1

200590 International Business Project

2021 Spring Semester

International Market Entry Feasibility Study Report

Vinamilk, Plant-based Milk and Plant-based Yogurt, India

IBP Group

Huong Thi Cam Nguyen (20281869), 20281869@student.westernsydney.edu.au

Tu Nguyen Phuc Nguyen (20084514), 20084514@student.westernsydney.edu.au

Uyen Nguyen Phuong Pham (20079693), 20079693@student.westernsydney.edu.au

Hai Nam Phan (20095808), 20095808@student.westernsydney.edu.au

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TABLE OF CONTENTS

LIST OF ABBREVIATIONS..................................................................................................5

EXECUTIVE SUMMARY......................................................................................................6

SUMMARISED MARKET PROFILE / REQUIREMENTS..............................................6

A. INDIAN SIZE........................................................................................................................6
B. KEY ECONOMIC INDICATORS........................................................................................7
C. INFRASTRUCTURE.............................................................................................................8
D. KEY POLITICAL AND LEGAL FACTORS.......................................................................9
E. COUNTRY OULOOK FOR TRADE....................................................................................9

PREVIOUS MARKET ENTRY EXPERIENCE................................................................10

MARKETING ANALYSIS...................................................................................................10

A. PRODUCT/ SERVICE DESCRIPTION.............................................................................10

B. TARGETED MARKET SEGMENTS AND CHANNELS OF DISTRIBUTION..............11
C. TARGETED CONSUMER ANALYSIS FOR NOMINATED MARKET.........................11
1. Broad Market Size (Total Country Size)..........................................................................11
2. Initial Market Segmentation............................................................................................11
3. Initial Targeting and Positioning.....................................................................................13
4. Competitor Analysis.........................................................................................................13
5. Specific Product/Service Strategy Issues.........................................................................13
6. Discussion On Relevant Expression of Product or Service Into Service For Nominated
Market..................................................................................................................................14
7. E-Marketing Strategies....................................................................................................14
D. PREFERED MARKETING STRATEGIES........................................................................15

ENTRY SELECTION FOR NOMINATED MARKET.....................................................17

A. CHOSEN ENTRY METHOD........................................................................................18

B. ADDITIONAL CONSIDERATION AFFECTING MARKET ENTRY.......................18
1. Financial Attractiveness and Incentives..........................................................................18
2. Governmental consideration and Incentives...................................................................19
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3. Distribution......................................................................................................................20
4. Potential application of this Market Entry Option Into Nominated Market As a Possible
Platform For Entry into other markets:...............................................................................21

LEGAL CONSIDERATIONS..............................................................................................21

A. TRADE POLICY.................................................................................................................21
B. REGISTRATION OF COMPANY......................................................................................22
C. OWNERSHIP OF THE BUSINESS ENTITY....................................................................22
D. GOVERNMENTAL POLICY ON FOREIGN INVESTMENT.........................................22
E. INTELLECTUAL PROPERTY PROTECTION.................................................................23

RISK ANALYSIS...................................................................................................................23

A. FINANCIAL RISK..............................................................................................................23
B. PROPERTY BUSINESS SEIZURE / EXPROPRIATE RISK............................................23
C. CAPITAL/ PROFIT REPATRIATION POLICY AND RISK............................................24
D. POLITICAL STABILITY AND RISK................................................................................24
E. TRADE RELATION RISK – OTHER COUNTRIES TRADE RELATIONS AND
POLICIES.................................................................................................................................24

FINANCIAL SUPPORT.......................................................................................................24

A. TYPE OF FINANCING FOR PROPOSED PROJECT......................................................25

B. SOURCE OF FINANCING.................................................................................................25
1. Initial Equity or Capital For Venture and Market Entry.................................................25
2. Internal.............................................................................................................................25
3. External............................................................................................................................25

FINANCIAL ANALYSIS......................................................................................................25

A. FINANCIAL ANALYSIS ASSUMPTIONS.......................................................................25

1. Assume the Unit Price......................................................................................................26
2. Assume and estimate Sales Revenue and Sales Volume in 03 years................................26
B. KEY FINANCIAL INDICATORS......................................................................................27
1. P&L Statement.................................................................................................................27
2. Break-even Units Based on Estimated Sales...................................................................27
3. Cash Flow Statement.......................................................................................................28
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4. Summary Discussion on Indicators.................................................................................29

5. Return on Investment (ROI).............................................................................................30

MANAGEMENT TEAM AND STRUCTURE...................................................................30

A. LOCAL AND EXPATRIATE COMPOSITION.................................................................31

B. STRUCTURE INCLUDING ALIGNMENT WITH HEAD OFFICE................................31
C. ORGANIZATION CHART.................................................................................................31

CONTROL STRATEGIES...................................................................................................31

A. DIFFICULTY OF INTERNATIONAL CONTROL...........................................................31

1. Distance and Inventory shipment issues..........................................................................31
2. Degree of uncertainty – Partners....................................................................................32
B. CENTRALIZED VERSUS DECENTRALIZED POLICY.................................................32

SUSTAINABILITY................................................................................................................32

TIMEABLE FOR IMPLEMENTATION............................................................................33

CONCLUSION.......................................................................................................................33

REFERENCES.......................................................................................................................35

APPENDICES........................................................................................................................55

LIST OF ABBREVIATIONS
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AIFTA ASEAN-India Free Trade Agreement

BJP Bharatiya Janata Party

BOD Board of Directors

CRM  Customer relationship management

CSR Corporate Social Responsibility

DSC  Digital Signature Certificates

FY Fiscal Year

FSSAI Food Safety and Standards Authority of India

FEMA Foreign Exchange Management Act

FDI Foreign direct investment

HQ Head Quarter

IP Intellectual Property

JV  Joint Ventures

LLP  Limited Liability Partnership

MCA Ministry of Corporate Affairs

MoIT Ministry of Industry and Trade

MoU Memorandum of understanding

SDGs Sustainable Development Goals

EXECUTIVE SUMMARY
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The influence of the COVID-19 on the world economy is undeniable. However, the

MoIT reported that the dairy industry, specifically in Vietnam, kept growing steadily in the

domestic market and achieved higher growth achievements compared to the same period last

year in export revenue, with US$302.7 million in 2020 (SGGP, 2021). Therefore, it opened an

expectation for Vietnamese dairy industry in general and Vinamilk in particular to seize the

opportunities to penetrate the Indian market, who has been one of Vietnam’s major partners in

many years (Trading Economics, n.d.) (Appendix A.1) and is the largest consumer of fluid milk

in the globe in 2020 (Shahbandeh, 2021) (Appendix A.2). After thorough research and analysis

from Vinamilk's diverse product lines, plant-based milk and plant-based yogurt are considered

promising in this billion-population nation, although there are still various issues and challenges

that will affect the company's market entry process. This study will analyze the Indian market as

well as outline appropriate strategies for Vinamilk to enter this market successfully.

SUMMARISED MARKET PROFILE / REQUIREMENTS

A. INDIAN SIZE
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B. KEY ECONOMIC INDICATORS

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C. INFRASTRUCTURE
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D. KEY POLITICAL AND LEGAL FACTORS

E. COUNTRY OULOOK FOR TRADE

According to Ankit (2021), despite the fact that this country has been severely damaged

by the COVID-19 pandemic in 2020, causing a drop of 7.7% in the economy due to the downfall

trend of domestic demand, the Indian economy is expected to grow by more than 8% in fiscal

year of 2021 (Times of India, 2021). At the moment, India is in the reformation process in order

to create jobs for millions of workforce before 2030; therefore, the government would stimulate

the economy by attracting foreign investments. Moreover, many sectors of India’s industries
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have allowed 100% FDI (UK India, n.d.), this is an opportunity for international investors to

enter Indian market.

PREVIOUS MARKET ENTRY EXPERIENCE

Globally, Vinamilk currently has four official subsidiaries around the world, located in

the USA, Poland, Laos and Cambodia. Besides Poland, Thailand is the second representative

office of Vinamilk in foreign countries. However, in 2018, Vinamilk closed Thailand's

representative office after completing its missions, recently, they continue to implement export

and sales activities in this market (VTCNEWS, 2018). Topmost Enterprise is Vinamilk’s

strategic partner in the Thailand market, the product distribution representative worth 60-billion-

baht ($US1.7 billion) in the dairy market, VTCNEWS continued.

MARKETING ANALYSIS

A. PRODUCT/ SERVICE DESCRIPTION

India with a young population and vegetarians make up the majority of the total

population; recently, they are gradually becoming more conscious about their health and

environment protection by consuming plant-based dairy products (Humane Society International

India, 2021). Vinamilk’s plant-based milk and yogurt with main flavors including almond,

walnuts, red bean, violet glutious rice and green rice which almost nuts are imported directly

from the US and products are manufactured with a closed European process (Vinamilk, 2020)

(Appendix C.1). Therefore, high-quality plant-based milk and yogurt are expected to be suitable

products for Vinamilk to enter the Indian market.

F. TARGETED MARKET SEGMENTS AND CHANNELS OF DISTRIBUTION

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In 2020, Vinamilk has successfully established their influence in the Korean market with

plant-based milk. In this market, the company focused on the high-end segment, especially into

young-adult and middle-age people who are conscious about nut nutrition (Vinamilk, 2020).

Also according to them, Vina Korea's surveys found that the local customers are extremely

interested in these “tasteful” products combined with vivid and handy design that can be an

alteration for small meals in the working environment and daily activities. The customers can

easily find these products in convenience stores such as CU, GS25, 7-eleven, etc. and also in e-

commerce platforms, namely eBay, 11St.

G. TARGETED CONSUMER ANALYSIS FOR NOMINATED MARKET

1. Broad Market Size (Total Country Size)

In 2020, the value of the India dairy market reached IRN11.357 billion (over $US153

billion) with the largest number of cattle in the world (Business Wire, 2021). With support of the

government and immense potential for value increase, India dairy industry is looking to grow

intensively in the next five years (Appendix C.2).

2. Initial Market Segmentation

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3. Initial Targeting and Positioning

Based on initial market segmentation, the three lucrative markets for Vinamilk are Delhi,

Mumbai and Kolkta. As the country with the largest number of vegetarians in the world

(Appendix C.7), Vinamilk is not only targeting these customers but also those on flexible dieters

because there are the groups that make up 84% of Indian are protein deficient (Bhushan, 2019).

In addition to children and the elderly are also potential customer groups, the company

specifically targets young adults (15-50 years old) (Appendix C.8), who have a stable job and

income but are looking for a healthy regimen from plant-based products to avoid lifestyle

ailments. As promised, Vinamilk will provide a product image with benefits such as rich in

protein, low prices and high quality of international standards.

4. Competitor Analysis

The India dairy alternative market, which was valued at $20.9 million in 2018 and is

expected to reach $63.9 million by 2024, is dominated by five major players: Hershey India

Private Limited, Life Health Foods (India) Private Limited, Rakyan Beverages Private Limited,

Dabur India Ltd, and Tilda Hain Celestial (TechSci Research, 2019). The Appendix C.9 will

provide the Vinamilk’s competitors analysis based on its strengths and weaknesses.

5. Specific Product/Service Strategy Issues

As a late mover compared to its competitors, winning back the market share is the first

challenge. The second is setting competitive price levels for products sold on the Indian

marketplace can be difficult due to expensive trade costs caused by the Indian government's

protectionism for the dairy industry (Kumar, 2020). According to Adele & Fouda (2012),

protectionism illustrates the high tariff imposed on imported goods and raw materials. For that

reason, the feasible measures Vinamilk should consider to overcome challenges that consist of
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investing strongly in building brand position at the beginning through marketing efforts

(Appendix C.10) and using equity sharing strategy such as a JV to reduce tax barriers (A Digital

Blogger, 2019).

6. Discussion On Relevant Expression of Product or Service Into Service For

Nominated Market

Firstly, focusing on product quality has always been Vinamilk's top priority and has since

created a strong reputation of the brand in the international arena (Lan & Thinh, 2020)

(Appendix C.11). Next, the diversity of product lines has helped Vinamilk ensure that it can meet

a wide range of customers of various ages to maximize the market share (Saokim Branding,

2021) (Appendix C.12), because the company has done a good job in understanding the market

and consumers. Finally, the brand image will be a contributing factor for Vinamilk's products to

reach closer to local consumers (Tintuc, 2021) (Appendix C.13).

7. E-Marketing Strategies

Marketing presence

With India’s technology advancement and the E-readiness (demonstrated in Appendix

B.4), Vinamilk can utilize E-marketing strategies to approach the market and build a well

engaged customer base in India. Marketing presence for Vinamilk in India would be employing

the bespoke tactics to connect with consumers, providing health values for customers and

increasing Vinamilk’s brand awareness in the new market. By implementing a clear message

from Vinamilk to the consumers that the plant-based products retain healthy purposes and are

produced by a high quality farming system along with the finest raw materials; this marketing

presence can help the company improve the brand recognition and market visibility in the India

market.
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Customer Interface, CRM, Social Media Approaches, E-Commerce

The company can apply two critical strategies to enhance their consumer relationship, the

CRM along with social media platforms. In particular, Vinamilk can employ the cloud-based

CRM. The cloud-base system stores the data on the vendor’s server, maintains their database

expeditiously which Vinamilk will have full access to the database. This system would be a great

fit for Vinamilk in the new market, the company can control and access the database anytime and

anywhere, save time and, most importantly, the vendor will be responsible for the operation of

the system and provide the necessary system updates and support. 

Specifically, Vinamilk can use Salesforce, which is one of the top CRM platforms in India, used

by major companies such as KONE, Motorola Inc, Yamaha corporation (DataFlair, 2018). This

platform can provide Vinamilk with critical features such as opportunity management, email

integration and contact management.  

Moreover, Vinamilk can utilize upheaval e-commerce (Appendix C.14) and social media

platforms to promote their new product line to the Indian market, such as Instagram, Vinamilk

official website; And most important, Facebook and Youtube, which are the two most used

social media platforms in India (Appendix C.15) Vinamilk can operate sales on Bigbasket,

Grofers and Zopnow, which are the top three most popular online grocery shopping apps

(SMARTHER, 2020).  

Subsequently, M-commerce is also a strong path that Vinamilk should target. With a

wide range of transactions from B2B to B2C, the majority of Indians from young to old are using

a smartphone in 2020, especially during the COVID-19 pandemic. India’s M-commerce sales

were forecasted to reach 38 billion U.S. dollars by 2020 (Statista, 2021).

H. PREFERED MARKETING STRATEGIES

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When entering a potential market but also very competitive like India, it requires

Vinamilk to have a Marketing Mix strategy to develop its popularity and image in the local

market.
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ENTRY SELECTION FOR NOMINATED MARKET

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A. CHOSEN ENTRY METHOD

There are multiple methods for Vinamilk to apply for entering an overseas economy. In

the Indian market, a JV between Vinamilk and the local enterprise Bagrry’s (Appendix D.1) is

considered the most optimized market entry method. More specifically, a LLP is suitable for

Vinamilk's long-term strategies due to the permission of the Indian government for 100% FDI in

the dairy sector (Darshini et al., 2020) (Appendix D.2). Resources leverage, budget savings, and

utilizing expertise are also competitive advantages for Vinamilk (Marshall, H. 2021) (Appendix

D.3). In the long term, Vinamilk can start building plant with their high-tech production chains

when economies of scale are feasible, taking advantage of their partner's resources. (Appendix

D.4 for pros and cons analysis of this strategy).

B. ADDITIONAL CONSIDERATION AFFECTING MARKET ENTRY

1. Financial Attractiveness and Incentives

a. Raw material

For the long-term target is to build a manufacturing factory domestically, the material

sourcing issue is essential. Fortunately, India has the suppliers of organic soybeans that are the

primary material of Vinamilk's products (Appendix D.5 & D.6). Therefore, strategically, the

company can use these domestic soybeans to replace those imported, helping much more cost-

saving (Appendix D.7). With a JV agreement, Vinamilk can leverage Bagrry's position to find,

connect and negotiate with local suppliers more quickly and effectively (Dezan Shira &

Associates, 2020).

b. Labor
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Establishing a joint venture company will help to solve personnel insufficient problem for

the project in the first stage. Le (2020) affirms that JV allows to combine human resources of

two companies and encourage professional coordination within personnel resources

simultaneously so that the project can be implicated quickly, more conveniently and costs saving

(Appendix D.8).

c. Tax Incentives and Allowances

When participating in a JV agreement, particularly in an LLP, Vinamilk will be exempted

from various taxes, including dividend distribution tax and minimal alternative tax (Lrcontent,

2017). The author also emphasized that the tax rate on LLPs is lower than that on corporations;

hence, the tax payable of the enterprise in the JV case is not significant (Appendix D.9).

Additionally, Vinamilk’s decision for this entry method also impacted positively by other

government taxation incentives for food processing industries (Appendix D.10).

2. Governmental consideration and Incentives

a. Stability

India has a stable and largest democracy in the world. The abrogation of various filling

charges in Delhi and Mumbai has improved the business expenses in India (Heritage, n.d.).

India's business freedom score also increased to 76.7 (Appendix D.11), improving the business

permitting process and the construction and building permit price deduction (Heritage, n.d.), this

will add to the advantages for Vinamilk when entering the market. With the COVID-19 outburst,

India's government and the Reserve Bank implemented various critical monetary and fiscal

policy adjustments to assist companies. With practical actions, it is predicted that India's

economy to overcome powerfully in FY22 (The World Bank, 2021); therefore, Vinamilk can

enter the India’s market with a stable economy.

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b. Regulations and specific sustainability policies, incentives and grants

India's Limited Liability Act 2008 promotes sustainability competition in the industry and

banned anti-competitive businesses (Amritt, 2015). Specifically, Vinamilk must adhere to India's

legal requirements correlated with FDI, such as the FEMA Act 1999. Businesses can issue the

FDI approvals through the FIFP, an online service between the foreign company and India's

government to expedite the application approval process (Shah, Shroff, & Adani, 2018).

For the dairy industry in India,Vinamilk focus and strictly comply with The FSSAI

standards and the Export (Quality Control & Inspection) Act (1963), which will regulate the

export system, handled by India's Export Inspection Council.

3. Distribution

a. Modes of transportation

Based on modes of milk transportation in India (Appendix D.12) (IndiaAngroNet, n.d.),

road transport is currently the most suitable mode of distributing products to retail locations in

three major cities; additionally, railway is also a consideration when the company's scale

expands, products need to be distributed farther in rural areas or even remote places. With

insulated motor trucks, milk and yogurt will be stored at a cool temperature, and unlikely to sour

even during long distance transportation.

b. Channels of Distribution

There are three types of entities exist in the channels including agents, merchants and

facilitators. For JV, Vinamilk can utilize the existing nationwide distribution channels and jointly

promote the products by agents of Bagrry’s. With the dairy industry, Vinamilk will apply a two-

level channel in the concept of levels to which the number of different buying and selling entities

exists between a producer and an end-customer. Particularly, Vinamilk's products will be

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distributed to supermarkets, convenience stores and grocery shops because these are common

types of distribution in India, and even e-commerce sites (Appendix D.13).

4. Potential application of this Market Entry Option Into Nominated Market As a

Possible Platform For Entry into other markets

Although Vinamilk has penetrated into most of the neighboring countries of India, the

product line of plant-based milk and yogurt are still not common in these markets. With the

opening in China in early 2021, followed by the world's second most populous market - India, if

this product line of Vinamilk makes an impression and achieves certain successes in these two

large and competitive markets, it can be expected that plant-based milk and yogurt can continue

to approach neighboring countries such as Bangladesh, Afghanistan, Myanmar where Vinamilk

already has a presence, and even a potential dairy consuming market as Bhutan.

LEGAL CONSIDERATIONS

A. TRADE POLICY

The AIFTA which Vietnam is a member of ASEAN (Dezan Shira & Associates, 2021)

has facilitated a wider range of Vietnam’s commodities exported to India with significant tariff

favors and promote cooperation between two countries relating to political and securities,

economic, socio-culture (Appendix E.1). Although India has entered the agreement, the

government has currently still maintained an inward-looking trade strategy for the dairy industry

by imposed high tariffs on finished dairy products imported (Mondal & Sirohi, 2016). However,

in the near future, the tariff reduction on dairy commodities in import cases in India would

happen due to the constraint of the agreement (Appendix E.2). Therefore, Vinamilk's dairy
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commodities exported to India will be more likely to benefit from the lower tariff levels as well

as other political risks will be eliminated.

B. REGISTRATION OF COMPANY

As mentioned above, Vinamilk should register for a limited liability partnership firm

(LLP) in India because of its advantages (Appendix E.3). According to Rastogi (2021), an LLP

company must have “at least two designated partners with one being resident in India for at least

180 days”, therefore, it is crucial for the enterprise to connect at least potential Indian partner

when deciding to establish an LLP. Moreover, the MCA will approve an LLP with sufficient and

credible proof of the company’s existence, including a registered office address and DSC

(Rastogi, 2021). Thus, to complete the registration of an LLP company, Vinamilk and its Indian

partner must spend the procurement comprising five steps (Appendix E.4).

C. OWNERSHIP OF THE BUSINESS ENTITY

Establishing a new LLP company must comply with regulations in The Limited Liability

Partnership Act, 2018 (Dezan Shira & Associates, 2020).  Before signing a JV contract,

Vinamilk and Bagrry’s must regulate all of the regulations (Appendix E.5) such as Jurisdiction

for resolution of dispute. Transfer of shares and the company’s dividend policy; plus, other

critical documents and proceedings such as MoU, the FEMA; The Companies Act, 2013 must be

strictly adhered (Appendix E.6).

D. GOVERNMENTAL POLICY ON FOREIGN INVESTMENT

All foreign investments must be approved by the Government of India and all FDI

proposals are examined by The Department for Promotion of Industry and Internal Trade

through the FIFP, an online service between the foreign company and India's government to

expedite the application approval process (Shah, Shroff, & Adani, 2018). There are three main
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steps (Appendix E.7) and critical documents (Appendix E.8) that Vinamilk also should be

prepared for the approval process.

I. INTELLECTUAL PROPERTY PROTECTION

Vinamilk would not have to register their brand and trademark again under India's law

since India and Vietnam are both members of the WIPO Copyright Treaty (Appendix E.9).

Additionally, India’s protection and enforcement of IP has always been challenging in the past;

Since 2016, there were improvements taken by the India's government to advance the situation

by acceding to critical international treaties (Appendix E.10). Besides, Vinamilk can work with

approved India’s trademark agents (Appendix E.11) and strictly follow The Trade Marks

(Amendment) Act, 2010 and The Trademark Rules, 2017 (Intellectual Property India, 2019).

RISK ANALYSIS

A. FINANCIAL RISK

Besides the existing burdens, the COVID-19 has caused heavy loss, as a result, the

government debt to GDP ratio has now increased to 89% (George & Bhargavi, 2021), and it is

expected to decrease only slightly in the coming years (Appendix F.1) (Trading Economics,

2021). Also, India's credit rating is generally described as lower medium grade which is rated by

reputable credit rating agencies such as S&P, Fitch, etc. (Appendix F.2) (Trading Economics,

2021). Therefore, Vinamilk needs to carefully consider financial risks when investing in India.

B. PROPERTY BUSINESS SEIZURE / EXPROPRIATE RISK

Although India had two notable nationalization events in the coal industry and banking

sector in the past, both took place before the era of economic liberalization (Sabeshan, Pisharody

& Rawat, 2019). Currently, India's expropriation risk is rated low to moderate (Australia
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Government, n.d.), ranking 100th out of 173 countries in terms of expropriation risk global rating

(The Global Economy, 2021) (Appendix F.3). Consequently, this will not be a cause for concern

for Vinamilk when operating in India.

J. CAPITAL/ PROFIT REPATRIATION POLICY AND RISK

According to the Reserve Bank of India (2018), all of the foreign investments based on

the capital of a LLP which are net of applicable taxes are repatriable, except for investments

made on non-repatriation basis (Appendix F.4 & F.5). Therefore, the risk for Capital/Profit

repatriation in India is low and Vinamilk financial flow can proceed smoothly.

K. POLITICAL STABILITY AND RISK

According to Heritage Foundation (2021), India has enjoyed a stable democracy with the

leadership of BJP. The political stability index for the country in 2019 is negative 0.70 points and

the figure for corruption perceptions of 2020 is 40.0 points (The Global Economy) (Appendix

F.6 & F.7). With the stable environment, Vinamilk can proceed their business fluently with

minimal political problems.

L. TRADE RELATION RISK – OTHER COUNTRIES TRADE RELATIONS AND

POLICIES

According to Vietnam Briefing (2021), over two decades, bilateral trade between

Vietnam and India has grown continuously in multiple industry sectors. No trade war or boycott

happened over this 42 years relationship. Also, Vietnam’s role has become more significant due

to countries shifting their supply chains out of China, including India. It is a promising

opportunity for Vinamilk to initiate their first stages in the market. (Appendix F.8, F.9 & F.10).

FINANCIAL SUPPORT
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A. TYPE OF FINANCING FOR PROPOSED PROJECT

With a stable growth in Vinamilk’s gross profit, cash & cash equivalent has been

maintaining steadily from 2017-2020, along with Vinamilk’s strategic partner - Bagrry’s stable

financial statement (Appendix G.1 & G.2). Moreover, there are a variety of potential options for

funding in India, specifically Angel investors (Appendix G.3); therefore, Vinamilk does not need

to take on loans and incur the loan interest. For these reasons, the financing solution for

Vinamilk is to use their equity together with their partner’s resources to invest in this project.

M. SOURCE OF FINANCING

1. Initial Equity or Capital for Venture and Market Entry

As such, Vinamilk need to invest approximately $US1.271 million to ensure the project

operate fluently.

2. Internal

That needed investment amount is smaller than Vinamilk’s owned cash and cash

equivalents sourcing recorded approximately $US93 million (Cafef, n.d.). Thus, the company

enable to well-managed the proposed project in the first year with investing entirely by equity

without using debt. Vinamilk will use a part of their cash balance in 2020 as Equity, along with

Bagrry’s resources to fund Vinamilk’s business project in India.

3. External

In addition, the firm can also utilize the proposed Indian angel investors (Appendix G.4)

for additional funds if needed.

FINANCIAL ANALYSIS

A. FINANCIAL ANALYSIS ASSUMPTIONS

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1. Assume the Unit Price

Vinamilk’s products price in India are estimated by utilizing Vinamilk’s product price in

Vietnam compared with competitors’ products price in India, based on the two reliable and

trusted distributors, Bach Hoa Xanh market - Vietnam and Flipkart grocery - India (Appendix

H.1). Finally, from all the calculations and estimations, Vinamilk’s Aggregated Unit Price is

around $2.2/batch/4 packs, which is explicitly lower than most of our competitors.

2. Assume and estimate Sales Revenue and Sales Volume in 03 years

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Tables showed a steadily increasing trend in both sales revenue and sales volume of

Vinamilk from Year 1 to Year 3. It is obvious that the brand has great potential to succeed in the

Indian market (Refer to Appendix H.4 for estimation method).

B. KEY FINANCIAL INDICATORS

1. P&L Statement

After the first year’s loss results in negative profit, gross revenue would grow steadily

over three years with precise estimation and administration policies (Appendix H.5 & H.6).

2. Break-even Units Based on Estimated Sales

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In Year 2, the project will start to be profitable. The economical break-even point is

estimated at approximately 7,254,157 products; therefore, as can be seen from the table of Sales

Volume estimates, the project will be expected to break even near the end of the first quarter of

Year 2. 

3. Cash Flow Statement

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Net Cash from operating activities increases gradually over years because in addition to

the inflow from EBIT and depreciation (Appendix H.7), starting from Year 2 the project must

pay income taxes. Besides, cash from investing activities is mainly cash out because the project

must invest into renting an office, purchasing the equipment and machines in India (Appendix

H.7). Additionally, Net Cash from financing activities show total Capital Investment for the

project over the three first years is estimated at approximately $US1,271,000. Cash flow table

shows when Net of Cash Flow (Ending cash) is higher than Target Safe Ending Cash, there is no

need to invest into the project since Q1Y2 (Appendix H.8). Based on the equity share of the JV,

Vinamilk’s total needed capital investment is approximately $US648,000 and $US623,000 for

Bagrry’s. 

4. Summary Discussion on Indicators

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Generally, major profit margin indicators increase steadily over the years. However,

operating profit margin and net profit margin of the total three years are smaller than those of the

industry because to achieve the profit margin indicators of industry, the project will have to run

business for more than 3 years. Nevertheless, based on the growth of financial indicators across

each year, this is still considered a project with well-business performance.

5. Return on Investment (ROI)

The project also showed that ROI is estimated at 88.04% in total 3 years, which is five

times higher than the nearly 18% of the industry (Appendix H.9). Therefore, this project is

considered a profitable investment for both Vinamilk and Bagrry’s. 

MANAGEMENT TEAM AND STRUCTURE

A. LOCAL AND EXPATRIATE COMPOSITION

 31

A JV requires employees and specialists from both parties in order to operate the business

effectively. The LLP between two companies would appoint either expatriates and locals for

every position that can utilize their expertises (Appendix I.1). For instance, Project Director and

Finance Director would be expatriates from Vinamilk, other members of BOD will be held by

the locals. Key positions in the BOD will be held by senior officers from the two parties

(Appendix I.2 & I.3).

B. STRUCTURE INCLUDING ALIGNMENT WITH HEAD OFFICE

Every strategy and decision should be made based on careful analysis and consideration.

However, some decisions such as hiring employees and internal adjudication can be made freely

by the project head. Other settlements including running new marketing strategies, changing in

policies and operation process would require agreements aligned with the HQ. Mutual

understanding between the two parties and manager levels are crucial in order to communicate

effectively to optimize the management and marketing process

C. ORGANIZATION CHART

A comprehensible organization structure would enhance the efficiency (Appendix I.4 &

I.5).

CONTROL STRATEGIES

A. DIFFICULTY OF INTERNATIONAL CONTROL

1. Distance and Inventory shipment issues

Operating a business internationally has always been challenging and needs a proper

business plan, plus an execution accordingly to build a successful enterprise in a new market. A

new market comes with new challenges and potential out-of-control situations that the company
 32

must see ahead to make the right move in these situations. Due to the distances between Vietnam

and India, plus the impact of COVID-19, it is possible that there will be problems or small delays

in the logistics process, the control strategy is to choose the right global shipment method and

have an astute inventory plan (Appendix J.1).

2. Degree of uncertainty – Partners

Furthermore, to minimize the risk of the local partners in India, the company will also

prepare back-up local contractors/warehouses that can be replaced immediately for a short period

of time if a problem occurs; Plus, the company will acquire a local specialist to advise the

transfer process relating partners/regulations to sudden issues. To minimize the risk of

uncertainty or disagreement with business partner in India – Bagrry India, both companies must

go through an agreement beforehand, consult with both company’s law attorneys to prepare a

partnership agreement that stipulates the rights and liabilities of the partners and will delineate

the agenda for dissolution. The company will try and untangle the knot of the dispute if issues

occur; Plus, the company will have a back-up potential business partner ready in mind if the

worst case scenario happens.

B. CENTRALIZED VERSUS DECENTRALIZED POLICY

Many challenges might arise in the new market as demonstrated above so It would be

reasonable to apply the decentralized policy and let the business operations be managed by the team

leaders in India, including Vinamilk and Bagrry’s directors as well. In order to minimize the risks of

false decision making within the enterprise, the head of the departments can propose ideas and make

decisions but all must be approved and authorized by the Project Director before execution.

SUSTAINABILITY
 33

India has demonstrated a strong commitment to achieve the SDGs even before they were

formally adopted (Government of India, 2017). This Vinamilk's project is expected to respond to

SDG 3 - “Good Health and Well-Being” that is one of the total specific SDGs the Indian

government is towards. With the goal of "Ensure healthy lives and promote well-being for all at

all ages", Vinamilk's products are committed to "present with utmost transparency about raw

materials, production technology and nutritional values" (Vinamilk, 2020). Besides, improving

health indicators targeting groups consisting of children, the poor and vulnerable communities

are always top priority within strategies (Government of India, 2017), the project can proactively

promote CSR programs to raise nutrition and health care awareness towards these subjects. For

example, Vinamilk in Vietnam has "Stand Tall Vietnam'' Milk Fund - for children's health and

safety - accompany to prevent COVID-19 (Vinamilk, 2020). Likewise, the project can establish

such milk funds in India. In brief, the project's commitment to the sustainability policy of the

nominated country will help enhance trust of its stakeholders in regard to the brand and ability to

earn long-term profit.

TIMEABLE FOR IMPLEMENTATION

The first and the most important step, the Project Director that will lead the entire project

will be appointed - This position will be entrusted to Ms. Mai Kieu Lien - Vinamilk’s CEO.

After the first step, the plan will follow up with critical stages (Appendix K.1). Along with the

implementation of the project, the company will establish actions impeding possible issues or

obstacles arising during the process (Appendix K.2).

CONCLUSION
 34

In conclusion, with what has been proved above, India is extremely a potential

destination for Vinamilk because this is a market with the highest milk consumption in the

world; additionally, the value of Vinamilk's plant-based milk and plant-based yogurt can ensure

to meet the customers’ needs, especially vegetarians and flexible dieters who lack protein. With a

JV with a reliable partner as Bagrry's, who have a loyal and solid customer base with the same

value of Vinamilk, this will be an advantage for Vinamilk when they can reduce financial

burden, potential risks in the first steps of penetration, and quickly reach local customers.

Although there will be problems in the process of market penetration, the above reference plans

and analysis may help Vinamilk overcome them. Consequently, this project is still considered a

profitable and potential investment, because the break-even time will take place in Year 2, as

well as an opportunity for Vinamilk to access the world's second largest market, after China.

Word count: 4960

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APPENDICES

EXECUTIVE SUMMARY (A)

Appendix A.1

Vietnam exports by country (Trading Economics, n.d.)

 56

As can be seen from the table, India took the seventh place in the top 10 of Vietnam’s

trading partners, with $USD6.68 billion in 2019, that proves that the Indian market is always a

potential destination for Vietnamese exporters.

Appendix A.2

Annual consumption of fluid milk worldwide in 2020, by country 

*in 1,000 metric tons

SUMMARISED MARKET PROFILE / REQUIREMENTS (B)

Appendix B.1 (World Population Review, 2021)

 57

India's population has remained relatively stable over the years. Notably, the population is rising

at a quicker rate than that of China. India is predicted to overtake China as the world's most

populous country in 2024, although like China, growth is expected to slow and eventually

decline in the latter half of the twenty-first century (World Population Review, 2021).

Appendix B.2

India population by regions (cities inside) (World Population Review, 2021)

58
59
 60

India is divided into six regions, each of which has its own distinct set of states, important

cities, and major languages. There are numerous distinctions between the regions. Miller (2017)

makes the following generalizations about disparities amongst Indians from various places, as
 61

listed in the table below:

 62

Appendix B.3

USD-IRN fluctuation rate (Trading Economics, 2021).

Appendix B.4

India’s infrastructure (Transport, Communications, E-Readiness/Digital Economy)

 63

Appendix B.5

India’s largest airports (WorldData, n.d.)

 64

Appendix B.6

India’s Ports (IBEF, 2021)

MARKETING ANALYSIS (C)

Appendix C.1

Vinamilk’s Plant-based milk products information (Vinamilk, n.d)

65
 66

Appendix C.2
 67

 India dairy industry (total market size)

Appendix C.3

Indian extended families by ages (iStock, n.d.)

 68

Appendix C.4

The percentage of Vegetarians across India in 2016

 69

The chart shows there are approximately forty percent of Indian young adults were

vegetarians including the groups of vegetarians and eggetarians in 2016.

Appendix C.5

Indian household income by Income Pyramid (Wharton Finmart Research Report, 2017)
 70

Appendix C.6

How the nation eats (INDIAN EXPRESS, 2016)

 71

The image points out the North and West regions central the most vegetarians in India.

Appendix C.7

Which Countries Have The Most Vegetarians? (RadioFreeEuropeLiberty, 2019)

 72

The bar chart showed that India is the country with the dominant percentage of

vegetarians in the world, with 31-42%.

Appendix C.8

Population Pyramid of India in 2020 (CIA World Factbook, 2020)

 73

As the table indicated that the type of India's age-sex distribution is the expansive

population pyramid, which mean a greater number of younger age groups than high age groups.

As a result, India is regarded a country with a young and growing population. With an average of

50 million individuals in each working age group (i.e. 15–64 years old) of both sexes, India has

an abundant labor force with the most of the population in working age.

Appendix C.9

Introduction and Analysis of Competitors in the Indian dairy alternative business

1. Hershey India Limited Company (US brand)

It is a 100% subsidiary of the Hershey company in North America. According to

Investox (2020), Hershey is North America's leading chocolate manufacturer and the company

credited with spreading happiness to the world by selling sweets, mints, and other great-tasting
 74

foods. Their plant-based product in India include Sofit Soya Milk and Sofit Almond Milk

(HERSHEY’S, n.d.).

2. Life Health Foods (India)

Image. Plant-based milk product (Life Health Foods, n.d.)

75
 76

3. Rakyan Beverages Limited Company (India)

Image. Product (Raw Pressery, n.d.)

77
 78

(*) In 2020, the company recorded a 46.82 percent growth in net sales revenue.

Additionally, Rakyan Beverages' net profit margin improved by 86.62 percent in 2020. Thus, the

corporation can use sales earnings to fund additional development goals (EMIS, 2021)

4. Dabur India Ltd (India)

Image. Product (Amazon, n.d)

79
 80

(*) The firm generates sales in excess of Rs 8,700 crore and has a market capitalization in

excess of Rs 80,000 crore (Dabur, n.d.). 

5. Tilda Hain Celestial (US brand)

Image. Product (Amazon, n.d.)

 81

(*) According to Watrous (2017), Tilda Hain Celestial benefited from a joint venture

agreement because the food and consumer division of the partner-run business in Mumbai is

responsible for manufacturing, marketing, and distribution of natural and organic products under

Hain Celestial brands in India, including Terra, Garden of Eatin, Sensible Portions, Dream, and

Earth's Best. Hain Tilda will continue to promote and sell Tilda products.

Appendix C.10

Marketing plans in order to build brand position successfully

In order to attract more and more potential health-conscious consumers, Vinamilk's marketers

should focus on promoting outstanding nutrients values, taste, and the price favors of the

products to consumers. Because according to Prytulska et al., (2021), in the survey relating to

Indian consumers' preferences for plant-based milk products, the author reveals that plant-based

milk consumers in India often pay much attention to the nutrition ingredients index within the

products. Besides, they are willing to purchase more of those products at a lower price.
 82

Additionally, shoppers also place a premium on taste when selecting plant-based milk

substitutes.

Appendix C.11

Vinamilk has always improved the quality of its products by selecting high quality raw

materials, constantly innovating technology and investing in modern machinery. With a long-

standing reputation as a Vietnamese dairy brand of international standards, Vinamilk can

confidently pass the rigorous quality checks of other countries, and ensure to provide the best

quality products to consumers. 

Appendix C.12

Different market segments for each product line of Vinamilk

 By age: 

 Formula: 

- 0-6 months old: Dielac Alpha Step 1

- 7-12 months old: Dielac Alpha Step 2

- 1-3 years old: Dielac Alpha 123 

- 4-6 years old Dielac Alpha 456

 Milk for pregnant mothers: Dielac Mama, Dielac Optimum Mama

 Milk for adults: Vinamilk CalciumPro, Vinamilk Sure Prevent, Vinamilk Weight loss

 Milk for the elderly: Vinamilk Sure Prevent

 By class: Organic fresh milk, Plant-based milk, Pasteurized fresh milk with bird's nest. 

Appendix C.13

Vinamilk has invested in its product image not only in the logo bearing bold brand

identity, but also on the packages for products exported abroad which are always specially
 83

designed with the local language, colors and images are suitable for consumers' tastes. This

strategy has been applied to nut milk products in the Chinese and Korean markets.

Appendix C.14

India’s E-commerce

For the India market, e-commerce platforms are a potential approach since the Indian

online grocery market size is projected to grow from US $1.9 billion in 2019 to US$ 18.2 billion

in 2024 along with a growth rate of 36% in India's e-commerce orders volume in Q4 of 2020

(IBEF, 2021).

Appendix C.15

Penetration of leading social networks in India as of January 2021

Appendix C.16
 84

Top 10 grocery online shopping apps in India (SMARTHER, 2020)

1. BigBasket

2. Grofers

3. ZopNow

4. Amazon Pantry

5. Flipkart Supermarket

6. Nature’s Basket

7. Spencer’s Online Grocery

8. Paytm Mall

9. D-Mart Online Grocery Shopping

10. Reliance Smart 

Appendix C.17

Market price of plant-based milk (soya milk) and plant-based yogurt in India and Vietnam
 85

For both product lines, Vinamilk should apply Pricing for Market Penetration when

entering the Indian market. Although in this strategy, the product price will be kept lower than

the products from other competitors in the market, it is still at an appropriate level to ensure the

product quality remains unchanged and also ensure for the risks of currency exchange rates as

well as shipping process for Vinamilk.

Plant-based milk:

Vietnam India

Reference price in two markets:

- India (e-commerce sites): INR 30 -> INR 70/pack/200ml (9,200 VND -> 21,500

VND).

- Vietnam (e-commerce sites): 7,000 VND/pack/180ml & 30,000 VND/batch/ 4

packs.

Apllied price for Indian market (for all flavors):

- INR 28 -> INR 55/pack/180ml (about 8,600 VND to 17,000 VND)

- INR 110 -> INR 210/batch/4 packs (about 34,000 VND to 64,000 VND)
 86

Plant-based yogurt:

Vietnam India

Reference price in two markets:

- India (e-commerce sites): INR 30 -> INR 120/pack/100gram (9,200 VND ->

37,000 VND)

- Vietnam (e-commerce sites): 8,500 VND/pack/100gram & 34,000 VND/batch/ 4

packs.

Apllied price for Indian market (for all flavors):

- INR 29 -> INR 35/pack/100gram (8,900 VND -> 10,700 VND)

- INR 110 -> INR 140/batch/4 packs (33,900 VND -> 43,100 VND)

Appendix C.18

The concept of plant-based product line named 3H 

Vinamilk should communicate with their customers through promotion activities;

therefore, first of all, they build the concept for the plant-based product line including milk and

yogurt called 3H which stands for High quality - Health - Happy. For “High quality”, customers

will be experienced the best quality products from Vinamilk because nuts are imported directly

from the US, with 100% non-GMO soybean seeds, and yogurt that is naturally fermented and
 87

uses healthy Bulgaricus yeast strain; therefore, this is a good product line for “Health” because

the product provides abundant energy as well as a source of healthy nutrition such as Protein,

Omega3 for everyone. Especially, plant-based milk or plant-based yogurt can be eaten during

breaks, before or after working and studying, so that consumers will be recharged with energy to

continue working “Happily”.

Appendix C.19

The reason why Vinamilk should promote products on its main website and local social

media channels.

With the consequences of COVID-19 that the use of smartphones is increasing and the

shopping habits of Indians are gradually changing, they tend to shift to a form of contactless

shopping for health protection (Tech Desk, 2020). Therefore, promoting products on social

networking platforms will reach quickly Indian customers. 

ENTRY SELECTION FOR NOMINATED MARKET (D)

Appendix D.1

Overview of Bagrry’s

Bagrrys India Ltd (known as Bagrry's) is an Indian multinational FMCG food

manufacturing company established in 1986, currently, the brand ranks second in the breakfast-

cereal market in this country. Barry's healthy product lines are diverse such as cereals, oats, bran,

muesli, etc, all of which are made with natural ingredients from many parts of the world such as

almonds imported from California, oats from England. Because their mission is to put the health

of consumers first (https://bagrrys.com/pages/about-us). With the same view of Vinamilk, the

desire to bring the best plant-based products to consumers' health, Bagrry's is the ideal and

potential partner for Vinamilk.

 88

Bagrry's customer segment is people with busy urban lifestyles and high spending power.

They are people who aim for a healthy and convenient lifestyle, so that they need ready-to-eat

food but still ensure adequate nutrition (Indiaretailing Bureau, 2016). 

Realizing that the plant-based milk and plant-based yogurt market is not really common

and diverse in India (through the analysis of Vinamilk's potential competitors in India), this will

also be an opportunity for Bagrry's to expand into another market for healthy food products, and

reach a new customer segment by introducing plant-based milk and yogurt into the company’s

product lines.

Bagrry's products are sold on the company's e-store and are now available at most major

Indian e-commerce sites such as Flipkart, Amazon India, Bigbasket, etc. and has up to 70,000

retail outlets across in India (Shankar, 2018). 

Share of Equity: Vinamilk 51% - Bagrry’s 49%

Common benefits of the joint ventures between Vinamilk and Bagrry's

 Promoting the products of both sides by combining selling bundles (cereals + plant-based

milk; cereals + plant-based yogurt: oats + plant-based milk).

 To some extent, they are able to reach the target customer segment.

Individual benefits of each party:

Vinamilk:

Short-terms:

+ Taking advantage of Bagrry’s existing wide distribution channel.

+ Reaching more customers who need convenient and nutritious breakfast products.

+ Using the same warehouse and implementing jointly the marketing strategy for the

products.
 89

Long-term:

+ Baggry's can become an intermediary in connecting with raw material suppliers (100%

non-GMO soybeans.

+ Baggry's can provide land to build a joint plant to produce plant-based products.

Bagrry's:

Short-term: 

+ Diversifying its product line.

+ Providing convenience for their customers to have milk or yogurt products

available with cereal or oats.

Long-term: Approaching the production technology of plant-based milk and plant-based

yogurt to create a product of both in the Indian market.

Appendix D.2

LLP advantages.

Because LLP would allow Vinamilk to cover liabilities based on their input to the

business without having their personal assets damaged (Andrew, B. 2021).

Appendix D.3

JV advantages
 90

Appendix D.4

Pros and cons of JV subject to Vinamilk

 91

Appendix D.5

Soybean production in India (Simpson, 2020)

 92

From 2019 to 2020, India produced 9.3 million metric tons of soybean, leading the

country to become the world’s most significant soybean production ranked sixth.

Appendix D.6

Suppliers of 100% non-GMO soybeans in India

Indian soybeans are considered the highest-quality soybeans due to their high protein

content (38 percent minimum) and sweeter flavor compared to soybeans from other origins. As a

result, demand for Soybeans of Indian origin is usually high (Shyam Industries, n.d.). Some

suppliers are mentioned below as evidence. There are still have many other suppliers that do not

show.

1. Shyam Industries

Shyam Industries brand is India's top processor, supplier, and exporter of various

conventional and organic oilseeds, grains, and spices. The Government of India has recognized

the company as a Star Export House (Shyam Industries, n.d). A supply offer of the firm for
 93

100% non-GMO soybeans expressed below:

2. Suminter India Organics

 94

Suminter India Organics is a manufacturer of organic products located at Mumbai city of

Western India that are 100 percent certified organic, all natural, and non-GMO. The company

collaborates with over 20,000 farmers to provide the highest-quality organic foods, fibers, and

other items. The provider strives for excellence in all aspects of their operations, from sourcing

to shipping the purest non-GMO products to customers globally (Suminter India Organics,

2019). The image below describes soybean seed organic specifications the firm provides

(Suminter India Organics, 2018).

 95

3. Sangatiy Enterprises
 96

Sangatiy Enterprises is a famous brand in the market. The company locates in Wardha

city, eastern Maharashtra state, western India. All of the company's products are appreciated

because of consistency in terms of shape, size, and color. The product is of exceptional quality

and is inspected on a variety of factors by Indian quality inspectors (ExporterIndia, n.d.). Non-
 97

GMO soybean is one of the most products they provide; see image below:

Appendix D.7

Advantage of JV with low cost of production

 98

Obviously, importing entirely raw material might be more expensive because Indian

government imposes imported raw materials must be taxed regardless of their original country

(Connect2India, n.d.). It shows that if the expenses of raw materials are cheaper, the product

price sold on the market will also be more affordable for domestic consumers. Because

according to Toppr (n.d.), when the cost of production can be reduced, a joint venture company

is able to provide its customers the products at the most efficient price.

Appendix D.8

Human resources advantages in JV

According to Le (2020), each party has its own human resources operating separate

methods and talents; hence, when participating in a joint venture, human resources certainly will

converge in both quantity and quality. The author also confirms that using available employees

of its corporate partner helping costs saving of hire consultants on labor law and recruitment

advertisings.

Appendix D.9

Taxation advantage of joint venture business in India

According to TaxGuru (2020), “a Joint Venture assessable in the status of an AOP that is

treated as an independent taxable entity, will be entitled to the deductions under Section 80-IA

(4) (iii) and Section 80-IB (10) etc. of the Income-Tax Act, 1961”
 99

Based on section 80-IB, it is clear that Vinamilk’s profits and gains are derived from the

business of dairy products (yogurts and plant-based milks); thus, following Income-Tax Act as

mentioned above, when entering a JV business, Vinamilk can take benefit on income tax

deduction.

Appendix D.10

Fiscal incentives for Indian food processing industries (Investor Portal, n.d.)

 Good and Services Tax (GST)

 100

 Income Tax Incentives

Appendix D.11

India: Business freedom score, 2020

Appendix D.12

Modes of milk transpotation in Inida

 101

Appendix D.13

The reason why supermarkets, convenience stores and grocery shops are the common form

of distribution in India

According to Jaganmohan (2019), up to 46% of Indians prefer purchasing goods at

supermarkets. Besides, grocery stores account for a 96% share of the retial business in India,

with about 12 million stores, and this is a sector that affects most all small and big FMCG

companies (Mediratta, 2018).

LEGAL CONSIDERARTIONS (E)

 102

Appendix E.1

Tariff Commitments in AIFTA

According to ASEAN (2021), the ASEAN-India Trade in Goods Agreement (AITIGA),

which entered into force on January 1, 2010, resulted in tariff liberalisation of more than 90% of

products traded between the two dynamic areas in which there are dairy commodities. Mondal

and Sirohi (2016) also emphasis the concerned nations will not impose or retain any non-tariff

measures on the entry of goods from other FTA members. They have also promised to lower

tariff charges on a wide range of tariff lines. These cuts will be implemented in accordance with

country-specific timetables.

Appendix E.2

Mondal & Sirohi (2016) clarifies the AITIGA allows binding parties to use exclusion

lists for products those countries do not want to commit to tariff reduction. India has leveraged

this regulation to keep most of the dairy product lines under exclusion list as safeguard measures

to protect domestically produced milk products from foreign competition. However, the

agreement has mentioned that “the exclusion list shall be subject to an annual tariff review with a

view to improving market access”.

Appendix E.3

Advantages of establishing an LLP in India (Rastogi, 2021)

 In comparison to a company, a LLP is easier and less expensive to create. Fees for

creating an LLP start at INR 500 (US$7) and go up to INR 5,000 (US$70).

 Account auditing is not required for LLPs unless their annual turnover surpasses INR 4

million (US$55,750) or their contribution exceeds INR 2.5 million (US$34,900).

 There is no minimum capital required for forming an LLP.

 103

 As a separate legal organization, an LLP limits its partners' responsibilities to their

agreed contribution, and partners are not obligated to pay the company's debts from their

personal assets. In other words, unlike sole proprietorships or partnerships, LLP protects

partners, including foreign investors, from infinite liability concerns.

 In contrast to the Company, there are no constraints on the partners' ability to enter into

legal transactions outside of India.

Appendix E.4

Five steps to register an LLP in India (The Ministry of Corporate Affairs, 2021)

Step 1: Application for DIN or DPIN

All LLP's proposed designated partners need to file eForm DIR-3 to get a "Designated

Partner Identification Number (DPIN) or DIN”.

Step 2: Acquire/ Register DSC

It requires that all filings made by the LLP(s) must be done with the use of Digital

Signatures by the person authorized to sign the documents (at least two of the LLP's proposed

authorized partners must obtain a Digital Signature Certificate (DSC)). To acquire DSC, a LLP

have to through a licensed Certifying Authority (CA) assigned by Section 24 of the Indian IT-

Act 2000 for the role of issuing signatures.

Step 3: New User Registration

Apply for the name's availability using Reserve Unique Name LLP (RUN LLP), a web

tool for reserving a name for a new firm or modifying its existing name. Ensure that the naming

criteria established by the Ministry of Corporate Affairs (MCA) are followed. The words

“limited liability partnership” or the acronym “LLP” must appear as the last words in the name

of every limited liability partnership.

 104

Step 4: Incorporate a LLP

Once the prospective LLP's name has been approved, file the form FiLLiP – to

incorporate the LLP. FiLLiP is an integrated form that provides a variety of services such as DIN

allocation, name reservation, and LLP establishment.

Step 5: File LLP Agreement

The time required to file the LLP agreement is within 30 days of incorporation of LLP.

The LLP Agreement is one of the most important papers because it defines the rights and

responsibilities of partners. The agreement may contain a variety of topics such as the amount

and method of contribution, the rights and duties of partners, and a description of the proposed

LLP's business, among others.

Appendix E.5

Regulations for Joint Venture’s consideration (Dezan Shira & Associates, 2020)
 105

Appendix E.6

Joint venture proceedings

Ordinarily, the two companies must formulate a memorandum of understanding (MoU)

that is signed and agreed by the partners. Then, Vinamilk and their India’s partner need to refer

to a chartered accountant firm proficient in the regulations in the laws relating to the association

of the two firms, the Foreign Exchange Management Act; Indian Income-tax Act, 1961; the

Companies Act, 2013; international laws and applicable Indian rules, regulations, and
 106

procedures. Furthermore, an MoU and a joint venture agreement must be sealed before the

companies consult with the chartered accountant firm (Dezan Shira & Associates, 2020).

Appendix E.7

FDI Procedures for government approval (Invest India, 2021)

 First step: Filing the foreign investment application through the Foreign Investment

Facilitation Portal, at www.fifp.gov.in/ 

 Second step: The internal conduct of approval.

- DPIIT will classify the concerned Ministry/Department and from there on, the

proposal will be determined within 2 days. Moreover, when the proposal is

obtained, the same process will be sent online to the RBI within 2 days for

remarks according to the FEMA decision.

- DPIIT would be needed to give the remarks within four weeks from receipt of the

online application, and the Ministry of Home Affairs to give remarks within a

month and a half (four weeks). 

- Additional data/clarifications might be asked to submit within one week.

- Proposals including FDI surpassing INR 50bn (approximately $ 775 mn) will be

set before the Cabinet Committee of Economic Affairs. 

 Final step: The proposal will get approved within 8-10 weeks.

Appendix E.8

FDI form/ document requirements (Invest India, 2021)

 107

Appendix E.9

Vietnam and India - WIPO Copyright Treaty (WCT)

India has a relatively stable copyright laws and had acquiesced in the WIPO Internet

Treaties, specifically the WIPO Copyright Treaty (WCT) and WIPO Performances and

Phonograms Treaty (WPPT) in 2018 (Privacy Shield Framework, n.d). Furthermore, Vietnam is

also a member of the WIPO Copyright Treaty (WCT) since 2019.

Appendix E.10

International Treaties Signed/Accepted in India since 2016 (International Trade

Administration, 2020)

 2017

+ August, 2017: The Maharashtra Cyber Digital Crimes Unit (MCDCU): a public-

private partnership in industries worked with state police to withstand digital piracy

 2018
 108

+ India signed the World Intellectual Property Organization (WIPO) Internet Treaties,

the WIPO Copyright Treaty (WCT) and WIPO Performances and Phonograms Treaty

(WPPT). 

 2019

+ June, 2019: approve the Lisbon, Nice and Locarno WIPO Agreements

- The Lisbon Agreement: protection of appellations of origin

- The Nice Agreement: classification of goods and services applied for

registration of marks; classification of goods for the purposes of the

registration of industrial designs 

- The Vienna Agreement: classification for marks that consist of, or contain,

figurative elements

+ September 7, 2019:   Presently, the Government of India is working on guidelines to

further implement its treaty obligations.

+ 2019: entered into a Patent Prosecution Highway (PPH) with Japan Patent Office

(IPO)Positive Enforcement Developments.

Appendix E.11

List Of Trade Marks Agents As Of 30/11/2020 - Top 11 agents (more on the government

official website) (Internal Trade Ministry of Commerce & Industry - Government of India,

2020)
 109

RISK ANALYSIS (F)

Appendix F.1

India Government Debt to GDP forecast for the coming years (Trading Economics, 2021)
 110

As reported above, specifically, India's public debt to GDP ratio before the COVID-19

epidemic was 72% and has increased to 89%. However, based on the global macro models,

analysts expect it to drop slightly to 85% by the end of 2021, and only about 84% by 2022.

Although there is a decrease, this is still considered a fairly high number of a country's public

debt. 

Appendix F.2

India’s credit rating by major credit rating agencies and Credit rating (Trading

Economics, 2021)
111
 112

India's credit rating in recent years is reported by leading credit rating agencies,

specifically, S&P ranked India at BBB- in 2014 with a stable outlook. However, both Fitch and

Moody's rate India at a negative outlook in 2020, with BBB- and Baa3, respectively. Finally,

DBRS has rated India at BBB (low) with a stable outlook in 2021. With these ratings coming

from four different agencies, India is a country in the lower medium grade that may cause some

financial risks that Vinamilk needs to consider. 

Appendix F.3

Expropriation risk global ranking

 113

India ranks 100th with 3 index points out of 7.

Appendix F.4
 114

Repatriation laws (Reserve Bank of India, 2021)

Appendix F.5

FDI repatriation laws on LLP (Reserve Bank of India, 2021)

Appendix F.6

India: Political stability index (-2.5 weak; 2.5 strong), 1996 – 2019 (The Global Economy,

2019)
 115

Appendix F.7

India: Corruption Perceptions Index, 100 = no corruption, 2001 – 2020 (The Global

Economy, 2020)
 116

Appendix F.8

India’s trade with Vietnam (Vietnam Briefing, 2021)

 117

Appendix F.9

Member of AIFTA (Vietnam briefing, 2021)

Appendix F.10

Vietnam Export Potential (Vietnam Briefing, 2021)

 118

FINANCIAL SUPPORT (G)

Appendix G.1

VINAMILK Capital Situation Review (Cafef, n.d.)

Vinamilk’s balance sheet (2017 - 2020) 

 119

In 2020: 

TOTAL ASSET: 48,432,480,673,629

EQUITY: 33,647,122,229,822 

DEBTS: 14,785,358,443,807

*(In VND)

The ratio of Equity/Total Asset = 69%

The ratio of Debt//Total Asset = 31%

Table: Vinamilk’s profit after tax (2018-2020) (Cafef, n.d.)

In Billion (VND) 2018 2019 2020

 120

Profit After Tax 10,227 10,581 11,098

According to Vinamilk’s financial report, annual profit after tax experienced a steady

growth in three recent financial years, along with a ratio of equity higher than the ratio of debt

(both to total assets). It can be seen from the data that the company has excellent financial

strategies to execute their business. Also, Vinamilk maintains a huge amount of cash and cash

equivalents (more than 2,000 billion VND) in 2020, specifically, about 863 billion VND in cash

and more than 1,200 billion VND in cash equivalents. Therefore, in this joint venture with

Bagrry’s, the company can mobilize full equity to invest in their business.

Appendix G.2

Bagrry’s Capital Situation Review (Bagrry’s, 2020)

Bagrry’s balance sheet (2019 - 2020) 

 121

In 2020: 

TOTAL ASSET: 515,735,955

EQUITY: 338,136,933

DEBTS: 177,599,022

*(In Rs.)

The ratio of Equity/Total Asset = 66%

 122

The ratio of Debt//Total Asset = 34%

For Bagrry’s, the company also went through 2020 with positive growth signals. They

added about 125 million Rs. to the total assets in the FY2020, a rocket bounce-back from the

COVID-19 pandemic. Moreover, the debt and equity ratio is also favorable for Bagrry’s to use

equity to operate this deal with Vinamilk (66% of assets is equity).

Appendix G.3

Funding option in India and India’s stock market overview 

There are a variety of potential options for funding in India. Besides the traditional

funding methods in India, one of the most reliable, upward trending sources in India is Angel

investors, whether an individual investor or management investor group (Cleartax, 2021). There

are many major experienced individual investors in India that are active and have the financial

assets to invest in the early stages of potential projects and business (Varun, 2020).  Vinamilk

can search more for the right investors on respectable sites, such as Angel Investment Network

India. Moreover, India's stock market is growing rapidly over the years, and as of 2021, India’s

stock market is currently the 7th largest market in the world with $2.7 trillion in the total market

capitalization (Times Now News, 2021). 

Appendix G.4

Proposed angel investors summarized profiles (Varun, 2020)

 Rajan Anandan 

+ Role: Managing Director – Sequoia Capital

+ Co-founder of Blue Ocean Ventures, the first seed fund in Sri Lanka

+ Has worked with: McKinsey, Dell, Microsoft and Google

 Anupam Mittal
 123

+ Role: Founder & CEO – People Group

+ Has worked with:  Shaadi.com, Makaan.com and Mauj Mobile

+ Invested in: more than 50 investments such as Ola Cabs, StayAbode, Druva, Daily Ninja

FINANCIAL ANALYSIS (H)

Appendix H.1

Unit price estimation

The products that have similar values from our competitors are chosen to base our price

on (Appendix H.2). Coming into the Indian market, Vinamilk aspires to bring high-quality

products at affordable, competitive prices to our competitors, from 15-20% cheaper than our

competitor’s products on the market, except for the Liquid milk - Walnut line (Appendix H.3).

The sales rate for Vinamilk’s products are arranged equally from 10-20% each category, for the

lines that have a more unique taste and are not quite familiar yet in the India market (Green rice

line & Red bean line), are estimated it at 10% and the lines that are well-known and loved

already in the market are 20% of the sales.

Appendix H.2

Competitors' products prices (in U.S Dollars)

 124

(Flipkart, n.d)

 Epigamia Greek Green Apple Flavored Yogurt:

1 pack = $0.54  1 batch (4 packs) = $2.16 

 Nestle a+ Grekyo Greek Yoghurt Blueberry Flavored Yogurt:  

1 pack = $0.61  1 batch (4 packs) = $2.44

 Epigamia Greek Vanilla Bean Flavored Yogurt:

1 pack = $0.54  1 batch (4 packs) = $2.16

 Hershey sofit soya milk vanilla:

1 bottle = $0.39  1 batch (4 packs) = $1,56

 Dabur Homemade Coconut milk:

1 bottle = $1.01  1 batch (4 packs) = $4.04

 Hershey sofit almond milk:

1bottle = $1,08 1 batch (4 packs) = $4.32

Appendix H.3

Vinamilk’s products price range specification

Specifically, all Vinamilk’s products are around 15-20% cheaper than the competitors,

except for the Liquid milk - Walnut line will be 25% cheaper since this flavor is quite

competitive in the market with lots of options and it’s a very popular taste that has been around

in India for a long time, which will be much harder for Vinamilk’s product to compete with. For

that reason, the Liquid milk - Walnut line will be 25% cheaper than Vinamilk’s competitors and

most of the walnut liquid milk on the market. 

Appendix H.4

3 Years - Vinamilk Sales Revenue and Sales Volume estimation method

 125

Step 1. Calculating Vinamilk Sales Revenue Forecast in Year 1

It is reasonable when Vinamilk decides to run business in India with 0.05 percent market

share target in the first year which roughly equals to the smallest market share percentage of its

competitor - Rakyan Beverages company. Thereby, Vinamilk target sales in the first year is

estimated at approximately 13.40 USD million (Table 1).

Table 1: Year 1 – Vinamilk Sales Revenue Forecast in India (USD million)

Calculating:

Vinamilk Target Sales Year 1= [Vinamilk target market share (%)] * [Total Indian Dairy
Market (USD million)] = 0.05% * 24,740 = 13.40 (USD million)

Step 2: Calculating Vinamilk Sales Revenue Forecast – Year 2 and Year 3.

Supposing sales revenue of the brand in Year 2 and Year 3 grows correspondingly 34

percent and 33 percent, sales revenue in Year 2 will equal approximately 17.96 USD million and

those in Year 3 will in range of 23.88 USD million (Table 2).

These assumed percentage numbers are acceptable. It can be explained that when

Vinamilk first entered the market, its market share is certainly small, coupled with increase in

sales revenues in the second year that is assumed; therefore, it seems that the growth rate of

Vinamilk in the second year will be large (approximately 34%). Additionally, at the third year, it

is possible the company has built a trustworthy and attractive brand positioning so that the brand

has ability to get more loyal customers. Referred to Vinamilk’s growth in Vietnam since 2018 to
 126

2020, the company records a growth rate of more than 30 percent per year (Cafef, n.d.), Thus,

since the 3rd year onwards, Vinamilk will record steadily stable increasing growth

(approximately 33 percent).

Table 2: 3 Years – Vinamilk Sales Revenue Forecast in India (USD million)

Calculating:

Vinamilk Growth Rate (%): Year 2= 34%; Year 3=33%

Therefore:
 Vinamilk Target Sales Year 2 = 13.40 + 13.40*34% =17.96 (USD million) (due Year
2 records a 34 percent growth rate of Sales Revenue in Year 1)
 Vinamilk Target Sales Year 3 = 20.77 +20.77*33%=23.88 (USD million) (due Year 3
records a 33 percent growth rate of Sales Revenue in Year 2)

Step 3: Calculating Sales revenue contribution by segments in Year 1, Year 2, and Year 3

Vinamilk’s customer segments in India include B2C and B2B offline (Segment 1), B2B

HORECA (Segment 2) and B2C online (ecommerce) (Segment 3). The project assumes that

Segment 1 will contribute to total sales revenue in Year 1 with the highest percent

(approximately 70 percent) because earning sales revenue of Vinamilk in India will mainly

across B2C customers from its partner’s outlets (approximately 200,000 outlets in 2021)

(Shankar, 2018), and other customers such as convenience stores, independent retailers,

supermarkets and hypermarket. Besides, Segment 2 will contribute the lowest percent

(approximately 5 percent) due to the number of customers who belongs to this segment of

Bagrry’s is only a few such as SpiceJet, IndiGo Airlines, Vistara and a few leading hotels such as
 127

Taj Hotels (Shankar, 2018). Segment 3 will contribute 25 percent due Indian ecommerce market

tends to increase substantially in recent years which “is expected to grow to US$ 200 billion by

2026 from US$ 38.5 billion in 2017” (IBEF, 2021). Over years, sales revenue contribution of

Segment 1 will decrease steadily to offset the steadily growing contribution of Segment 3 (Table

3)

Table 3. 3 years – Sales revenue contribution by segments across three years (USD million)

Calculating:

 Sales revenue contribution by segments -Year 1:

– Segment 1=70%*13.40=9.38 (USD million)
– Segment 2=5%*23.40=0.67 (USD million)
– Segment 3=25%*13.40=3.35 (USD million)
 Sales revenue contribution by segments in Year 2 and Year 3 is estimated in the
same way.

Steps 4: Calculating sales portion by segment across each quarter of year.

It seems that Vinamilk will get more profit if boosting promotions and marketing

advertising in the time period between July and December because that is the time the most

famous and attended Hindu festivals happen (GVietnam Travel, n.d.). Besides, two national

holidays of Indian are Independence Day (August, 15th) and Gandhi Jayanti (October, 2nd), also

are placed on this time period. Therefore, two last quarters of the year will record a higher sales

portion than the rest quarters (Table 4).

 128

Table 4: Sales portion by segments across each quarter (%)

Step 5: Calculating sales revenues by segments across each quarter of Year 1 (Table 5)

Table 5: Sales Revenue Forecast by segment across 4 quarters of Year 1 (USD million)

Formula:

Sales Revenue Contribution by Segment A across Q(n) of Year 1 = [Sale Portion

Percentage by Segment A across Q(n) of Year 1] * [Sales Revenue contribution by
Segment A in Year 1)]
In which:
 Segment A: B2C and B2B offline or B2B HORECA or B2C online (ecommerce)
 Q(n): Quarter 1 or Quarter 2 or Quarter 3 or Quarter 4

Sales revenues by segments across each quarter of Year 2 and Year 3 are estimated in the same

formula.

Steps 6: Calculating sales volume by segments across each quarter of Year 1 (Table 6)

Table 6: Sales volume forecast by segment across 4 quarters of Year 1 (USD million)
 129

Formula:

[The Unit Price (USD)] * [Sales Volume (Product unit)] = [Sales Revenue (USD)]
 [Sales Volume (Product unit)] = [Sales Revenue (USD)]/ [The Unite Price]

[Sales Volume Contribution by Segment A across Q(n) of Year 1] = [Sales Revenue

Contribution by Segment A across Q(n) of Year 1]/ [The Unite Price]
In which:
 Segment A: B2C and B2B offline or B2B HORECA or B2C online (ecommerce)
 Q(n): Quarter 1 or Quarter 2 or Quarter 3 or Quarter 4

Sales volume by segments across each quarter of Year 2 and Year 3 are estimated in the same

formula.

Appendix H.5
 130

Project Cost Percent Estimation

Based on Vinamilk's separate interim financial statements in the period ended 31 March

2020, the project's cost percent estimation has been estimated based on the company's spending

for sales deductions, costs of goods sold, selling expenses and administrative expenses

(Vinamilk, 2020). Since then, it is possible to estimate the percentage of costs that a project in a

new foreign market will need for implementation in the first three years. In addition, the
 131

corporate income tax rate in India is reported to be 25.17% for domestic businesses, which is a

figure that has decreased quite significantly in 2019, and has remained unchanged until now

(Trading Economics, 2021).

Appendix H.6

Project Headcount

In order for Vinamilk to operate effectively in the Indian market, the company must build

up their organization with diversity. Strategists and specialists in varied fields working together

is essential for business’s success. The headcount report would explain details about the number

of employees required for the project and their receivable in a 3-year period. This is a potential

yearly salary budget estimation for Vinamilk based on research in average base salary for

different positions in India (Payscale, n.d.), the labor law and Insurance regulation for employees

of the country (Rodl & Partners, n.d.).

Appendix H.7

Expenses for Office in India

 132

This office is for around 41 employees. Rent and equipment prices are referenced to

prices in the Indian market. Straight line depreciation method is applied to this project. Thereby,

cash in the project from depreciation assets is estimated at approximately 0.006 USD million

across each quarter of each year. Besides, this project also assumes that total investment for

office and equipments only happens in the first and second quarter of Year 1 with 75 percent and

25 percent respectively.

Appendix H.8

The calculation of the project’s target safe ending cash

Table 1. The project’s quarter P&L statement 

 133

Table 2. Vinamilk cash percentage statement

Table 3. The project's safe end cash statement

Step 1, based on table 1, all expenses of the project by quarters of three years include

COGS, Selling Expenses and Administrative Expenses. Step 2, table 2 shows Vinamilk target

safe cash percentage is 4.1%. This percentage is calculated based on reliable data extracted from

Vinamilk's financial reports. Finally, by multiplying this percent with all expenses data.  Safe

End Cash by quarters of each year is presented in table 3. The cash flow table has used the

Project's Safe End Cash Statement to examine how long this project needs to be supported by

capital. 

Appendix H.9

Reasons the ROI is possible for the project.

 Large consumption market and diversified product lines. 

 Vinamilk’s products are also sold in combination (bundle) with products of Bagrry's.

Therefore, it promotes sales of Vinamilk. The Gross Revenue is estimated to grow

steadily year by year (average 33 percent/year).

 If in fact the volume of products can be sold as quickly as estimated thanks to the

marketing and pricing strategies, it is possible to break even at the beginning of Year 2.
 134

Therefore, the amount of capital both Vinamilk and Bagrry’s need to invest for this

project is not extremely high compared to the EBIT.

MANAGEMENT TEAM AND STRUCTURE (I)

Appendix I.1

Project head-count.

Appendix I.2

Key positions

Locals:

 Mr. Biraj Patro (Sales Director)

 Mr. Aditya Bagr (Marketing Director)

 Mr. Rishi Sharma (HR & PR Director)

→ They understand the Indian market, have important insights about customers and have

years of experience with Indian distribution channels.

Expatriates:
 135

 Mr Le Thanh Liem (Finance Director/ Project Head)

 Mr. Mai Hoai Anh (General Manager)

→ Ensure the overall control of the business

Appendix I.3

Project’s Board of Directors

Appendix I.4

Organization Chart
 136

Appendix I.5

Project Head Information (Vinamilk, n.d.)

 137

CONTROL STRATEGIES (J)

Appendix J.1

Shipment method and emergency plan

TIMEABLE FOR IMPLEMENTATION (K)

Appendix K.1

Timetable for the project’s implementation

 138

The first and the most important step, the Project director that will lead the entire project

will be appointed - This position will be entrusted to Ms. Mai Kieu Lien - Vinamilk’s CEO.

After the first step, the plan will follow up with critical stages: such as, gathering the whole team,

with our JV partner to have an official meeting, then an official agreement will be drawn up with

the rights, liabilities and obligations of both partners, authorized by both company’s law
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attorneys. Then, after submitting the FDI proposal through the Investment Facilitation Portal and

Finalizing the office rent contract, the company will then appoint leadership positions of

departments, after that the company will settle the agreements with local contractors, vendors,

distributors and warehouse. Finally, the company will start transferring the inventory and start

the marketing campaign.

Appendix K.2

Key issues and alternatives

Business partner change of plans - Joint Venture partner backed out in the last

minute

Action:

+ Go through an agreement beforehand, Consult and negotiate with both company’s

lawyers to authorize a partnership agreement that classifies the rights, liabilities and

obligations of the partners and will delineate the procedures for dissolution.

+ Untangling the knot of disagreement if issues occur.

+ Have a back-up potential business partner ready in mind if the worst case scenario

happens.

Post COVID logistics, border gate problems

It is possible that there will be problems or small delays in the logistics process due to

COVID-19 

Action:

+ Choose the right global shipment methods: 

- Ordinary stocks - Maritime & Railways

- Emergency stocks - Plane  

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+ The company will Stock inventory level for 3 months, set aside emergency stocks so in

case problems arise, Vinamilk and Bagrry’s can have enough stocks and time to resolve

the problem. 

+ Have back-up local contractors/warehouses that can be replaced immediately for a short

period of time if a problem occurs.

Office Rent Contract issues/disagreement

Action:

+ The company will acquire a local specialist on the ground to advise the rent contract

signing, negotiation process relating partners/regulations sudden issues.