1. EXECUTIVE SUMMARY

Fruits and Vegetables are the essential food that cannot be absent in people’s daily meals.

The matter of hygiene and safety of food to guarantee the health of the population has

become hotter day by day, in which the demand for green vegetable achieving safety

standard is increasing, particularly in big cities, and especially in Ho Chi Minh City.

However, the production of safe vegetable in Ho Chi Minh City still has some

problems needed to be solved: planning cultivation surface for safe vegetables in the

whole city, doubling the output of safe vegetable to meet nearly 70% of the city’s demand,

connecting factors in the value chain: from farmers to collectors/ traders, wholesalers/

retailers and supermarket..., the harvest, preliminarily processing, packaging, labeling,

preserving, transporting as well as consumers’ awareness and usage of safe vegetables are

still poor.

Fresh 24 will be a company which provides fresh fruits and vegetables to the customers at

reasonable price and at their convenience. The company will be aiming for customer

satisfaction and retention rather than on expansion and huge growth. The company will be

delivering fruits and vegetables at the door of the customer. Customers in the HCM central

city do not have access to the informal vegetable markets and so, they have to purchase their

required produces from the malls and super markets which sell these fruits and vegetables at

higher margins. The customer also do not mind to pay the extra price for the quality produce

which these retail formats provide. In this scenario, fresh mart will provide relief to the

customers from going and standing in the long queues for their requirements. The

convenience and quality produce will ensure the customers satisfaction and will be the seed

for the company development and growth.

My proposed business is to distribute the fruits and vegetables from the clear market to direct

customers through home delivery with freshness and good quality.

2. BUSINESS DESCRIPTION:

2.1 Overview of safe vegetable production

The Vietnamese economy has developed and evolved quickly since the later 1980s following

government reforms. State run agriculture became managed by farmers directly for the

market and saw the use of agrochemicals increase significantly in the 1990s. Generally,

farmers have overused chemicals, often not following instructions and even using banned and

restricted pesticides. This resulted was many reported cases of food poisoning from chemical

residues and other contaminants such as nitrate and heavy metals.

In 1998, Ministry of agricultural and rural development (MARD) issues the “Temporary

Regulation for the Production of Safe Vegetables” which was then finalized in January 2007

as the “Regulation for the Management and Certification of Safe Vegetable Production”

(No.04/2007/QD-BNN). It was then replaced in November 2008 by Decision no 99 titled

“Management of safe vegetables, fruit and tea production and trading”. These regulations

introduced guidelines for safe vegetable production as well as tables showing the Maximum

Residual Levels (MRLs) for permitted pesticides, nitrate, heavy metals, bacterial pathogens

and intestinal parasites which are allowed in soil and in harvested vegetables. Many other

decisions were promulgated by the government to somehow guide and support safe vegetable

production. The government followed the policy initiatives by offered training to farmers on

safe vegetable production and integrated pest management (IPM) in an effort to improve food

safety.

Still, despite these initiatives, there were nearly 23, 000 reported cases of food poisoning in

Vietnam including vegetable produce between 2001-2005 (Ministry of Health, 2006). A

study done by the Institute for Ecology and Biology Resources in 1998-9 found nitrate levels

from fertilizer use much higher then MRLs. In peri-urban areas such as HCM where the

majority of vegetables are produced, over-use of chemical fertilizers and pesticides as well as

toxic waste from large industries have resulted in severe soil contamination and

environmental pollution. Health concerns are thus the primary divers of safe vegetable

production in Vietnam that citizens in city who need green things in order to make sure their

health.

Mission:

To become a market leader in fruits and vegetables market in Ho Chi Minh City within 5

years.

Objective:

1. To provide qualitative fruits and vegetables to consumers at reasonable price.

2. To benefit from eliminating the limitations of existing traditional supply chain.

* Structure of fresh vegetable marketing system

The major actors in general circulation and distribution of fresh vegetables in Vietnam

are producers, collectors, wholesalers, retailers and export organizations. Each marketing

actors can take over one or more functions such as transportation and distribution.

Collectors are villagers and even vegetable producers. At harvest time, the producers may sell

their own products or they engage in marketing activities to increase their families’ income.

They can collect vegetables from producers who often live in the same villages or communes

to retail on market places or directly to the final consumers.

Wholesalers can be divided into 3 types: wholesale traders, wholesale producers and

wholesale collectors. Wholesale traders (big wholesalers) serve as intermediaries between

collectors and retailers. At present, these actors are still small and unspecialized. They mainly

trade on fruits and vegetables trading only a subsidiary activity that mainly focuses on

luxury vegetables.

PRESENT STATUS AND MARKET POTENTIAL:

Basic market Information:

Currently the majority of the fruits and vegetables market is unorganized. Organized

retailers are also there in HCM city but they would not be forming more than 10% of

the total market.

Customers of the city expect the quality products at reasonable price.

Existing Fruits and vegetables retailers in the area:

There are major organized competitors in this area such as Tien Giang Vegetables and

Fruits joint stock company, METRO Cash & Carry Vietnam located and sell at supermarkets

in the city , Co. Agricultural Foods Sunflower and Reliance Fresh having 3 stores in the area.

They pose a strong competition base for the company.

Expected Customers and Selected Areas:

The customers will be those people who want to spend the quality time with their families

and expect quality fruits and vegetables at their convenience. The company is going to

serve the main four areas of city includes Thu Duc district , Ben Thanh Area, Go vap

Area and Binh Thanh Area. Combined these areas include around 120000 households. The

company is aiming to get 1000 customers initially.

Annual Market Need:

The annual consumption of fruits and vegetables in the HCM city can be estimated at

around 1.2 million tonnes annually.

Scope for Diversification:

Fresh 24 has huge scope for diversification in various other products like FMCG and Grains.

The company can also go for online business. Fresh 24 also has huge opportunity for

expansion the market base as it will less capital expenditure.

Fresh 24 is also planning to buy the fruits and vegetables directly from the farmers which will

open the flood of opportunity for the company for trading with other organized retail stores,

wholesale open market operations and easy expansion for the home delivery model.

Though the company has many diversification opportunities, it will insist more on sticking to

the core business of fruits and vegetables business. The company wants to build a strong

brand for the fresh fruits and vegetables. The expansion of the home delivery model will be

the core focus for the company growth and expansion.

Risk Factor:

1. Fresh 24 will have to strive hard to keep the delivery cost in control.

2. Procurement of the quality products and their quality maintenance while transit will also

require substantial system and efforts.

3. The price of the fruits and vegetables are very much volatile. Sudden price increase may

couch on the profit margin of the company.

TYPE OF UNIT & SELECTION

Name of the unit: FRESH 24

Name of our unit will be Fresh 24 –All fresh things reach at your Home because it is the

project which helps customers to get the fresh fruits and vegetables at their home. Home

delivery system is one of our competitive edges. The system of home delivery will not only

help the customers but it will also help us to reduce the wastage and efficient

purchasing as per the order.

Products:

Primary product of the company is fruits and vegetables. It will include all the seasonal fruits

& vegetables, off season fruits & vegetables.

Address:

We will be operating in No.22 Road 18, Linh Chieu Ward, Thu Duc District, Ho Chi Minh

City (HCMC)

Type of unit:

The fresh 24 will be a partnership firm.

The fresh 24 will fall under the category of Small Scale industry unit because its turnover as

well as the capital investment in fixed assets is less than Rs. three crores.

Organizational chart:

Reasons for site selection:

Economic factors must be considered before selection of site because it is the decision

which is irrecoverable in nature and it is very hard to change the location. There are

many reasons for site selection. Our decision of site selection is based on the following

economic reason.

+Nearness to customer base

+Easy for transportation

+Efficient time management

Location of Warehouse:

The warehouse will be located at Thu Duc district because it is located on the Highway and

near to the customer base.

Requirement of land:

Delivery man

Supervisor

Warehouse

- Clerk

- Accountant

- Purchasing

- Drivers

- IT

Director

The basic activity of the Fresh 24 will be to acquire and pack the fresh vegetables and fruits

and deliver it. One warehouse will be taken on rent. The goods will be purchased daily and

there will be no any storage. One warehouse of 10000 square feet will be enough for above

stated activities.

Marketing feasibility

Positioning:

Whenever customers need fruits and vegetables, ‘Fresh 24’ must come first in their mind

first. Fresh 24 will be positioned as the fresh fruits & vegetables provider for on time

delivery.

Fruits like grapes, strawberry, blackberry will be cooled at the assortment centre and then will

be delivered. Only qualitative fruits and vegetables will be packed and poor quality fruits and

vegetables will be assorted and sold in the wholesale market if possible.

On time delivery schedule also will be strictly adhered. Drivers will be negatively reinforced

for on time delivery to the customers.

Management concentration will be more on existing customer satisfaction and customer

retention rather than on expansion.

Giving Details

Providing details about each type of fruit or vegetable that we sell helps customers

understand the quality and value of the produce so they feel confident buying. For instance,

small cards that describe the taste of the different varieties of apples such as sweet, crunchy

or sour, help people learn and appreciate more than just the color. Note where the produce

comes from, such as the name of a local farm, to help the consumer realize the value and

quality of the produce you carry.

Providing nutritional information about the fruits and vegetables we sell helps make the

buyer more aware of their value. Have fliers or brochures that explain how to handle and

store various types of produce to encourage customers to buy more.

Promotion

Create short surveys to ask our customers what types of fruits and veggies they’d like to see

in the store or stand, and then run promotions to encourage people to buy it.

Provide discount coupons to help gauge the response.

Share information on how to prepare the produce featured in our ads so people feel

encouraged and knowledgeable about what to do with their purchases.

Segmentation:

Target segment will be upper middle and upper class people living in the targeted area.

Target customers would be those housewives who do not want to move around for

purchasing fruits and vegetables.

Customer Relation:

Existing customers would be retained by providing fresh, hygienic and good quality

fruits and vegetables; timely delivery is also highly insisted for higher customer

satisfaction. In case of non-delivery of the goods; those goods will be delivered for

free on the next day. The customers will be allowed to change their order till 10pm.

Competition:

Fresh 24 will have competition from Reliance Fresh, Tien Giang Vegetables and Fruits joint

stock company, METRO Cash & Carry Vietnam, Co. Agricultural Foods Sunflower, More

Retail Store, local fruit & vegetable stores and fruits vendors & vegetables venders.

Competitive Advantage:

Fresh 24 will be able to deliver goods at the customer’s home. Home Delivery Model has

ensured zero cost in real estate; which will help to serve customers at lower/ reasonable price.

Loyal customer base will help for sustainable development/growth.

COST OF PROJECT

Particulars Amount in US dollar.

Deposit for warehouse 300000

Warehouse development expenses 50000

Karat (300*100) 30000

Weight machine (8000*4) 32000

Fridge 70000

Delivery vehicles (20000*5) 100000

Preliminary expenses 60000

Working capital 200000

Software & IT 30000

Computer 25000

Telephone (1500*2) 3000

TOTAL 900000

MEANS OF FINANCE

MEANS OF FINANCE

Particulars Amount in Us dollar

stakeholder's contribution ( 115000 Rs. by each) 460000

Long term loan from BIDV 500000

TOTAL 960000

PRELIMINARY AND PREOPERATIVE EXPENSES:

Particulars Amount in Us dollar

Legal expenses 10,000

Project report preparation 5,000

Electrification & water deposits 10,000

Inauguration expenses & other expenses 10,000

Market research 10,000

Initial advertisement expenses 15000

TOTAL 60000

OPERATION PROCESS

REQUIRED INFRASTRUCTURE AND FACILITIES:

Particulars No.

Loading of the packages in Vehicles and delivery of the goods

Taking orders for the next day

Making standard sized packages of fruits & vegetables

Packaging as per customers’ orders

Purchasing fruits & vegetables from wholesale Market

Delivery Vans 5

Karats 100

Computers 1

Billing Machines 2

Warehouse 1

Chairs 10

Tables 3

Refrigerator 1

Expected Operational Capacities

Delivery Van 1000Kg

Karat 25Kg

Refrigerator storage capacity 500Kg

Expected Operational Efficiency

Average Customer Interaction time at Delivery Time

(Payment collection) 1.5 Minutes

Delivery Van Mileage 15Km/Ltr

Average customer Packaging Time 1 Minute

Average Order Taking Time (On Phone) 1 Minute

Other Assumptions

Expected Amount Per Order Rs. 100

Packaging Cost 50p/package

Transport Route of Vehicle (2 Routes for a vehicle per day) 20 Km/Route

Electricity Units consumed per day 20 Units

Average No. of customers per day 500

HUMAN RESOURCE REQUIREMENT:

Sr. No. Particulars Nos. Salary

Monthly (in Us

dollar.)

Yearly (in Us

dollar.)

A) Warehouse staff

Supervisor 1 10,000 120000

Packing staff cum delivery man 5 30000 360000

B) Office staff

Clerk/typist 1 3,000 36,000

Accountant 1 6,000 72,000

C) Purchase staff 3 27000 324000

D) Drivers 5 30000 360000

Total 93000 1272000

UTILITIES AND OVERHEAD:

Amt. in Us dollar.

Particulars Monthly Yearly

Rent 30000 360000

Transportation (inward carriage) 15000 180000

Electricity 3500 42000

Miscellaneous - 10000

TOTAL 592000

ADMINISTRATIVE EXPENSES:

Sr. No.Particular

s

Monthl

yYearly

1 Stationary and printing 1,000 12,000

3 Telephone and fax 5,000 60,000

4 Legal charge 5,000 60,000

6 Travelling 900010800

0

7 Miscellaneous - 10000

Total25000

0

Note:

Travelling expense includes fuel expense of the person collecting orders and taking

feedbacks.

RAW MATERIAL REQUIREMENT:

Particulars Amt. in Us dollar.

Fruits & Vegetables 1,05,88500

DEPRECIATION:

Particulars Amt. in Us dollar.

Refrigerator (10% on Rs. 70,000) 7000

Karat (50%) 15000

Computers (25%) 6250

Weight machine (33.33%) 10667

TOTAL 38917

SELLING & DISTRIBUTION EXPENSES:

Particulars Monthly Yearly

Outward carriage

Delivery expenses (fuel cost) 20000 240000

Vehicle rent (5000*5) 25000 300000

Packing expenses 6000 72000

TOTAL 612000

Assumption:

Packaging expense will be 50 paisa per order.

INTERST CALCULATION:

Particulars Amt. in Us dollar.

Interest On Term Loan from SIDBI (10%) 50000

TOTAL 50000

PROJECTED INCOME STATEMENT

Particulars

Years (in Us dollar)

1 2 3 4 5

Sales revenue1800000

0

3600000

0

7200000

0

1440000

00

2880000

00

Less:- expenses

Cost of goods sold1058850

0

2160000

0

4320000

0

8640000

0

1728000

00

Depreciation 38917 77834 155668 311336 1122672

Repairs&

maintenance(vehicle) 20000 40000 80000 160000 320000

Salaries & wages 1272000 2544000 50880001017600

0

2035200

0

Administrative expenses 250000 400000 640000 1024000 1638400

Selling & distribution

expenses612000 979200 1566720 2506752

4010803.

2

Interest 50000 40000

Advertising expenses 150000 300000 600000 1200000 2400000

Warehouse expenses 592000 888000 1332000 1998000 2997000

Wastages 500000 850000 1445000 2456500 4176050

Total expenses1407341

7

2771903

4

5410738

8

1062325

88

2098169

25

PBT 3926583 8280966 1789261 3776741 7818307

2 2 5

Income tax (30%) 1177975 2484290 53677841133022

4

2345492

2

Net profit 2748608 57966761252482

8

2643718

8

5472815

2

Assumptions:

1. Company aspires to grow at 100% growth rate y-o-y.

2. Loan will be paid in the second year fully.

3. Salary and wages will be increasing at 100% y-o-y.

4. Administrative expenses will be increased at 60% due to increase in the span of operation.

5. Wastages will be increasing at 70% on y-o-y basis.

6. Company will increase advertisement expenses at 100% on y-o-y basis.

7. Volume of the orders has been considered instead of the individual items.

8. Gross margin rate is considered to be the same.

9. Additional Refrigerator, karats, computers, weighing machine will be purchased every

year due to higher capacity requirements.

10. Company office will be opened in the fifth year.

PROJECTED CASH FLOW STATEMENT:

Years (in Rs)

Particulars 1 2 3 4 5

Sources

Promoters contribution46000

0

Loan from SIDBI50000

0

Cash flow from operating

activity

27875

25

58745

10

126804

96

267485

24

558508

24

Total 37475 58745 126804 267485 558508

25 10 96 24 24

Applications

Cost of project90000

0

Preliminary exp. 60000

Increase in assets15700

0157000 157000

515700

0

Repayment of loan10000

0

40000

0

Increase in working

capital

40000

0

60000

0800000

100000

0

Total10600

00

95700

0757000 957000

615700

0

Net cash flow26875

25

49175

10

119234

96

257915

24

496938

24

BEP CALCULATION:

Particulars AMT. IN RS. AMT. IN

RS.

TOTAL REVENUE 1,80,00000

LESS:- VARIABLE COST

Cost of goods sold 10588500

Transportation 180000

Delivery expenses (fuel) 240000

Packing expenses 72000

Wastages 500000

Total 11580500

CONTRIBUTION 6419500

LESS:- FIXED COST

Administrative expenses 250000

Salaries & wages 1272000

Vehicle rent 300000

Depreciation 38917

Repairs & maintenance 20000

Electricity 42000

Interest 50000

Miscellaneous expenses 10000

Advertisement expenses 150000

Warehouse rent 360000

Total 2492917

Contribution margin ratio (= 1-Variable cost/ sales ) (1--.64) 0.36

BEP (IN RS.)= Break Even Sales in Rs. = [Fixed Cost / 1 –

(Variable Cost / Sales)]2492917/0.36 6924769

Break even sales is Rs. 6924769 so we will be able to break even in 139 days

(break even sales/ daily sales)

PROJECT IMPLEMENTATION SCHEDULE:

PROJECT IMPLEMENTATION SHEDULE

Particulars DAYS

Product selection & completion of market survey 10

Project report preparation 5

Site selection 10

Selection of vehicle & customization 10

Warehouse development 15

Recruitment of manpower 5

Sales arrangements 3

No. Of days required to implement project 58

CONCLUSION

Though there are several competitors in the market of Ho Chi Minh City, Fresh 24 will be

able to achieve success through its core focus on the product quality and high level of on time

commitment.

Besides that, Looking at the overall business plan we can conclude that, as far as the need of

the consumer is concern, it can be satisfied with the help of this business model.

Freshness is the aspect which matters as far as the fruits and vegetables are

concerned. This model emphasizes home delivery system. The challenge for this model will

be inventory management, effective procurement and waste reduction and cost reduction. As

far as the profitability is concerned, this project is very lucrative and attractive.