1.

EXECUTIVE SUMMARY
Fruits and Vegetables are the essential food that cannot be absent in peoples 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 citys 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:

Supervisor

Director

Warehouse

Delivery man

Clerk
Accountant
Purchasing
Drivers
IT

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:
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 theyd 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 customers 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
Deposit for warehouse
Warehouse development expenses
Karat
Weight machine
Fridge
Delivery vehicles
Preliminary expenses

Amount in US dollar.
300000
50000
(300*100) 30000
(8000*4) 32000
70000
(20000*5) 100000
60000

Working capital
Software & IT
Computer
Telephone
TOTAL

200000
30000
25000
(1500*2) 3000
900000

MEANS OF FINANCE
MEANS OF FINANCE
Particulars
stakeholder's contribution
Long term loan from BIDV
TOTAL

Amount in Us dollar
( 115000 Rs. by each) 460000
500000
960000

PRELIMINARY AND PREOPERATIVE EXPENSES:

Particulars
Legal expenses
Project report preparation
Electrification & water deposits
Inauguration expenses & other expenses
Market research
Initial advertisement expenses
TOTAL

Amount in Us dollar
10,000
5,000
10,000
10,000
10,000
15000
60000

OPERATION PROCESS

Purchasing fruits & vegetables from wholesale Market

Making standard sized packages of fruits & vegetables

Packaging as per customers orders

Loading of the packages in Vehicles and delivery of the goods

Taking orders for the next day

REQUIRED INFRASTRUCTURE AND FACILITIES:

Particulars
Delivery Vans
Karats
Computers
Billing Machines
Warehouse
Chairs
Tables
Refrigerator

Expected Operational Capacities

Delivery Van
Karat
Refrigerator storage capacity

No.
5
100
1
2
1
10
3
1

1000Kg
25Kg
500Kg

Expected Operational Efficiency

Average Customer Interaction time at Delivery Time
(Payment collection)
Delivery Van Mileage
Average customer Packaging Time
Average Order Taking Time (On Phone)

1.5 Minutes
15Km/Ltr
1 Minute
1 Minute

Other Assumptions
Expected Amount Per Order
Packaging Cost
Transport Route of Vehicle (2 Routes for a vehicle per day)
Electricity Units consumed per day
Average No. of customers per day

Rs. 100
50p/package
20 Km/Route
20 Units
500

HUMAN RESOURCE REQUIREMENT:

Nos
Sr. No.

A)

B)

C)
D)

Particulars

Warehouse staff
Supervisor
Packing staff cum delivery man
Office staff
Clerk/typist
Accountant
Purchase staff
Drivers
Total

Salary
Monthly (in Us

Yearly (in Us

dollar.)

dollar.)

1
5

10,000
30000

120000
360000

1
1
3
5

3,000
6,000
27000
30000
93000

36,000
72,000
324000
360000
1272000

UTILITIES AND OVERHEAD:

Amt. in Us dollar.
Particulars

Monthly

Yearly

Rent
Transportation (inward carriage)
Electricity
Miscellaneous
TOTAL

30000
15000
3500

360000
180000
42000
10000
592000

ADMINISTRATIVE EXPENSES:
Sr. No.

Particular

Monthl

1 Stationary and printing

3 Telephone and fax
4 Legal charge

1,000
5,000
5,000

6 Travelling

9000

7 Miscellaneous

Total

Yearly
12,000
60,000
60,000
10800
0
10000
25000
0

Note:
Travelling expense includes fuel expense of the person collecting orders and taking
feedbacks.

RAW MATERIAL REQUIREMENT:

Particulars
Fruits & Vegetables

Amt. in Us dollar.
1,05,88500

DEPRECIATION:
Particulars
Refrigerator (10% on Rs. 70,000)
Karat (50%)
Computers (25%)
Weight machine (33.33%)
TOTAL

Amt. in Us dollar.
7000
15000
6250
10667
38917

SELLING & DISTRIBUTION EXPENSES:

Particulars
Outward carriage
Delivery expenses (fuel cost)
Vehicle rent (5000*5)
Packing expenses
TOTAL

Monthly

Yearly

20000
25000
6000

240000
300000
72000
612000

Assumption:
Packaging expense will be 50 paisa per order.

INTERST CALCULATION:
Particulars
Interest On Term Loan from SIDBI (10%)
TOTAL

Amt. in Us dollar.
50000
50000

PROJECTED INCOME STATEMENT

Particulars
Sales revenue
Less:- expenses
Cost of goods sold

Years (in Us dollar)

1
2
3
4
1800000 3600000 7200000 1440000
0

5
2880000

00

00

1058850 2160000 4320000

8640000

1728000

Depreciation
Repairs&
maintenance(vehicle)
Salaries & wages
Administrative expenses
Selling & distribution
expenses
Interest
Advertising expenses
Warehouse expenses
Wastages
Total expenses

0
38917

0
77834

0
155668

0
311336

00
1122672

20000

40000

80000

160000
1017600

320000
2035200
0
1638400
4010803.

1272000 2544000 5088000

250000

400000

640000

0
1024000

612000

979200 1566720

2506752

50000
40000
150000 300000 600000
592000 888000 1332000
500000 850000 1445000
1407341 2771903 5410738

1200000
1998000
2456500
1062325

2400000
2997000
4176050
2098169

8
1789261

88
3776741

25
7818307

5
2345492

PBT

3926583 8280966

Income tax (30%)

1177975 2484290 5367784 11330224

Net profit

2748608 5796676

1252482

2643718

2
5472815

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
Particulars
Sources

Promoters contribution
Loan from SIDBI
Cash flow from operating
activity
Total

(in Rs)
3

46000
0
50000
0
27875

58745

126804

267485

558508

25
37475

10
58745

96
126804

24
267485

24
558508

25

10

96

24

24

157000

157000

Applications
90000

Cost of project

0
60000

Preliminary exp.

15700

Increase in assets
Repayment of loan
Increase in working
capital
Total
Net cash flow

10000

0
40000

0
40000

0
60000

0
10600

0
95700

00
26875

0
49175

25

10

800000

515700
0

100000
0
615700

757000

957000

119234

257915

0
496938

96

24

24

BEP CALCULATION:

Particulars
TOTAL REVENUE
LESS:- VARIABLE COST
Cost of goods sold
Transportation
Delivery expenses (fuel)
Packing expenses
Wastages

AMT. IN RS.

10588500
180000
240000
72000
500000

AMT. IN
RS.
1,80,00000

Total
CONTRIBUTION
LESS:- FIXED COST
Administrative expenses
Salaries & wages
Vehicle rent
Depreciation
Repairs & maintenance
Electricity
Interest
Miscellaneous expenses
Advertisement expenses
Warehouse rent
Total
Contribution margin ratio (= 1-Variable cost/ sales )
BEP (IN RS.)= Break Even Sales in Rs. = [Fixed Cost / 1
(Variable Cost / Sales)]

11580500
6419500
250000
1272000
300000
38917
20000
42000
50000
10000
150000
360000
2492917
(1--.64)
2492917/0.36

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
Product selection & completion of market survey
Project report preparation
Site selection
Selection of vehicle & customization
Warehouse development
Recruitment of manpower
Sales arrangements
No. Of days required to implement project

CONCLUSION

DAYS
10
5
10
10
15
5
3
58

0.36
6924769

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.