How A Poor Boy Built A 2000Cr Dairy Company And Beat Giants: Business Case Study

Summary

The script narrates the inspiring journey of Satish Kumar, a 17-year-old entrepreneur who, despite having no capital or brand value, built a 2,000 CR dairy business, Milky Mist, in a competitive Indian market. It highlights the importance of value addition to escape price wars, building trust with farmers, and creating a robust cold chain logistics system to ensure product quality and supply consistency. The story emphasizes the power of conscious capitalism and strategic partnerships in business success.

Takeaways

• 🚀 Satish Kumar, a 17-year-old with no capital or backing, built a 2000 CR dairy business in a highly competitive industry.
• 🥛 The dairy industry is extremely challenging due to the perishable nature of milk and slim profit margins.
• 🌊 Amul's Operation Flood transformed India into a milk surplus country, setting the stage for intense competition in the dairy sector.
• 🔑 Satish identified value addition as a strategy to escape the low-margin trap of commoditized milk by creating products like paneer and ghee.
• 📈 By adding value to milk, Milky Mist increased its profit margins significantly, from less than 5% to over 35% for certain products.
• 🛒 Satish targeted high-quality conscious customers by starting with five-star hotels and then expanding to kirana stores.
• 🧊 Milky Mist addressed the lack of refrigeration by providing chillers to retailers and implementing chilling technologies in their delivery trucks.
• 🚚 The company built its own cold storage supply chain to maintain quality control, which was crucial for their perishable products.
• 🤝 Milky Mist won farmer loyalty by addressing their pressing issues, such as access to loans, animal healthcare, and education on modern farming practices.
• 💡 Key business lessons include the importance of value addition to commodities, collaborating with partners for mutual benefit, and maintaining quality control over logistics.

Q & A

What challenges did a 17-year-old Satish Kumar face when he started in the dairy industry?

Satish faced challenges such as having no money, no brand value, and no investor backing in a highly competitive and brutal industry with perishable products and low margins.

How did the 'Operation Flood' impact the dairy industry in India?

'Operation Flood' was the world's largest dairy development program that transformed India from a milk-deficient country to the world's largest milk producer, creating a collective platform for farmers to sell directly to dairies.

What were the three major problems Satish identified in his family's milk selling business?

The three problems were: low margins due to no value addition to milk, a short shelf life of milk requiring quick dispatch, and logistical issues that hindered business expansion.

How did Satish Kumar's strategy of value addition help Milky Mist?

By turning milk into products like paneer and ghee, Satish was able to increase the product margins significantly, escape price wars, and make the business viable.

What advantages did Milky Mist gain by selling paneer and ghee?

The advantages included reduced competition, increased margins, and an extended shelf life for their products, which helped in making the business more sustainable.

How did the economic reforms of 1991 affect the dairy market in India?

The reforms led to an increase in per capita income and a more affluent middle class, which in turn increased the demand for protein-rich foods like paneer, benefiting brands like Milky Mist.

What were the three major challenges Milky Mist faced in the market apart from producing and selling paneer?

The challenges were the fragmented supply of milk from farmers, the lack of loyalty from farmers due to no contracts, and the inconsistent quality of milk due to poor farmer education.

How did Milky Mist address the issue of farmer loyalty?

Milky Mist addressed this by providing loans, 24/7 animal care helplines, cattle feed at zero profit, and education on the latest technology to help farmers increase their income.

What solutions did Milky Mist implement to overcome logistical and refrigeration challenges?

Milky Mist provided chillers to retailers, installed chilling technologies in their delivery trucks, and built a cold storage supply chain to ensure product quality and extend shelf life.

Why did Milky Mist decide to bring logistics in-house instead of outsourcing?

Bringing logistics in-house allowed Milky Mist to maintain control over product quality and efficiency, which could be compromised with outsourcing.

What are the key business lessons learned from the rise of Satish and Milky Mist?

The lessons include the importance of value addition to escape price wars, collaborating with partners to increase profit margins, and the potential benefits of in-housing logistics for quality control.

Outlines

00:00

🚀 Entrepreneurship in the Dairy Industry

This paragraph introduces the story of Satish Kumar, a 17-year-old entrepreneur who, despite having no capital or brand recognition, managed to build a 2,000 CR dairy business called Milky Mist. The narrative sets the stage by highlighting the challenges of the milk industry, including its perishability and slim profit margins. It also provides historical context about the Indian dairy industry's transformation through Operation Flood, which turned India into the world's largest milk producer. The story emphasizes the lack of resources Satish had compared to established brands and cooperatives, setting the tone for the business strategies he employed to achieve success.

05:01

🛠️ Value Addition as a Business Strategy

The second paragraph delves into the business strategy of value addition that Satish employed to escape the low-margin trap of commoditized milk. It illustrates the concept with the example of rice and its transformation into idli batter and idlis, showing how value addition can significantly increase profit margins. The summary explains how Milky Mist applied this strategy by converting milk into paneer and ghee, which not only increased their profit margins but also reduced competition and extended the shelf life of their products. The paragraph also discusses the challenges of the Indian dairy market at the time, including the lack of refrigeration and the fragmented nature of milk production.

10:04

🤝 Building Trust with Farmers

This paragraph discusses the challenges Milky Mist faced in securing a consistent and high-quality milk supply from fragmented sources and the innovative solutions they implemented. Satish tackled the issue of farmer loyalty by addressing their pressing problems, such as lack of loans, unreliable animal care, and lack of knowledge about modern farming techniques. Milky Mist provided solutions like securing loans, establishing a 24/7 animal care helpline, offering cattle feed at zero profit, and educating farmers about the latest technology. This approach not only won the loyalty of the farmers but also ensured a consistent supply of high-quality milk, demonstrating the power of collaboration over extraction in business partnerships.

15:04

🚚 Overcoming Logistics and Refrigeration Hurdles

The fourth paragraph describes the logistical challenges Milky Mist faced in distributing paneer to kirana stores, including the lack of refrigeration in trucks and stores, and the short shelf life of paneer. The company addressed these issues by providing chillers to retailers and installing chilling technologies in their delivery trucks, effectively building a cold storage supply chain. The decision to manage logistics in-house, despite the higher initial cost, allowed Milky Mist to maintain control over product quality and efficiency. The paragraph also highlights the importance of owning the logistics process to ensure product freshness and the strategic use of return logistics to offset transportation costs.

20:04

🏆 Lessons from Milky Mist's Success

The final paragraph wraps up the story by summarizing the key business lessons learned from Satish Kumar and Milky Mist's journey. It emphasizes the importance of turning commodities into value-added products to escape price wars, the benefits of collaborating with partners to increase profit margins, and the potential downsides of outsourcing when it compromises quality and efficiency. The summary concludes by acknowledging the contributions of Satish and his team and inviting viewers to share their thoughts and messages.

Keywords

💡Legendary Brand

A 'legendary brand' refers to a company or product that has achieved iconic status, often due to its exceptional quality, innovation, or impact on the market. In the context of the video, the term is used to describe the remarkable journey of a young entrepreneur who built a successful dairy business despite numerous challenges, turning it into a legendary brand in the competitive market.

💡Commoditization

Commoditization is the process by which goods or services become similar in quality and price, making differentiation difficult. The video discusses how the protagonist escaped the commoditization of milk by adding value to it, which is a key strategy for standing out in a crowded market and increasing profit margins.

💡Value Addition

Value addition involves enhancing the worth of a product or service beyond its basic function. The script illustrates this concept through the transformation of milk into products like paneer and ghee, which not only increased the shelf life but also significantly improved the profit margins for the company.

💡Margins

Margins, in a business context, refer to the difference between the cost of a product and its selling price, indicating profitability. The video emphasizes the importance of increasing margins through value addition, as seen when the company's margins jumped from 3-5% for milk to over 20% for paneer and ghee.

💡Operation Flood

Operation Flood was a large-scale dairy development program in India that aimed to increase milk production and improve the livelihood of dairy farmers. The script mentions this program to highlight the historical context and the significant impact it had on the dairy industry, setting the stage for the challenges and opportunities faced by the entrepreneur.

💡Shelf Life

Shelf life is the duration for which a product remains fit for use. The video script explains how increasing the shelf life of dairy products by adding value to milk was crucial for the business's growth, as it allowed for a more extended period of sale before the product would spoil.

💡Logistics

Logistics refers to the detailed organization and implementation of a complex operation. The script describes the challenges faced by the company in managing logistics, particularly the transportation and storage of perishable dairy products, and how they overcame these obstacles by investing in refrigeration and a cold storage supply chain.

💡Supply Chain

A supply chain is the network of organizations, people, activities, information, and resources involved in manufacturing and delivering a product or service. The video discusses the importance of building a robust supply chain to ensure the consistent supply of high-quality milk and the efficient distribution of dairy products.

💡Farmer Loyalty

Farmer loyalty pertains to the trust and commitment of farmers to a particular company or brand. The script highlights the strategies employed by the company to earn this loyalty, such as providing financial support, animal care, and education, which in turn ensured a reliable and high-quality milk supply.

💡Conscious Capitalism

Conscious capitalism is an economic philosophy that emphasizes the simultaneous pursuit of business profitability and social good. The video uses this concept to explain how the company's approach to collaborating with farmers, rather than merely extracting value, led to mutual benefits and long-term success.

💡Return Logistics

Return logistics is the process of efficiently managing the flow of goods and information from the point of consumption to the point of origin for the purpose of recapturing value. The script describes how the company innovated by creating a return logistics system that not only reduced transportation costs but also generated additional revenue.

Highlights

The story of a 17-year-old boy, Satish Kumar, who built a 2,000 CR dairy business with no initial capital, brand value, or investor backing.

The milk industry's challenges, including perishability within 4 days, low margins, and the need for fast inventory movement.

Amul's pioneering role in the 'White Revolution' and the impact of Operation Flood on transforming India into the world's largest milk producer.

The disadvantages faced by Satish, including lack of money, technology, and brand recognition, compared to established milk brands and cooperatives.

The concept of value addition to escape commoditization and increase profit margins, illustrated through the transformation of rice to idli batter and idlis.

Milky Mist's strategy to turn milk into paneer, ghee, and other products to increase margins and differentiate from commoditized milk.

The advantages gained by Milky Mist, such as reduced competition, increased margins, and extended product shelf life.

The rise of paneer consumption in South India due to increased awareness of nutrition and protein among the growing middle class.

Challenges faced in the milk industry, including fragmented supply, farmer loyalty issues, and inconsistent milk quality.

Milky Mist's solutions for farmer loyalty, including providing loans, 24/7 animal care, and education on latest technology for increased milk quality and income.

The importance of collaborating with partners to deliver maximum value, as demonstrated by Milky Mist's approach to farmer relationships.

Milky Mist's initial market penetration through five-star hotels and the challenges of expanding to kirana stores due to refrigeration issues.

Innovative logistics solutions by Milky Mist, such as providing chillers to retailers and installing chilling technologies in transportation trucks.

The decision to bring logistics in-house to maintain quality control, despite the higher initial costs.

Building a return logistics system to reduce transportation costs and increase efficiency.

Lessons learned from Milky Mist's success, emphasizing the importance of value addition, partner collaboration, and maintaining quality control.

The transformation of Satish Kumar from an underestimated entrepreneur to the builder of a successful dairy brand.

The significance of conscious capitalism in building a sustainable and profitable business, as exemplified by Milky Mist.

Transcripts

hi everybody if you're someone who wants

to learn how to build a legendary brand

in a market full of sharks then this

episode is for you because the story

that I'm about to tell you today is the

story of a 17-year-old boy who had no

money no brand value and no investor

backing at all and yet he went on to

build a 2,000 CR Dair business and that

to in the presence of many giant

competitors now just so you know the

milk industry is one of the most brutal

Industries the country because your

product will perish in 4 days your

margins are hardly 3 to 5% and if you

don't move your inventory fast enough

you will be out of business in no time

secondly during that time amul was the

pioneer of the white revolution of India

so much so that in the 1960s if you look

at this graph we were importing 50,000

tons of milk powder but by 1990s we

became a net exporter of milk powder

operation flood which ran from 1970 to

in 1996 is the world's largest Dairy

development program where the farmers

would collectively decide their rates

and sell directly to the dairy this was

the birth of operation flood under the

newly formed National Dairy development

board the world's biggest Dairy

development program that transformed

India from milk deficiency into the

world's largest milk producer this was

the effect of the wide Revolution on

India so during this time all these milk

Brands and cooperatives had the perfect

recipe for Domination which were money

brand value and Technology whereas this

17-year-old boy neither had money nor

did he have the technology to scale his

business and let alone brand value

nobody even knew he even existed this

boy that I'm talking about is one of the

most underrated entrepreneurs of India

who goes by the name Satish Kumar and

the brand that he built is none other

than milky mist and today milky mist is

such a successful brand that they sell

2,000 crores worth of dairy products all

across India so in this episode today

ladies and Gentlemen let's go deep and

find out how did a 17-year-old boy carve

a space in the challenging Battlefield

of the Indian dairy industry what were

the business strategies that helped

Satish build a 2,000 CR company with

very less money and no investor backing

and what are the business lessons that

we need to learn from the rise of Satish

and milky

Mist this is story that dates back to

1992 when Satish Kumar was a 17-year-old

boy who had just dropped out of his

school and he joined his father's milk

business but very soon he realized that

their business was running into losses

and if he did not do anything about it

they would have to shut down their

business this is when he identified

three major problems in their milk

selling business firstly because there

was no value addition to milk they

couldn't charge High margins so they

barely made 30 PES to 1 rupee Max per

liter of milk sold so this this was a

margin of barely 3 to 5% and sometimes

they even had to sell milk at a loss

secondly milk had a shelf life of Just 2

days so they had to dispatch the milk

within 10 hours of milking so that they

could move their inventory at a profit

and thirdly because of this Logistics

was a nightmare and they could not

expand their business so they were

practically stuck in a stagnant Market

with a low margin business and with no

power of logistics at all then the

question is how did this boy turn milky

Mist into such a legendary company with

2,000 crores in Revenue well the first

thing they did was escape the

commoditization of milk with a strategy

of value addition now this seems like a

simple statement right but you know what

guys this statement has a very deep

meaning so hear me out this philosophy

of business says that the margin of your

product is usually directly proportional

to the value that you add to the product

let's take the example of rice if you

buy rice from a wholesaler and sell it

in the Market at 50 rupees a kg your

gross margin would be around 30% and

you'll make a 15 rupes profit out of it

but if you take rice and add 250 g of UR

Dal and grind it into a batter you can

make 3 cges of idly batter to make these

3 CES of batter you would need 50 rupees

worth of rice 40 rupees worth of urat

Dal and 20 rupes worth of other

materials so the input cost is 110

rupees but now at Standard Market rates

you can sell this batter in Mumbai at 80

rupees a kg so when you sell 3 kg of

batter you make 240 rupees now if you

see because of the value that you added

to rice with urat Dal and grinding your

margin has shot off from 30% to

54% and now if you turn this batter into

idy something magical happens again 3

kgs of batter will give you 20 idys per

kg and 60 idys in total and when you

turn it into idly it will cost you

another 20 rupees of input cost for

Chutney and other items per kg so the

total input put cost is 110 rupes plus

60 rupes which is 170 rupees right and

now if you sell a plate of three idlies

for 40 rupes a plate you can sell 20

plates of idys so the total revenue that

you generate is 40 into 20 equal to 800

rupe so now what's your gross margin

it's 800 - 170 which is 630 rupees or

78.75 so if you see the idiy that you're

selling is still made out of the same 1

kg bag of rice but your Revenue has

short up from 50 rupees to 800 rupees

and the gross margin it commands short

up from 30% to

78.75 so you see as you added value to

the commodity your margins shot up from

30% to 54% and then when you turn the

batter into idley by adding more value

the margins went up to

78% this is how ladies in German

companies turn a commodity into a high

margin product by value addition if this

is very very clear to you let's see how

milky Mist applied this philosophy to

milk you see milk is a commoditized

product with a profit margin of just 3

to 5% but what the founders of Milky

Mist did was they procured milk and

turned it into CD paneer and ghee and

this is where the magic of value

addition happened if you see this table

while the margin in milk is less than 5%

the moment you go to kurd the margins

jump to 20% with paneer it's around 20%

again but with higher cost with ghee it

goes to 22% and with ice cream it shoots

up to more than

35% so Sati saw that the root cause of

their business problems which were

margin Logistics and growth is nothing

but the milk itself but if he adds value

to milk suddenly the margins shoot up by

four to five times based on the products

he sells this is a reason why ladies and

gentlemen Satish started selling paneer

and ghee in the market and this gave

milky Mist three major advantages

firstly as they went from milk to paneer

the number of competitors in the space

reduced by a large extent in fact in

South India back then even cooperatives

were not bullish on paneer CD and ghee

type products secondly like we saw it

help them stretch their margins which

help them make their business viable and

lastly the beauty of value added milk

products is that as you go from milk to

paneer not just your gross margins

increase but also the shelf life of your

product increases so if you look at this

chart when you go from milk to ice cream

the shelf life of the product increases

from 7 days to 30 days to 6 months to

even one full year this is the reason

why milky Mist started selling CD and

paneer in the market and this teaches us

the first lesson in business which says

if you're in a commoditized market you

will end up killing your own margins

with prize wor but if you use value

addition you can escape the pricee wars

of the market and actually make a profit

coming back to our case study in the

southern part of India the consumption

of paneer was very less and it was

consumed only by rich people this was

partly because refrigerate of

penetration in India was less than 20%

in 1995 but in the late 1990s the 1991

globalization effects were seen all

across India 1991 was a landmark here

for India with economic reforms changing

the way we live work and spend money

it's a budget that's set to change the

path of the Indian economy is

we are in a phase of restructuring our

economy so markets opened up lots of

people got jobs and the per capita

income of India shot up so when the

middle class population of India became

more affluent they also became more

aware of nutrition and food and this is

when people started seeing paneer as an

important source of protein and as you

all know while the non-vegetarian have

chicken mutton and eggs vegetarians can

only have paneer and Tofu for protein

that's it this is the reason why

suddenly paneer started selling very

well in the South Indian market so this

looks perfect isn't it Satish found a

great market and a high margin product

which had less competitors so Satish

must have had a very easy time building

his business isn't it well absolutely

not because there were three more

challenges in the market which were way

more difficult than just producing and

selling paneer and cod so the question

is what were these problems and how did

saish tackle them firstly India's milk

source was extremely fragmented in fact

even today if you see it is so

fragmented that we have 7.5 lakh small

Dairy Farmers with an average of just

two cows or buffalos so you can imagine

how difficult the situation was in 1995

where there was no internet very less

highways and very less Logistics

infrastructure secondly the farmers

could not be bound by a contract to sell

milk only to one company because back

then then it was considered to be a

taboo of corporate control why because

we were a socialistic country where the

word business was an evil word but

funnily at the same time the Loyalty of

the farmers was such that tomorrow if

somebody paid them more money they would

happily sell their milk to that company

and they will just cut all ties with the

existing company so you as that milk

company might suddenly lose thousands of

liters in supply of milk so long story

short it was very difficult to win the

Loyalty of the farmers

the third challenge was inconsistent

quality of milk from different Farmers

this was because education was very less

amongst the farmers and they used to

feed unhygienic or not so nutritious

food to the cows that led to

inconsistent quality of milk so in short

supply was not guaranteed quality was

not guaranteed and Logistics was not

high class at all then the question is

how did they solve these problems well

the first challenge of scattered Supply

was solved by the location itself if you

see this map this is the EOD milk belt

for those those who don't know EOD is a

major milk producing City why because

Cav water was available to the citizens

of EOD in large quantities and because

of water agriculture prospered in this

region as a result good quality feed and

F were available and hence more cattle

was owned in EOD and the adjoining areas

this way milk procurement became a

little bit easier the second challenge

of farmer loyalty was soled in a

wonderful Way by Mist you know what they

did to win the Loyalty of the farmers

they ident ify the most pressing

problems in their life and became the

farmers Lifesaver and there were three

major problems that they solved for

number one was lack of loans this was

because the banks could not trust the

Farmers Credit worthiness secondly they

saw that the farmers had no reliable

source for animal care so as a farmer in

the middle of the night if your cow

collapsed you had nowhere to go no

doctor was available during emergency

and you just had no option but to let

your cow die and lastly the f farmers

were uneducated about the latest

technology in the market because of

which they were not able to increase

their income so milky Mist so these

problems immediately firstly they used

their Rao with the bank to give loans to

Farmers secondly they launched 24/7

Animal Care help line and give ready

access of doctors to Farmers at

subsidized rate so the farmers could

immediately seek help from these doctors

and keep their cattle in good health

cherry on the cake they even got them

cattle feed at zero profit so that the

farm Farmers could produce great quality

milk and thirdly they educated the

farmers about the latest technology and

even arranged financing so that the

farmers could produce more output and

eventually make more money and the best

part was that milky Mist paid Farmers on

a weekly basis so this say the farmers

had enough cash flow and they could take

home money and they did not face cash

Crunch and this payment today is done

digitally straight to their bank account

so that the banks could track their

income and their transactions and event

eventually they could increase the

farmers loan eligibility now you tell me

guys as a farmer if a company takes so

much efforts to pay you on time to take

care of your cattle to help you get a

loan and even takes the trouble to

educate you with no contract binding at

all my question to you is won't you be

loyal to that company this is how milky

Mist won the trust and loyalty of the

farmers without a written contract and

in return they again got three major

benefits they got high quality milk they

got consistent supply of milk and most

importantly they did not have to worry

about competitors stealing their farmers

and this teaches us the second lesson in

business which says while good companies

focus on extracting maximum value out of

their Partners to maximize their profit

margins great companies collaborate with

their Partners to help them deliver

maximum value and eventually end up

increasing their profit margins this is

one of the golden attributes of

conscious capitalism and if you remember

this philosophy of helping the partners

is what turned Japan from a wall tone

country into the second largest economy

in the world this is how ladies and

gentlemen milky Mist solve their supply

problem but now the question is they

were buying so much milk that is fine

but how did they manage to sell their

milk products and what did they do

different from their competition well

firstly they started with five star

hotels in Bangalore this is because five

star hotels have a very strict

regulations about p

for those who don't know five star

hotels have these strict regulations of

using high quality paneer which needs to

be stored between 0 to 4° espcially they

also need to have the perfect level of

consistency and quality of paneer so

while local vendors struggle to match

the quality milky Mist could fulfill all

their criteria this is how they got

their first set of customers but as you

all know the total addressable market

for festar hotels in India is too small

in the entire country even today we

barely have 324 F star hotels so this

was too small of a market for milky M to

make a hefty profit but at the same time

this was enough customer base to keep

them running this is the reason why they

stepped up their game and reached out to

Kira stores so again this looks very

simple right I mean what can be so

complicated about asking kirana stores

to sell your paneer which is a high

value

product well as it turns out milky Mist

encountered two more challenges number

one the kirana stores back then did not

have chillers to store the paneer for

more than 2 days and secondly the

transportation from Factory to the

kirana stores was a big big problem so

if you see the shelf life of paneer

without a refrigerator it's not even 2

days so if the trucks did not have

refrigeration and the Kira stores also

did not have refrigeration the company

only had 48 hours after manufacturing to

ship distribute and sell paneer at the

retailer and if the customer also does

not have a refrigerator it will get

spoiled within just one day so this was

a big big problem which was lack of

Refrigeration in trucks and Kira stores

and the shelf life of paneer and as we

know even Refrigeration was only present

in 20% of Indian households so the

question is how did milky Mist solve for

Logistics and

Refrigeration well this is where they

came up with two very high cost solution

and it almost looked futuristic to all

the competitors back then number one

they decided to give out 20,000 chillers

to all retailers who could sell their

paneer and if you remember this is what

Coca-Cola did to distribute their soft

all across America this cooler keeps the

air just below freezing so that with a

Simple Touch of a button you can enjoy

an icy version of your favorite

Coca-Cola beverage and this will allow

us to expand to many many more places CU

it leverages the coolers that are

already out there you're starting to see

there's over a thousand of these in

stores in the US already and secondly

their paneer was manufactured in their

Factory in per and got transported to

different cities in the South so they

installed chilling Technologies in the

trucks so that the products could be

stored in cool conditions till they

reach the retailer basically milky Mist

was one of the first companies to build

a cold storage supply chain now any

season businessman would ask a question

as to why didn't milky Mist Outsource

their Logistics to a cold storage

company because that way they could

reduce their upfront cost and they could

skip the headache of managing the staff

and Logistics team right well that is

what even we were wondering but when we

spoke to the stakeholders in the Daily

Business what we understood is that even

though Outsourcing gives you cash flow

it takes away your control over quality

so if Outsourcing leads to degradation

in quality you must bring it inhouse

even if it is costly and this is a very

very important lesson for all

entrepreneurs because we somehow choose

the convenient option of Outsourcing

because we feel like we need not have

the headache of managing a staff and

paying them consistently even though

they might have less work but what we

fail to realize is that that Outsourcing

might lead to degradation in quality and

efficiency both now in case of Milky

Mist they noticed that the drivers were

shutting down the trucks Refrigeration

in between their trips with a fully

loaded truck which was decreasing the

shelf life of paneer they were also not

punchable with the deliveries which

again affected the logistic schedule and

milky Mist could not do anything because

the trucks belonged to a third party

provider so milky Mist decided to

purchase the trucks and operated them

all by themselves this way they could

control both the journey times and the

quality of the product but you know what

this is where they faced another problem

when you own these trucks you can send

cheese from oo to Shimla but most of the

trucks would return empty right so

automatically the transportation cost

would shoot up in fact it would double

so you know what the team of Milky Mist

did they managed to build their own

return logistic system for example if

the truck full of Milky Mist products

goes to Shimla or Kashmir the truck does

not return empty from there instead they

might get apples from Kashmir back to

Tamil Nadu so they actually made a

profit out of their return logistic

system and today milky Mist has more

than 250 cargo trucks and tankers all

fitted with GPS mechanisms to keep track

of their data and their location so this

is how Satish found a gap in the market

leveraged it to make a profitable

business sold for a fragmented Market

soled for the trust of the farmers and

then built a logistic supply chain to

turn milky Mist into a two ,000 CR

Revenue company and did all of this by

selling milk and milk products so what

are the lessons that we learned from

this case study lesson number one if you

are in a commoditized market you will

end up killing your own margins in prize

Wars with competitors but if you use

value addition and branding you can

escape the price Wars of the market so

find a way to turn a commodity into a

value added product and sell it under a

brand name and invest heavily into

branding secondly while good companies

selfish focus on extracting maximum

value from their partners and increase

your profit margins great companies

collaborate with their Partners to help

them deliver maximum value as a result

end up increasing their profit margins

this is one of the golden attributes of

conscious capitalism and lastly even

though Outsourcing gives you cash flow

it takes away your control over quality

and if Outsourcing leads to degradation

in quality or efficiency you must it in

house this might mean high cost

initially but it will pay you dividends

beyond your

imagination these are the lessons that

we learn from the rise of Satish and the

brand called milky Mist that's all from

my side for today guys I would

especially like to thank Satish and his

team for spending their precious time

with us in helping us understanding the

Milky my story in helping us derive

these valuable business lessons it

really means a lot to us and guys if you

have a message for Satish and milky Mist

please drop a comment I think he will

have wonderful time reading your

comments and your messages if you learn

something valuable as usual make sure to

the like button in order to make Bey

Baba happy and for more such insightful

business and political case studies

please subscribe to our Channel thank

you so much for watching I will see you

in the next one

[Music]

[Music]

bye-bye