Business Plan on Fruits and Vegetable Supply Chain

G.H.PATEL P.G.INSTITUTE OF BUSINESS MANAGEMENT. Page 1

A

Business Plan on

Haat at your home

Presented By:

Kishan Tank (10F17)

Prakash Kava (10F29) Udaysinh Barad (10F37)

Viral Gondaliya (10M41)

Presented To:

Dr. H. J. Jani

G. H. Patel Post Graduate Institute of Business Management

Sardar Patel University, Vallabh Vidyanagar


PREFACE

This report contains the business plan of fruits and vegetable supply chain. This is

like a map. Starting the business without any plan is same as a journey without

map or guide. Business plan checks the reality and viability of proposed business.

We have tried to justify the project by analyzing the feasibility of business. This

project also includes the estimation of future income statements, cash flows and

break even analysis as well.

The object of this project report is to learn how to write business plan and how to

check the feasibility of proposed business


ACKNOWLEDGEMENT

It is really a matter of great pleasure for us to undertake & present this creative &

practical work, a project report on business development plan.

This report has been prepared by keeping in mind various aspects relating to

market condition, financial feasibility and operational feasibility as well.

We undertake this opportunity to express our sincere thanks to Prof.

(Dr.) H.J.Jani (Director, GHPIBM) who has guided us in preparing this report. We

would like to thank Dr. Swati Mehta, who has guided us at each and every step

while developing the business plan. our. Finally, we would like to thank our family

and friends for their support and encouragement.

Date:

Place: Vallabh Vidyanagar.

Kishan Tank (10F17)

Prakash Kava (10F29)

Udaysinh Barad (10F36)

Viral Gondaliya (10M41)


INDEX

Sr.No. Particulars Page no.

1 INTRODUCTION 05

2 PERSONAL INFORMATION 07

3 PRESENT STATUS & MARKET POTENTIAL 08

4 TYPE OF UNIT & SITE SELECTION 10

5 COST OF PROJECT 13

6 MEANS OF FINANCE 13

7 PRELIMINARY EXPENSES 14

8 OPERATION PROCESS 15

9 FACILITIES REQUIRED 16

10 MANPOWER REQUIREMENT 17

11 UTILITIES 18

12 ADMINISTRATIVE EXPENSES 18

13 PROJECTED INCOME STATEMENT 21

14 PROJECTED CASH FLOWS 22

15 BREAK EVEN ANALYSIS 23

16 PROJECT IMPLEMENTATION SCHEDULE 25

17 CONCLUSION 26

18 BIBLIOGRAPHY 27


INTRODUCTION

India is the second largest producer of vegetables in the world (ranks next to

China) and accounts for about 15% of the world’s production of vegetables. The

current production level is over 92 million MT and the total area under vegetable

cultivation is around 6.2 million hectares which is about 3% of the total area under

cultivation in the country. In case of vegetables, potato, tomato, onion, cabbage

and cauliflower account for around 60% of the total vegetable production in the

country. Vegetables are typically grown in India in field conditions; the concept is

opposed to the cultivation of vegetables in green houses as practiced in developed

countries for high yields.

India is the second largest producer of fruits & vegetables in the world with an

annual production of around 94 million tones. It has the distinction of producing

almost all-tropical and exotic fruits and vegetables because of varied climatic

conditions. Due to the short shelf life of these crops, as much as 30-35% of fruits

and vegetables perish during harvest, storage, grading, transport, packaging and

distribution. Only 2% of these crops are processed into value-added products.

Hence, there is a need for maximum commercial utilization of fruits and vegetables

and to adapt production and marketing activities to the requirements of the world

market and to cater to domestic demand which, over the past few years, has been

increasing because of various socio-economic factors.

Our proposed business is to channelize the fruits and vegetables from the market to

direct customers through home delivery with freshness and good quality.


Company Summary:

Fresh Mart 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 western part of ahmedabad 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. You will find it while standing

in the queue at reliance fresh or big bazaar that people are purchasing their fruits

and vegetables for the whole week or for three to four days and are paying bills of

more than Rs. 500 for their fruits and vegetable requirements. 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.

Mission:

To become a market leader in fruits and vegetables market in Ahmedabad 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.


PERSONAL INFORMATION

Name: Prakash Kava

Telephone no.: 7567028716

Date of Birth: 12/02/1990

Educational Qualification: MBA(Finance)

Name: Kishan Tank




Name: Uday Barad




Name: Viral Gondaliya



Educational Qualification: MBA(Marketing)


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 Ahmadabad city but they would not be

forming more than 10% of the total market. Ahmadabad city have wholesale sabji

market at Kalupur and APMC at Saraspur. Customers of the city expect the quality

products at reasonable price.

Existing Fruits and vegetables retailers in the area:

There are major organized players in this area such as Big Bazaar near ISKON

temple, Star Bazaar at Shiv Ranjani cross road and Reliance Fresh having 3 stores

in the area. They pose a strong competition base for the company. Their sales data

during last year are as follow:

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 major four areas of the Ahmedabad city –

Prahalad Nagar, Satellite Area, Bodakdev Area and Thaltej Area. Combined these

areas include around 125000 households. The company is aiming to get 1000

customers initially.

Annual Market Need:

The annual consumption of fruits and vegetables in the Ahmadabad city can be

estimated at around Rs. 2000 crores annually.

Scope for Diversification:

Fresh Mart has huge scope for diversification in various other products like FMCG

and Grains. The company can also go for online business. Fresh Mart also has

huge opportunity for expansion the market base as it will less capital expenditure.

Fresh Mart is also planning to procure 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 Mart 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.

Conclusion:

Though there are several competitors in the market of Ahmedabad city, Fresh Mart

will be able to achieve success through its core focus on the product quality and

high level of on time commitment.


TYPE OF UNIT & SELECTION

Name of the unit: FRESH MART – A Haat at your Home

Name of our unit will be Fresh Mart –A haat 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 Ahmadabad, Sarkhej-Gandhinagar high way.

Type of unit:

The fresh Mart will be a partnership firm.

The fresh mart 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.

Techno economic reasons for site selection:

Techno 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 Sarkhej,Ahmedabad as

the it is located on the SG Highway and near to the customer base.

Requirement of land: The basic activity of the Fresh Mart 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 Mart’ must come first in

their mind first. Fresh Mart 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.

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 Mart will have competition from Reliance Fresh, Big Bazaar, Star Bazaar,

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

venders.

Competitive Advantage:

Fresh Mart 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 creation will help for sustainable

development/growth.


COST OF PROJECT

Particulars Amount in Rs.

Deposit for warehouse 300000

Warehouse development expenses 50000

Karat (300*100) 30000

Weight machine(8000*4) 32000

Fridge 70000

Auto rickshaw carrier (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


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

Long term loan from SIDBI 500000

TOTAL 960000


PRELIMINARY AND PREOPERATIVE EXPENSES:


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:

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 No.

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


MANPOWER REQUIREMENT:

Sr. No. Particulars Nos. Salary

Monthly (in Rs.) Yearly (in Rs.)

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 RS.

Particulars Monthly Yearly

Rent 30000 360000

Transportation (inward carriage) 15000 180000

Electricity 3500 42000

Miscellaneous - 10000

TOTAL 592000

ADMINISTRATIVE EXPENSES:

Sr. No. Particulars Monthly Yearly

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 9000 108000

7 Miscellaneous - 10,000

Total 250000

Note:

1. Travelling expense includes fuel expense of the person collecting orders and

taking feedbacks.


RAW MATERIAL REQUIREMENT:

DEPRECIATION:

Particulars Amt. in Rs.

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:

1. Packaging expense will be 50 paisa per order.


Fruits & Vegetables 1,05,88500


INTERST CALCULATION:


Interest On Term Loan from SIDBI (@ 10%) 50000

TOTAL 50000


PROJECTED INCOME STATEMENT

Particulars

Years (in Rs)

1 2 3 4 5

Sales revenue 18000000 36000000 72000000 144000000 288000000

Less:- expenses

Cost of goods sold 10588500 21600000 43200000 86400000 172800000

Depreciation 38917 77834 155668 311336 1122672

Repairs&

maintenance(vehicle) 20000 40000 80000 160000 320000

Salaries & wages 1272000 2544000 5088000 10176000 20352000

Administrative expenses 250000 400000 640000 1024000 1638400

Selling & distribution

expenses 612000 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 expenses 14073417 27719034 54107388 106232588 209816925

PBT 3926583 8280966 17892612 37767412 78183074.8

Income tax @ 30% 1177974.9 2484289.8 5367783.6 11330223.6 23454922.4

Net profit 2748608.1 5796676.2 12524828 26437188.4 54728152.4

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:

Particulars

Years (in Rs)

1 2 3 4 5

Sources

Promoters contribution 460000

Loan from SIDBI 500000

Cash flow from operating

activity 2787525 5874510 12680496 26748524 55850824

Total 3747525 5874510 12680496 26748524 55850824

Applications

Cost of project 900000

Preliminary exp. 60000

Increase in assets

157000 157000 157000 5157000

Repayment of loan 100000 400000

Increase in working capital

400000 600000 800000 1000000

Total 1060000 957000 757000 957000 6157000

Net cash flow 2687525 4917510 11923496 25791524 49693824


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

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.


BIBLIOGRAPHY

Websites:

www.freshndaily.com

www.bplan.com

www.magicbricks.com

http://www.freshndaily.com/

http://www.bplan.com/

http://www.magicbricks.com/

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