of products in South India accounted for 71.00%, 73.68% and 78.46% of its revenue from operations for Fiscal 2025, 2024 and 2023, respectively. Any adverse developments affecting the company's operations in South India, could have an adverse impact on its business, financial condition, results of operations and cash flows.

The company derives a significant portion of its revenue from the sale of certain product categories, namely, paneer, cheese and curd (which contributed 62.63%, 66.16%, and 67.36% to the company's revenue from operations in Fiscal 2025, 2024 and 2023, respectively). The company's inability to anticipate and adapt to evolving consumer tastes, preferences and demand for such product categories, or ensure product quality may adversely impact demand for such product categories and consequently its business, results of operations, financial condition and cash flows.

The company does not have long term agreements with suppliers for the company's other raw materials (in addition to raw milk) and its cost of such other raw materials (excluding raw milk) accounted for 18.89%, 16.30%, and 15.43% of the company's revenue from operations in Fiscal 2025, 2024 and 2023, respectively. An increase in the cost of or a shortfall in the availability of such raw materials could have an adverse effect on its business, results of operations and financial condition.

The Company is required to obtain certain statutory approvals, licenses, registrations and permits to operate its business, manufacturing facilities and Milk Chilling Centres. Failures to obtain or renew such approvals in a timely manner, or at all, or comply with laws in relation to safety, health and environmental protection may adversely affect the company's business, financial condition, results of operations and cash flows.

Improper, processing or storage of the company's raw materials or products, or spoilage of and damage to such raw materials and products, or any real or perceived contamination in the company's products, could subject us to regulatory action, damage its reputation and have an adverse effect on business, results of the company's operations, financial condition and cash flows.

The company may be unable to comply with food safety laws and other applicable regulations in relation to the company's products and manufacturing facilities, which may adversely affect its business, results of operations, financial condition and cash flows.

The company incurs significant expenses towards strengthening its brand visibility and brand equity and expect to continue to incur such expenditure in the future. The company's advertisement and business promotion expenses in Fiscals 2025, 2024 and 2023 accounted for 3.03%, 1.13%, and 1.18% of its revenue from operations in Fiscal 2025, 2024 and 2023, respectively. An inability to maintain or enhance the popularity of our brands or any increase in the company's marketing expenditure may adversely impact its business, results of operations, financial condition and cash flows.

The company's business is significantly dependent on the company's distribution network and a majority of its revenue from operations is generated from the distributors from the south of India (representing 72.41% of our total distributors as of March 31, 2025). An inability to expand or effectively manage the company's distributor network, or any disruptions in the company's distribution network may have an adverse effect on its business, results of operations, financial condition and cash flows.