Exclusive: MilkStation Nets $2.5 Mn To Expand Value Added Products

D2C dairy startup MilkStation has raised $2.5 Mn (around INR 22.5 Cr) from UK-based family dairy company V-Dairy. This marks the Rajasthan-based startup’s first external capital raise.

MilkStation plans to deploy about half of the fresh capital towards capital expenditure, primarily for procuring new machinery and expanding its manufacturing facilities. The remaining funds will be channeled into market expansion, sourcing raw materials, marketing initiatives and setting up new ice-cream parlours, cofounder Nirmal Choudhary told Inc42.

Founded in 2021 in Pali, Rajasthan by brothers Nirmal and Manish Choudhary, MilkStation is positioning itself as a value-added dairy player rather than a traditional milk distributor. Its current product portfolio includes paneer, ice cream and ghee, with plans to expand into categories such as whey protein and protein-rich milk.

In FY25, the startup’s operating revenue grew 13% year-on-year to INR 27 Cr from INR 24 Cr in the previous fiscal. The startup was EBITDA positive in the first 2 years of operations, but made a loss of INR 80 L due to increased expenses and depreciation. It had set up an ice-cream manufacturing facility during this time, which added to the expenses.

Choudhary said MilkStation has been steadily scaling its value-added products (VAP) business over the past four years. Milk distribution accounted for just 40% of revenue in FY25, down from 85% in its early days. VAP now contributes over 60% of overall distribution, with ghee alone accounting for 25%.

Ice cream is emerging as a key focus area, with Choudhary citing the success of newer brands such as Go Zero and Hocco as validation of growing demand. MilkStation launched artisanal ice creams last year and currently manufactures them in small batches, selling around 100 kg per day, according to the cofounder.

“The stronghold of milk cooperatives is tough to break due to government incentives. Instead of focussing on milk, we want to scale value-added products, where demand is rising, especially with increasing awareness around protein consumption,” Choudhary said.

Operating in a price-sensitive market, MilkStation is not pursuing premium pricing, particularly as most of its customers are based in and around Jodhpur. The startup follows an omnichannel distribution model, with distributors across cities such as Mumbai, Hyderabad and Pune. About 30% of its orders come via its website, while a significant share is still placed through WhatsApp.

MilkStation is currently avoiding quick commerce and ecommerce platforms due to high commission structures, which Choudhary said do not make economic sense at this stage.

In the crowded dairy market, the startup competes with cooperatives such as Amul and Mother Dairy, as well as private players like Country Delight, Milky Mist and Dhoodhvaale. However, MilkStation claims its differentiation lies in affordable pricing and a focus on tier-3 and tier-4 cities, where demand exists but organised distribution remains limited.