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We have recently completed the feasibility study and conceptualization for the business.

We will subsequently form up a team of trained and knowledgeable engineers and technical team members who will provide end-to-end services, from consultation, engineering support, installation and commissioning of our tunneling equipment and products. We will also subsequently have a team of customer service and system engineers to provide post implementation technical support, and are dedicated to give our customers a worry-free maintenance of the system.

CURRENT STATUS

We have recently completed the feasibility study and conceptualization for the business. This includes the SWOT analysis (Strengths, Weaknesses, Opportunities and Threats) and studying the market needs and consumer trends. We have researched into and identified the available offerings in the market and are convinced that our product offerings can meet the needs of our target customers in the construction and engineering sectors.

We have developed our marketing and engineering details and tested our ideas through focus groups by asking a number of prospective customers on the product and services offerings that we will provide. We have identified and established tie-ups with components suppliers and contractors. At this moment, we believe that we have what it takes that can penetrate and serve the demand of the market segment that we are targeting.

OPERATIONS PLAN

SUPPLIERS AND SOURCING

Tunnelling and Underground infrastructure has become a world-wide trend solution to space scarcity, increase world population and urbanization. Particularly in Asia, underground infrastructure and tunnelling construction is fast becoming a priority in a rapidly-urbanizing Asia. With the numerous opportunities emerging in the booming and demanding Tunnelling and Underground space industry in Asia Singapore is a small city and a country, where prime land is scarce and there’s no room to sprawl.

Massive underground projects are going on today in cities around the world. Over the next two years, Beijing is adding 40 miles (64 kilometers) of subway lines to a system that already built 235 miles (378 kilometers) from 2007 to 2014. Helsinki recently opened a centralized wastewater treatment plant in an underground location, with a residential development set to be built on the ground above it. New York is finishing up a massive water tunnel that has been under construction since the 1970s. And Amsterdam is excavating an underground location for parking up to 7,000 bicycles.

TARGET MARKET AND SIZE

The construction sector had a rough year in 2016, but a surge in public sector building jobs should help the sector get its groove back from 2017. Public sector construction demand is projected to grow to between S$20 billion and S$24 billion this year, up from about S$15.8 billion in 2016, said the Building and Construction Authority (BCA). Public sector jobs this year include that of mega public sector infrastructure projects, such as various major contracts for the second phase of the Deep Tunnel Sewerage System, North-South Corridor and Circle Line 6.

BCA estimates that overall construction demand for 2018 and 2019 will be between S$26 billion and S$35 billion per annum, growing slightly to between S$26 billion and S$37 billion per annum in 2020 and 2021. Public sector demand over the next few years will include infrastructure projects such as the Jurong Regional Line, Cross Island Line and the development of Changi Airport Terminal 5. Singapore is now at a second phase of the rail addition. The rail network will be 360km long by 2030, which will bring it to a rail density similar to London and New York today. The overall on-site construction activities or construction output is expected to stay at a relatively high level in the years ahead. There is also a big push for companies to change, innovate and transform to stay at the forefront of technological innovation, process re-engineering and productivity improvement.

V.D.T Vulkan has identified the opportunities that the market presents, but is also mindful of the associated threats. While maintaining engineering excellence and quality to capture the booming switchgear demand in South East Asia, we will also ensure competitive pricing by establishing a good network of suppliers and vendors. Ms Lin’s connection to key manufacturer in China will be essential for V.D.T Vulkan to build a reliable and cost effective supply network. In order to navigate the competitive landscape, we will internationalize the lower end of the value chain of our business to cheaper locations like China and aggressively sell in Southeast Asia to diversify market risks. In addition, we will also focus on after-sales services and further cut down production costs by adopting innovative methods.
COMPETITORS
Some of our competitors include: Grand Tunnelling (Asia) Pte Ltd, MEPT Engineering Pte Ltd, Flexi Systems (Singapore) Pte Ltd.Driven by needs by the industry, specialist tunnelling engineering service providers and equipment suppliers are seeing brisk businesses. Furthermore, being equipped with in-house services from engineering & design, fabrication (working with our exclusive manufacturing partner), installation and testing, V.D.T Vulkan will create differentiation by being a one stop solution provider to fully meet clients’ needs and requirements.

MARKET PLANS

The key competitive advantage of V.D.T Vulkan is that we will deliver high quality products and service centric engineering delivery for our customers. We are looking at supplying to customers running turnkey construction and engineering projects, and our key differentiator will be the ability to produce customized to specifications products and solution for our customers with efficiency and productivity.
GO TO MARKET AND PROMOTION STRATEGY

To gain traction for our new products, we aim to forge exclusive, long-term strategic partnerships with strategic partners identified include builders, engineering companies and consultancies. We hope that through our strategic partners, we will have a good rolling starting to launch the V.D.T Vulkan’s brand across the broader market. For our targeted customers, our promotional activity will be executed through both push and pull strategies.

The push strategy will call for the use of direct sales force and industrial marketing to introduce V.D.T Vulkan’s products to target customers. Personal selling will be necessary to reach decision makers within these organizations. To stimulate awareness among the industry, industrial marketing techniques will be utilized. This will involve running campaigns and presenting at trade fairs to reach decision makers

Once reasonable success has been achieved, the pull strategy will utilize advertising campaigns to further build up demand. It is important to gain a critical volume in terms of customer references before a nation-wide advertising campaign. We will use online marketing and publish advertisements in trade magazines and catalogues. Once our objectives have been achieved, we shall utilize our marketing budget to build and protect the V.D.T Vulkan’s brand.
SALES CHANNELS AND DISTRIBUTION STRATEGY
Beyond our personal sales force, we intend to forge alliance with sales channels to promote and distribute our products to our targeted markets. Such partners will fall into the categories of Product Resellers and System Integrators.

PRODUCT PARTNERS

Our product partners are resellers who have a long and extensive experience with the use of rolling stock, locomotive, other tunneling and related products for the construction and civil engineering industry. Asset Owners and Constructors (shipyards, etc.) often rely on them to provide products to meet their engineering requirements.

SYSTEM INTEGRATORS

We will also work with system integrators whom will also be our resellers and implementers of our components. Systems integrators are generally good at matching customers’ needs with existing products, and there are many who are focused in the construction and civil engineering industry have existing inroads and relationships into many Engineering Procurement Construction (EPC) owners. We will work closely with them to help us conceive and utilize our products in their solution / system offering. We will also work closely with them for on-going product enhancements and development.

OPERATIONS PLAN

SUPPLIERS AND SOURCING
Through early supplier involvement, we have already established contacts with the manufacturer who can supply the raw materials, components and products. The vendors are closely assessed and evaluated for both cost and quality that will allow us to penetrate our established market. The suppliers sourced are based in China. Freight and logistics costs are assumed to be at 5% of revenue.
TARGET MARKET AND SIZE
The V.D.T Vulkan team will be based in Singapore. The Human Resource cost has also been factored in the financial projection. The table below lists the human resource plan for the first 3 years of operations.

FINANCIAL PROJECTIONS

SALES FORECAST

For the purpose of this business plan, we will stick to conservative forecast for the sales figures. We assume the growth in sales in the first 3 years to be as follow:

The first year will see V.D.T Vulkan ramping up and establishing client base and market share. The first year is forecasted to start off with sales of our products to support the 4 turnkey projects, with average sales revenue of S$200,000 per project. We target to achieve sales to support 6 projects in the second year and 9 projects in the third year, with average project value progressively increasing to S$300,000 as we take on bigger projects.

PROJECTED SALES AND NET PROFIT BEFORE TAX

Based on the financial projection modeled upon the earlier mentioned assumptions, we expect the business to reach operating breakeven by the first year of operations. Based on the projected sales and expenses (cost of goods sold, production and other overhead), the business is expected to yield profit margin after tax of about 17% once business stabilizes in the third year.
The table below illustrates the project Sales and Net Profit Before Tax for the first 3 years of operations. The basis for deriving the figures is tabulated in Appendix A: Financial Model.

DETAILED PRO FORMA FINANCIAL STATEMENTS

The detailed pro-forma Balance Sheet, Income Statement and Cash Flow Statements of the first 3 years’ projection can be found in Appendix B.

APPENDIX A: FINANCIAL MODEL

IMPORTANT ASSUMPTIONS
This financial plan assumes the following (Initial Year):
  • All dollars are in Singapore Dollars.
  • Staffing
    • Comprising of
      • Managing Director (S$7,600 monthly)
      • Admin (S$2,600 monthly)
      • Driver (S$1,800 monthly)
    • 1 month AWS bonus per annum
  • Fixed Assets
    • Fixed Assets purchase of S$30,000
    • Straight line depreciation over 3 years
  • Pre-Operating Expenses
    • Administration (S$3,000)
    • Discussion and Tie Ups with Distributor (S$5,000)
    • Rental Deposits (S$2,000)
  • Cost of Goods Sold
    • Product / Material Cost (60% of sales)
    • Freights and Logistics (5% of sales)
  • Rental of office and facility at S$2,000 per month
  • Marketing (3% of sales)
DETAILED PROJECTION SPREADSHEET

APPENDIX B: PROFORMA FINANCIAL STATEMENTS

BALANCE SHEET
INCOME STATEMENT
CASH FLOW PROJECTION