169 Chemicals Feasibility

Feasibility Study
OXYGEN GAS PRODUCING PLANT
Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE 6th & 8th Floor LDA Plaza, Egerton Road, Lahore. Tel: (042) 111-111-456Fax: (042) 6304926-7 Helpdesk@smeda.org.pk
REGIONAL OFFICE PUNJAB REGIONAL OFFICE SINDH 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 Helpdesk-khi@smeda.org.pk REGIONAL OFFICE NWFP Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 helpdesk-pew@smeda.org.pk REGIONAL OFFICE BALOCHISTAN Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 831623, 831702 Fax: (081) 831922 helpdesk-qta@smeda.org.pk
8th Floor LDA Plaza, Egerton Road, Lahore. Tel: (042) 111-111-456 Fax: (042) 6304926-7 helpdesk@smeda.org.pk
June, 2006
Pre-feasibility Study
Oxygen Gas Producing Plant
1 2 3
INTRODUCTION TO SMEDA.................................................................................................... 4 PURPOSE OF THE DOCUMENT ............................................................................................... 4 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT..................... 5 3.1 SWOT ANALYSIS ................................................................................................................ 5
3.1.1 3.1.2 3.1.3 3.1.4

3.2
Strengths ..................................................................................................5 Weaknesses..............................................................................................5 Opportunities ...........................................................................................5 Threats .....................................................................................................6 Sales promotion........................................................................................6 Other Success Factors ..............................................................................6
KEY SUCCESS FACTORS / PRACTICAL TIPS FOR SUCCESS .......................................... 6
3.2.1 3.2.2
4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 5
PROJECT PROFILE.................................................................................................................... 6 OPPORTUNITY RATIONALE.............................................................................................. 6 PROJECT BRIEF................................................................................................................... 7 PROPOSED BUSINESS LEGAL STATUS ............................................................................ 8 MARKET ENTRY TIME....................................................................................................... 8 PROPOSED LOCATION....................................................................................................... 8 PROJECT CAPACITY........................................................................................................... 8 PROJECT INVESTMENT ................................................................................................... 12 PROJECT PARAMETERS .................................................................................................. 12
MARKET INFORMATION ....................................................................................................... 12 5.1 OXYGEN GAS PRODUCERS IN PAKISTAN..................................................................... 12
PRODUCT................................................................................................................................... 13 6.1 PRODUCTION PROCESS FLOW ....................................................................................... 13
6.1.1 6.1.2 6.1.3

7 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11 8
Process SKID .........................................................................................15 Expansion Engine...................................................................................19 Cylinder Filling Manifold/Station...........................................................21
TECHNOLOGY AND PROCESSES.......................................................................................... 22 MACHINERY REQUIREMENT ......................................................................................... 22 LAND REQUIREMENT ............................................................................................................ 24 BUILDING REQUIREMENT ...................................................................................................... 24 MACHINERY REQUIREMENT .................................................................................................. 25 FITTINGS & INSTALLATIONS REQUIREMENT ............................................................. 25 OFFICE EQUIPMENTS REQUIREMENT........................................................................... 25 FURNITURE & FIXTURES REQUIREMENT..................................................................... 26 VEHICLES REQUIREMENT .............................................................................................. 26 RAW MATERIAL REQUIREMENT ............................................................................................. 26 HUMAN RESOURCE REQUIREMENTS....................................................................................... 27 UTILITIES REQUIREMENT ...................................................................................................... 28
FINANCIAL ANALYSIS............................................................................................................ 29 8.1 8.2 8.3 8.4 PROJECT COST ...................................................................................................................... 29 PROFIT & LOSS STATEMENT .................................................................................................. 30 BALANCE SHEET ................................................................................................................... 31 CASH-FLOW STATEMENT ....................................................................................................... 32
KEY ASSUMPTIONS................................................................................................................. 34
PREF-97/June, 2006/ Rev 1
DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject matter and provide a general idea and information on the said area. All the material included in this document is based on data/information gathered from various sources and is based on certain assumptions. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA does not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. The prospective user of this memorandum is encouraged to carry out additional diligence and gather any information he/she feels necessary for making an informed decision. For more information on services offered by SMEDA, please contact our website: www.smeda.org.pk
DOCUMENT CONTROL
Document No. Prepared by Issue Date Issued by PREF-97 SMEDA-Punjab June 2006 Library Officer
INTRODUCTION TO SMEDA
The Small and Medium Enterprise Development Authority (SMEDA) was established with the objective to provide fresh impetus to the economy through the launch of an aggressive SME Support Program. Since its inception in October 1998, SMEDA had adopted a sectoral SME Development Approach. A few priority sectors were selected on the criterion of SME presence. In depth research was conducted and comprehensive development plans were formulated after identification of impediments and retardants. The all-encompassing sectoral development strategy involved recommending changes in the regulatory environment by taking into consideration other important aspects including Finance, Marketing, Technology and Human Resource Development. SMEDA has so far successfully formulated strategies for sectors including, Fruits and Vegetables, Marble and Granite, Gems and Jewelry, Marine Fisheries, Leather and Footwear, Textiles, Surgical Instruments, Transport and Dairy. Whereas the task of SME development at a broader scale still requires more coverage and enhanced reach in terms of SMEDAs areas of operation. Along with the sectoral focus a broad spectrum of Business Development Services is also offered to the SMEs by SMEDA. These services include identification of viable business opportunities for potential SME Investors. In order to facilitate these Investors, SMEDA provides business guidance through its help desk services as well as development of Project Specific Documents. These documents consist of information required to make well-researched investment decisions. Pre-feasibility Studies and Business Plan Development are some of the services provided to enhance the capacity of individual SMEs to exploit viable business opportunities in a better way. This document is in the continuation of this effort to enable potential investors to make well-informed Investment Decisions.
PURPOSE OF THE DOCUMENT
The objective of this proposed Pre-feasibility study is primarily to facilitate potential entrepreneurs with the Investment information and provide an overview about the "Oxygen Gas Manufacturing Business". The proposed Pre-feasibility may form the basis of an important investment decision and in order to serve this objective, the document covers various aspects of Oxygen Gas Manufacturing Business Concept Development, Start-up, Production, Marketing, Finance and Business Management. This document also provides Sectoral Information, brief on Government Policies and International Scenario, which have some bearing on the Project itself. The pre-feasibility is based on the information obtained from various industry sources as well as discussions with businessmen. For financial model, since the forecast / projections relate to the future periods, actual results are likely to differ because of the events and circumstances that dont occur frequently as expected. Whilst due care and attention has been taken in performing the exercise, no liability can be inferred for any in-accuracy or omissions reported from the results thereof. It is
essential that our report be read in its entirety with financial model in order to fully comprehend the impact of key assumptions on the range of values determined. This particular Pre-feasibility is regarding "Oxygen Gas Manufacturing Unit". Before studying the whole document one must consider following critical aspects, which forms basis of any Investment Decision.
CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT
Before making the decision, whether to invest in setting up the Oxygen Gas Manufacturing business or not, one should carefully analyze the associated risk factors. A SWOT analysis can help in analyzing these factors, which can play important role in making the decision. 3. 1 SWOT ANALYSIS Continuous availability & easy access of the raw material, which mainly comprise free atmospheric air. Availability of Cheaper Labor. Latest technology oxygen producing plant with high working efficiency and trouble free operations, safety & low power consumption. Oxygen gas producing plant is very simple to operate. Easy availability of spare parts. Latest molecular sieve technology with out recurring cost of chemicals. About 3% of nitrogen gas is used for the regeneration of the molecular sieve battery and nitrogen cascade cooler The big players in the Oxygen Gas manufacturing business have captured the market and require the heavy promotional charges and some orders already in hand. The process is totally automated and requires technical expertise of Plant Engineer and Machine operator on a continuing basis. Demand for Oxygen gas is influenced by the growth in the industrial sector as well as increase in the consumption in medical sector. For filling high-pressure nitrogen up to 99.999% simultaneously with oxygen production cylinders, an additional nitrogen pump and nitrogen exchanger can be used. For compressed nitrogen gas at 0.1 Kg /cm2 to 1.1 up to 155 bar or higher a separate nitrogen compressor can be installed with a nitrogen cylinder filling manifold. 3.1.1 Strengths
3.1.2 Weaknesses
3.1.3 Opportunities
Pre-feasibility Study 3.1.4 Threats 3. 2
In case of the power failure to the engine its braking mechanism will fail and this accelerating speed of the machine. The fire extinguisher should be installed and smoking should be banned near the production area as the out of the project is very sensitive and highly flammable. Expected losses during the initial stages of the Project as a result of competitors campaign. KEY SUCCESS FACTORS / PRACTICAL TIPS FOR SUCCESS
There are many units existing which are in the business of industrial & medical manufacturing but still they are not successful in catering the demand. So there is a potential for new entrepreneurs to enter the market. Key success factors will be: 3.2.1 Sales promotion Another critical success factor of this proposed pre-feasibility is the Marketing and Promotion of the oxygen both in the industrial & medical fields. This involves dedication and hard work from the marketing personals and detailed advertising on the Media along with the use of other automated marketing techniques. 3.2.2 Other Success Factors Some other factors critical to the success of this proposed project include; Advance Orders for sale can ensure the success of the Business. Responsiveness to Customers' demands and requirements. Available for enquiries, designated and known contact persons. Low Prices Reliability in delivery Quality Certifications.
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4. 1
PROJECT PROFILE
OPPORTUNITY RATIONALE
Oxygen gas comprises 21 percent of atmospheric gas. Its symbol is O2. Atomic weight of oxygen is 16 and atomic no. is 8. Oxygen gas is non metallic element. Oxygen is colorless, odorless and tasteless. Oxygen reacts with all elements, but not with inert gases to form compound called oxides. Oxygen support combustion and support flammable materials to burn more rapidly. And this combustion supporting property prefers it for different industrial applications. Atmospheric air used to produce Oxygen and Nitrogen, in most industrial processes. Atmospheric air mainly contains the following elements:-
Pre-feasibility Study Table 1: Elements of Atmospheric Air Element Percentage Composition by volume Nitrogen (N2) Oxygen (O2) Argon (A) Carbon Dioxide (CO2) 78.03% 20.99% 0.9323% 0.03%
Boiling Point at atmospheric Pressure -195.5 Deg.C. -182.7 Deg.C. -185.5 Deg.C. -78.5 Deg. C. It solidified from gas.
Oxygen is largest volume industrial gas and is used in following industries: Steel Manufacturing Industry. Chemical Industry. Pulp and Paper Industry. Glass Manufacturing. Petroleum Recovery and Refining.
In addition to the requirements of the oxygen gas in the industries as described above, oxygen gas is also largely consumed in the medical field in the hospitals. There are many units which are in the business of industrial & medical oxygen gas manufacturing but still they are not successful in catering the demand. So there is a potential for new entrepreneurs to enter the market. 4. 2 PROJECT BRIEF The project will be producing medical grade oxygen and Industrial oxygen from free saturated air sucked from atmosphere. The process adopted to produce oxygen and Nitrogen is called liquefaction and fractional distillation of Air. Air is liquefied by expansion in an Expansion Engine and in a Joule Thompson Expansion Valve. As an Expansion Engine is used, the air is to be compressed only to a medium pressure of 40-45 Kgs. Cm2 whereas other processes need about 150 to 200 Kgs/Cm2 air pressure. Expansion Engine is a single acting reciprocating engine with Inlet and Outlet valves, set to open at a particular time intervals of stroke cycle. Thus, air entering expansion engine through Inlet valve with a high pressure is expanded during the downward stroke of piston. The expanded air will be drawn out through the outlet valves during upward stroke of piston. During such expansion, air gets cooled. The expanded air from expansion engine and expansion valves will enter the lower part of distillation column.. This air will mostly be liquid. Distillation is an operation of separating two components having two different boiling points. Thus at a particular temperature in between the two boiling points, one component will be volatile (Thus vapor) and the other component will be liquid. Thus, the component which is more volatile can be drawn out of a distillation column as vapor. The component which is less volatile can be drawn out as liquid. Oxygen and Nitrogen have a 7
difference of about 13 Deg.C. In boiling points and therefore can be separated in a distillation column. Nitrogen will be drawn out as per vapor or partially collected from the liquid tapping outlet valve (optional). Oxygen will be collected as liquid and can be pumped up to 150 Kg/Cm2 by a Liquid Oxygen Pump. 4. 3 PROPOSED BUSINESS LEGAL STATUS The said project can be a sole proprietorship or a partnership and even it can be registered under the Companies Ordinance, 1984 with the Securities & Exchange Commission of Pakistan. The selection totally depends upon the choice of the entrepreneur. This prefeasibility assumes the legal status of a sole proprietorship. 4. 4 MARKET ENTRY TIME The proposed business do not get affected with seasons, changing trends and emerging attributes therefore the proposed business can be started any time during the year. However at the commencement of the proposed business, it is important that the entrepreneur must have good public relations in the market and should have some orders in hand. 4. 5 PROPOSED LOCATION The said project can be started in any Industrial Area. It may have any Industrial Area of Lahore, Gujranwala or Sargodha. The location of this proposed Pre-feasibility is however recommended at Lahore Raiwind Road or Kot Lakh Pat. 4. 6 PROJECT CAPACITY Selection of Project Size is really critical. Following below is presented a list of capacities of Oxygen manufacturing plant available for commencing the project. After doing thorough Market Research, it is decided that the proposed Pre-feasibility will be based upon the Production Capacity of 500 cubic meters per hour (2,000 Cylinders per day). As it is evident that the there is a large consumption of oxygen gas in the industrial sector as well as in the medical fields, high grade producers will have heyday in the oxygen market in future. This particular Pre-feasibility study is however based on the maximum production capacity of 500 cubic meters per hour which is the minimum viable size for an oxygen manufacturing unit. Hours utilized one day Production Capacity in cubic meters per hour Production Capacity in Cylinders per day 24 500 2,000
Following is the detailed description of oxygen plants with available capacities.
SMALL CAPACITY S.No. Model 1. Capacity: Oxygen Pressure*(upto) Nitrogen** (as second product) 2. Purity: Oxygen Nitrogen (Optional upto 99.999%) 3. 4. Power Connected Power Consumed (abt.) Power Supply Air Capacity Starting Pressure Working Pressure (abt) Starting Time (After Defrost) Starting Time (After Tripping) Areas Required Assembly Height Weight (About) Air Separation Column UB-25 25CuM/Hr. 155 bar 80 CuM/Hr 99.6% 96%-96.6% UB-30 30 uM/Hr. 155 bar 100 uM/Hr 99.6% 96%96.6% 70 KW 45 KW UB-40 40 um/Hr. 155 bar 150 um/Hr 99.6% 96%96.6% 80 KW 60 KW UB-50 50 Cum/Hr. 155 bar 200 um/Hr. 99.6% 96%96.6% 95 KW 70 KW
55 KW 40 KW
5. 6. 7. 8. 9. 10. 11 . 12 . 13 . 14 .
415 Volts 150 Cum/Hr 60 Kg/sq.cm. 50 Kg/sq.cm. 8 Hours 40 Mts. 6M x 8 M 7M 14 Tons TypeBoschi
415 Volts 200 Cum/Hr. 55 40Kg/sq.c m 8 Hours 40 Mts. 6 M x 10 M 7M 16 Tons TypeBoschi
415 Volts 200 Cum/Hr. 55 40Kg/sq.c m 7 Hours 40 Mts. 8Mx 10M 7.5 M 18 Tons Type Boschi
415 Volts 300 Cum/Hr 55 40Kg/sq.c m 7 Hours 40 Mts. 8 M x 12 M 7.5 M 19 Tons Type Boschi
Pre-feasibility Study MEDIUM CAPACITY S.No . 1. Model Capacity: Oxygen Pressure*(upto Nitrogen** (as second product) Purity *** Oxygen Nitrogen (Optional upto 99.999%) Power Connected Power Consumed (abt.) Power Supply Air Capacity Starting Pressure Working Pressure (abt) Starting Time (After Defrost) Starting Time (After Tripping) Areas Required Assembly Height Weight (About) Air Separation Column UB-60 60 CuM/Hr. 155 bar 200 CuM/Hr 99.6% 96%99.99% 110 KW 88 KW 415 Volts 400 Cum/Hr 45 Kg/sq.c m.. 50 Kg/sq.cm. 8 Hours 40 Mts. 12M x 15 M 8.0 M 20 Tons TypeBoschi UB-80 80 CuM/Hr. 155 bar 250 CuM/Hr. 99.6% 96%99.99% 130 KW 95 KW 415 Volts 500 Cum/Hr 45 Kg/sq.cm . 3040Kg/sq.cm 7Hours 30 Mts. 12M x 15 M 9.0 M 25 Tons TypeBoschi
UB-100
UB-150
100 Cum/Hr. 150 Cum/Hr. 155 bar 155 bar 300 Cum/Hr 99.6% 96%99.99% 150 KW 105 KW 415 Volts 600 Cum/Hr 45 Kg/sq.c m. 3040Kg/sq.c m 6 Hours 20 Mts. 14 M x 15M 9.5 M 30 Tons TypeBoschi 500 Cum/Hr. 99.6% 96%99.99% 250 KW 165 KW 415 Volts 900 Cum/Hr 45 Kg/sq.cm . 3040Kg/sq.c m 6 Hours 20 Mts. 14M x 15 M 9.5 M 40 Tons TypeBoschi
2.
3. 4. 5. 6. 7.
8.
9. 10. 11. 12. 13. 14.
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Pre-feasibility Study HIGHER CAPACITY S.No . Model UB-200 200 CuM/Hr. 800 CuM/Hr. 99.6% UB-300 300 CuM/Hr. 1200 CuM/Hr. 99.6%
UB-400 400 Cum/Hr. 1400 Cum/Hr. 99.6%
UB-500 500 Cum/Hr. 2000 Cum/Hr. 99.6%
1. Capacity: Oxygen Pressure* Nitrogen** (as second product) 2. Purity (Optional upto 99.999%) Nitrogen (Optional upto 99.999%) 3. Power Connected 4. Power Consumed (abt.) 5. Power Supply 6. Air Capacity 7. Starting Pressure 8. Working Pressure (abt) 9. Starting Time (After Defrost) 10. Starting Time (After Tripping) 11. Areas Required 12. Assembly Height 13. Weight (About) 14. Air Separation Column
96%99.99% 300 KW 220 KW
96%99.99% 400 KW 330KW
96%99.99% 600 KW 400 KW
96%99.99% 750 KW 500 KW
415 Volts 1200 Cum/Hr 45 Kg/sq.cm. 36Kg/sq.cm . 6Hours 20 Mts. 14M x 15 M 9.5 M 50 Tons TypeBoschi
415 Volts 415 Volts 1800 Cum/Hr. 2400 Cum/Hr. 45 Kg/sq.cm. 45 Kg/sq.cm. 36Kg/sq.cm . 5Hours 20 Mts. 15M x 16 M 9.5 M 60 Tons TypeBoschi 30Kg/sq.c m 5Hours 20 Mts. 15M x 18M 10 M 70 Tons Type-Boschi
415 Volts 3000 Cum/Hr. 45 Kg/sq.cm. 30Kg/sq.c m 5Hours 20 Mts. 18M x 20M 10 M 80Tons Type-Boschi
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Pre-feasibility Study 4. 7 PROJECT INVESTMENT
Total Project cost is Rs.99.82 million worked out in the following table:-. Table 2: Project Cost Capital Investment Working Capital Requirement Total Investment
96,379,600 3,448,531 ________________99,828,131
4. 8
PROJECT PARAMETERS Human Resource 66 Technology/Machinery imported Location Raiwind Road, Lahore Payback period 4.06 yrs
Capacity 500 cubic meters per hour Project Cost Rs. 99,828,131
Financial Summary IRR NPV (Rs.) 26.76 % 31,335,995
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5. 1
MARKET INFORMATION
OXYGEN GAS PRODUCERS IN PAKISTAN
Major oxygen gas producing units currently in operation in Pakistan are reproduced below: Table 3: Major Players Sr. COMPANY NAME No. 1Fine Gas Company (Pvt.) Ltd. 2BOC Gas Limited 3Medi Gas (Pvt.) Ltd. ADDRESS Kot Lakh Pat, Lahore Shalimar Link Road, Lahore. Kot Lakh Pat, Lahore
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6. 1
PRODUCT
PRODUCTION PROCESS FLOW
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EQUIPMENT SCHEDULE Serial # Description 1 Suction Filter 2 Stage Air Compressor 3 After cooler 4 Moisture separator 5 Chilling Unit 6 Refrigeration Unit 7 Oil Absorber 8a Molecular Sieve Battery 8b Molecular Sieve Battery 9 Reactivation Heater 10 Defrost Air Heater 11 Dust Filter 12 Outer Shell 13 Heat Exchanger No 1 14 Expansion Engine 15 Liquifier 16 Bottom Column 17 Condenser 18 Top Column 19 Sub cooler 20 Liquid Oxygen Pump 21 Filling Manifold
LEGENDS CA Air CWS Cooling Water Supply CWR Cooling Water Return O2 Oxygen N2 Nitrogen PL Poor Liquid RL Rich Liquid Thermocouple Notes ----Oxygen ----Air ----Defrost air ----Nitrogen ----Rich Liquid ----Poor Liquid Valve Expansion valve Temperature Indicator
Air is drawn from atmosphere through Suction Air Filter. (1).Air is drawn from atmosphere through Suction Air Filter to prevent dust from getting into the system. The air is then compressed in a four stage Air Compressor (2) with after cooler (3) mounted on the process skid to a maximum pressure of 45-50 Kgs./Cm2 for plant starting conditions and a pressure of 38 40 Kgs./Cm2 for best results normal running conditions. Depending on ambient conditions and good operations the operating pressure of the Air Separations Unit is brought down to 40 Kg/Cm2 as per past experience. Air Compressor has inter-coolers between stages and an After-Cooler after 4th stage. The air compressor should be maintained properly in good condition as it is the main source of air supply to the plant.
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6.1.1 Process SKID This consists of the following items: After cooler with Tank, Nitrogen Cooler with Tank, Moisture Separator (PURGER). Chilling Unit with Fream Unit Oil Absorber filled with Alumina Molecular Sieve Battery on skid Defrost Heater Gas / Air Lines as per standard Layout on skid/platform.
Water Pump Inlet & Outlet Water Lines Drain Manifold complete with Ball Moisture
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The air then enters into cascade an Evaporating Cooler (5) on the process skid where it gets cooled to about 20 Deg.C. This unit is optional. The cooler is a cubical vessel where, there is pipe coil and is inter connected. The coils are half submerged in water in the vessel Dry Nitrogen will be bubbled through this water to become wet gas. As the water vaporizes, it requires latent heat which is absorbed from water itself. So, water gets cooled. Thus, air inside the pipe coil will get cooled. Compressed air, cooled in evaporation cooler will enter into a Moisture Separator. Moisture condensed as water will be separated and drained once in an hour. It is important to drain moisture from the bottom of the Oil Absorber (9) at regular intervals and also change the Alumina every 6 to 12 months. After this the air will pass through an additional cooler called Chilling Unit (7).
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After this the air will pass through Oil Absorber. (9) Packed with Alumina balls. Here the Oil Vapor carried over from Air Compressor will be removed. If this oil vapor is not removed sufficiently, due to spent carbon or due to high temperature of process air, the oil vapor will damage the Molecular Sieves. To obtain a long life of Molecular Sieve ensure the Alumina is well maintained.
Caution: Check any discoloration of alumina every three months. Ensure that oil and moisture is drained minute is set correctly as per the manual supplied by the air compressor manufacturer and no access oil is sent to the cylinder by the lubricator. The air then enters one of the Molecular Sieve vessels/battery. The moisture and carbon dioxide in the air will be removed in this drier. If they are not removed before entry to Cold Box, they will form Ice and dry Ice which will choke the Heat Exchanger Tubes and other equipments. There are two driers. One (dryer A) will be (on line with the process air) in operation for around 10 hours and the other (dryer B) will be under regeneration. Regeneration is done by heating and cooling with not-going Nitrogen. An electric regeneration gas heater (12) is used for regeneration. For further details, refer separate chapter on Molecular Sieve Driers.
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Caution: Proper working of the molecular sieve drier/battery is very important for proper removal of carbon dioxide and moisture from the process air. Ensure that the heating and cooling cycle are proper and quality of molecular sieves as per international standards. The dry air is again filtered in a Dust Filter (13) before entry to Cold Box to avoid any dust entry to Cold Box. In some plants the air is further cooled through special coils provided in the Chilling Unit Tank (6), which is called an equalizing coil (optional) as it equalizes the temperature after the Molecular Sieve drier before Air enters the Cold Box. The compressed air, cooled to about 15 to 20 Deg.C free of moisture and carbon dioxide will enter the Cold Box (15). It initially passes through a Heat Exchanger No.1 (16); the incoming air will be cooled by the outgoing Oxygen and Nitrogen. The air will be cooled to around 100 Deg.C. In this Heat Exchanger. This can be single or divided two parts in series.
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The air will then be into two streams. The main air stream will enter Expansion Engine (14) at 40 Kgs./Cm2 and will be expanded to 5 Kgs./Cm2 and 150 to 160 Deg.C the rest of the air will pass through Heat Exchanger No. 2 (17) to be cooled to about 160 Deg.C. by the outgoing Oxygen and Nitrogen. This air will then be expanded by an Expansion Valve V3 to form liquid air. Both the air streams will now enter bottom portion of the Lower Column (19). Operating pressure of the column is around 40 kg/cm2 under normal operating conditions. 6.1.2 Expansion Engine As the air enters the Lower Column, after the Expansion Engine and after Expansion Engine valve V3, a part of this air condenses into liquid and falls at the bottom of the column. This liquid is about 40% Oxygen and 60% Nitrogen and is usually called the Rich Liquid and as Nitrogen is more volatile it rises to top of the lower column where it gets cold from the condenser and become liquefied. This liquid nearly free of oxygen collected in the (Pockets in the condenser) trap. As this liquid poor in oxygen is called poor liquid.
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Final separation of the two fractions is achieved in the upper column. Both the poor liquid are carried into the upper column by two Expansion Valves and the pressure drops from 4.5/5.0 Kgs. /Cm2 in the lower column to 0.5 Kgs. /Cm2 in the upper column. The rich liquid enters the middle of the Upper column and as it flows down, Nitrogen evaporates and Oxygen continues as liquid. The Liquid Nitrogen (Poor Liquid) enters the top of the column and as it is flows down the column, it comes in contact with any evaporating Oxygen and condenses the same into liquid, while the Nitrogen itself becomes a Gas as it is more volatile. This process takes place in each Gas as it is more volatile. This process takes place in each tray. The entire gaseous Nitrogen is piped out from the top of the column through Heat Exchangers. Similarly the Liquid Oxygen at the bottom of the column is carried away to a Liquid Oxygen Pump from which it is compressed and again passed through the Heat Exchangers into the Gas Cylinders in the cylinder filling station. As the Liquid Oxygen travels through the Heat Exchangers, it evaporates into gaseous oxygen filling the cylinder with gas and giving up its cold to the incoming air Generally the purity of Oxygen will be 99.5% and Nitrogen about 96%, when the plant is operated exclusively for oxygen production.
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6.1.3 Cylinder Filling Manifold/Station The Plant operation should be such that it is not too cold or too warm. If the cold box is too cold, the Nitrogen will condense into Liquid Oxygen and the Oxygen Purity will fall. If the plant is too warm oxygen will evaporate with the Nitrogen and the quantity of Oxygen produced will go down substantially and the waste nitrogen will carry more and more oxygen. To obtain optimum result of the plant, therefore check the purity of the waste Nitrogen which should not fall below 96%. When the plant works continuously for a few months, it tends to accumulate Carbon Dioxide and moisture in its internal parts. These are to be removed once in about four months. For details, refer chapter on Defrosting of Plant. Similarly, the L.O. Pump alone can be defrosted in case of trouble in pumping (Refer L.O. Pump chapter). It is advised to give Carbon Tetra Chloride wash to the Cold Box equipments once in a year to ensure protection against Hydro Carbon contamination. But when starting during commissioning CTC wash is a must. Before starting plant, it is generally defrosted and blown out. That the cooling/starting is done which will take about 7 to 8 hours. When the plant is stopped for short intervals, the plant need not be defrosted, but all the cold line valves are to be closed to prevent outside moisture from entering the Cold Box.
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7. 1
TECHNOLOGY AND PROCESSES

MACHINERY REQUIREMENT
Following table shows the plant & machinery requirement for setting up a Oxygen Manufacturing Unit. Table 4 Machinery Detail Machine Description Suction Filter Air Compressor Process skidof oxygen Sall Expansion Engine Air separation unit High pressure filling manifold of oxygen Liquid oxygen pump Cooling Tower of Oxygen Electrical Panel of oxygen Water softener of oxygen Make imported Imported Imported Imported Imported Imported Imported Imported Imported Imported USD No. of Units 1 1 1 1 1 Set 1 1 1 1 750,000/-
Value of the Plant & Machinery (Quotation enclosed ) Pak Rupee Conversion Pak Rupees
The Plant & Machinery described above comprise following components: SR. NO. 1 2 QTY One One ITEM SUCTION FILTER DESCRIPTION
One
A high efficiency filter supplied with the compressor AIR This is 4-multistage heavy duty water cooled air COMPRESSOR compressor with fly wheel inter cooler, OF OXYGEN foundation bolts, motor pulley, motor, v belt, guard and slide rails and air filter. This is used to compress atmospheric air complete with ABB Motor and Starter. PROCESS This consists of the following items for Air SKIDOF OXYGEN Separation Plant SAll the above 1) After cooler with tank equipments are 2) Nitrogen cooler with tank
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Pre-feasibility Study neatly mounted on skid /platform complete with interconnecting piping and ready for installation of Oxygen Plant is optional.
Oxygen Gas Producing Plant 3) Moisture separator 4) Chilling unit with freon unit 5) Oil absorber filled with alumina 6) Molecular sieve battery on skid (Zeochem, Switzerland) 7) Defrost heater 8) Gas/Air/water line as per standard layout on skid /platform prefabricated and ready for installation. 9) Water pump. 10) Inlet & outlet water lines 11) Drain manifold complete with ball valves for draining moisture. Complete with motor/starter/ starter shall be of Siemens /ABB/ with hydraulic valve control, bursting disc for safety, hydraulically operated high efficient engine with ball type of valves stainless steel liner vertical type of German design. (Air separation column cold box) consists of outlet steel casing, main heat exchanger, liquifier, bottom column, top column, condenser, sub cooler, liquid oxygen and nitrogen filter. Cooling pipe line, insulation material, digital electronic temperature indicator and scanner, PT 100 sensor, DP gauge manometer, Expansion valve with longstemp type with pointer And index & wheel (Stainless Steel column argon welded to meet European specifications can be supplied) For filling high-pressure Oxygen gas to Cylinders. It consists of main High Pressure Isolation Valve and Pigtail connection with individual Valve with Pressure Gauge and Safety Relief Valve. Horizontal single acting pump with Piston, Piston Rings, Safety Devices, Non-Return Valves with Stainless Steel head for long life, Motor and Starter with Pulley, V-Belts, Belt Guard, Inter Connecting Pipes with A. S. U. Suitable for filling Oxygen. Induced Draft-Rotary Sprinkler type with Aluminium Casting Fan, FRP Body with suitable Electric Motor for maintaining the circulating water temperature between the Hot well and Cold well for optimum performance of the Plant. Complete in all respects. 23
One
EXPANSION ENGINE OF OXYGEN
One
AIR SEPARATION UNIT (COLD BOX)OF OXYGEN
Set
HIGH PRESSURE FILLING MANIFOLDOF OXYGEN LIQUID OXYGEN PUMP OF OXYGEN
One
One
COOLING TOWER OF OXYGEN
Pre-feasibility Study 9 One ELECTRICAL PANEL OF OXYGEN WATER SOFTENER OF OXYGEN
Oxygen Gas Producing Plant Electrical Panel for supply of electricity to individual motors. It has a bank of on/off switches and fuses. This enables the Operator to control all the Motors from one point. Made of HDPE having single mutiport valve for different plant valve for different operations. Used to remove hardness of the water and to avoid scaling in Air Compressor Cylinder jacket and water line. Nacl/Regeneration. With min/max. working pressure in 2.0/4.0 kgs/cm2. Complete in all respect
10
One
7. 2
Land Requirement
Land for the proposed business can be acquired on rent but it is recommended that it should be purchased as total infrastructure is required to be established. Total land required for the Oxygen Gas Manufacturing Unit is approximately 4 Kanals. Land price per kanal is taken to be Rs. 1,000,000 per Kanal (Raiwind Road, Lahore). Items Total Land Cost i. 7. 3 Total Kanals 4 Cost per Kanal 1,000,000 Total Land Cost in (Rs.) 4,000,000
including acquisition & documentation charges Building Requirement Building & Civil works Space Req. Sq. ft 4,500 5,000 1,000 400 400 2,200 4,500 18,000 Construction Cost Per Sq. Ft. Rupees 600 550 750 550 550 100 125 Total Cost Rupees 2,700,000 2,750,000 750,000 220,000 220,000 220,000 562,500 7,422,500
Production Hall - Machinery Area Finished Goods Store Management Offices Accessories Store Toilets Loading, unloading Bay - - Open Plot Area Grounds & Tracks - - Open Plot Area Total Space Requirement (sq.ft) & Infrastructure Cost
24
Pre-feasibility Study 7. 4 Machinery Requirement
Following table shows the plant & machinery requirement for setting up a Oxygen Manufacturing Unit. Machine Description Machinery (Supplier Contact)1 Cylinders Cylinders Purchased Total 7. 5 Make imported local Qty. 1 set Cost ($) 750,000 Cost in Rs. 10,000 Conversion Total Cost Rate in Rupees 60.20 45,150,000 Qty. 3,500 35,000,000 80,150,000
FITTINGS & INSTALLATIONS REQUIREMENT
Following fittings & installations are required for factory and management offices. Items Air Conditioners Haier Generator 165 KVA - Local Electric Installations Weighing Scales Fire Fighting Equipments Water Pump ( 2.0 H.P ) including boaring 150 TOTAL 7. 6 Qty. 6 1 2 8 4 Cost per unit Rupees 23,500 85,000 65,000 450 15,000 Total Cost Rupees 141,000 85,000 400,000 130,000 3,600 60,000 819,600
OFFICE EQUIPMENTS REQUIREMENT
Following office equipments are required for factory and management offices. Items Computers Printers Fax Machine Telephone Exchange Telephone Sets TOTAL
1
Qty. 4 2 1 1 15
Cost per unit (Rs.) 25,000 25,000 10,000 20,000 500
Total Cost (Rs.) 100,000 50,000 10,000 20,000 7,500 187,500
Universal Industrial Plant Mfg. Co. (P) Ltd.(Certified ISO 9001:2000 Company) Address: 6, Poorvi Marg, Vasant Vihar, New Delhi - 1100 57. INDIA Tel No: +91-124-4386250; 91-124-5519863 Fax No.: +91-1244386234E-mail:oxygen@universalboschi.com;oxygenub@vsnl.net Web: www.oxygen-plants.com; www.air-separation-plants.com
25
Pre-feasibility Study 7. 7 FURNITURE & FIXTURES REQUIREMENT
Following furniture & fixtures are required for factory and management offices. Items Executive Tables Conference Room Table Accounts & Marketing Office Tables Other Tables Computer Tables Management Room Table Reception Table Executive Chairs Conference Room Chairs Accounts & Marketing Office Chairs Computer Chairs Management Room Chairs Other Chairs File Cabinets Interior & Glass Work Total 7. 8 VEHICLES REQUIREMENT Qty. 5 1 7 4 4 2 1 5 12 7 4 1 20 Cost per unit Rupees 7,500 18,000 4,500 4,500 2,000 6,500 3,500 3,000 1,000 1,000 750 1,500 500 Total Cost Rupees 37,500 18,000 31,500 18,000 8,000 13,000 3,500 15,000 12,000 7,000 3,000 1,500 10,000 45,000 200,000 423,000
The schedule for Vehicles required for the Project is presented below: items Cars - Suzuki Cultus Loader Shahzor Motor Cycle Cycle Total 7. 9 Raw Material Requirement No. 2 3 4 2 Cost (Rs.) 600,000 650,000 55,000 3,500 Total Cost (Rs.) 1,200,000 1,950,000 220,000 7,000 3,377,000
The project will be producing medical grade oxygen and Industrial oxygen from free saturated air sucked from atmosphere and hence there is no requirement for the raw material other than the air.
26
Pre-feasibility Study 7.10 Human Resource Requirements Description PRODUCTION STAFF Production Manager Plant Engineer Technical Supervisor Machine operators Quality Inspector Skilled Labour Un-skilled Labor ( helpers ) Total Direct Labor ADMINISTRATIVE COST Admin. Manager Finance Manager Accounts Officer Purchase Officer Operator/ Receptionist Office Boys Driver Security Guard, Gate Keepers Sweeper Total Administrative Salaries MARKETING & SELLING COST Marketing Manager Asst. Manager Sales Officer Total Marketing Salaries Direct Production Cost Factory Wages *Other Benefits Total Administrative Cost Salary Other Benefits Total Marketing Cost Salary Other Benefits No. of Shifts 1 1 3 3 1 3 3
Number of Employees 1 1 1 4 2 5 8
Per Month Salary 40,000 20,000 13,000 6,000 8,000 4,500 4,000
Annual Salary 480,000 240,000 468,000 864,000 192,000 810,000 1,152,000 4,206,000 420,000 480,000 192,000 192,000 60,000 96,000 216,000 324,000 60,000 1,980,000 480,000 216,000 480,000 1,176,000 4,206,000 420,600 4,626,600 1,980,000 198,000 2,178,000 1,176,000 117,600
1 1 1 1 1 1 1 3 1
1 1 2 2 1 2 4 2 2
35,000 40,000 8,000 8,000 5,000 4,000 4,500 4,500 2,500
1 1 1
1 1 5
40,000 18,000 8,000
27
Total 1,293,600 * Other benefits include EOBI, Social Security, Gratuity, Medical and Other welfare expenses. 7.11 Utilities Requirement 1. 2. 3. 4. Electricity Water Telephone Sui Gas
28
8
8. 1
FINANCIAL ANALYSIS
Project Cost
Fixed Capital Expenditure Land Buildings Plant & Machinery Fittings & Installations Office Equipments Furnitures & Fixtures Vehicles Working Capital Current Assets: Stock in Trade Stores & Spares Advances, Deposits & Other Receivables Accounts Receivable Accrued & Other Charges Workers' Profit Participation Fund Sales Tax Payable Provision for Taxation Total Working Capital Reqd. Financed By: Sponsors' Equity Debt Financing
RUPEES 4,000,000 7,422,500 80,150,000 819,600 187,500 423,000 3,377,000 96,379,600
2,172,002 1,224,720 1,549,768 8,388,493 13,334,983 2,403,888 1,153,403 850,500 5,478,662 9,886,453 3,448,531 99,828,131 49,914,065 49,914,065 99,828,131
29
8. 2
Profit & Loss Statement

Year - I RUPEES Year - II RUPEES 75,014,100 41,427,637 33,586,463 4,966,511 3,108,069 8,074,580 25,511,883 375,071 25,886,953 Year - III RUPEES 82,703,045 43,938,936 38,764,109 5,361,084 3,334,620 8,695,704 30,068,404 413,515 30,481,920 Year - IV RUPEES 91,180,107 46,774,305 44,405,802 5,813,513 3,579,614 9,393,127 35,012,675 455,901 35,468,576 Year - V RUPEES 100,526,068 50,760,221 49,765,847 6,325,991 2,866,201 9,192,192 40,573,655 502,630 41,076,285 Year - VI RUPEES 110,829,990 54,622,280 56,207,710 6,901,651 3,104,209 10,005,860 46,201,851 554,150 46,756,001 Year - VII RUPEES 122,190,064 58,965,282 63,224,782 7,544,513 3,363,587 10,908,101 52,316,681 610,950 52,927,632 Year VIII RUPEES 134,714,546 63,858,131 70,856,415 8,259,468 3,646,351 11,905,820 58,950,595 673,573 59,624,168 Year - IX RUPEES 143,608,669 69,090,009 74,518,660 8,929,413 3,954,712 12,884,125 61,634,535 718,043 62,352,578 Year - X RUPEES 150,789,103 74,788,468 76,000,635 9,605,599 4,291,095 13,896,694 62,103,941 753,946 62,857,886
Sales - Net of Sales Tax Cost of Sales Gross Profit Operating Expenses: Administrative Expenses Marketing & Selling Expenses Total Op. Expenses Operating Profit Other Income Total Op. Profit Financial & Other Charges Mark up on Long Term Loans Bank Charges Other Charges Profit before Taxation Taxation Profit after Taxation Accumulated Profits brought forward Accumulated Profits carried to the Balance Sheet
68,040,000 37,467,028 30,572,972 4,878,614 2,898,465 7,777,079 22,795,892 340,200 23,136,092
68,040 1,153,403 1,221,443 21,914,650 5,478,662 16,435,987 16,435,987
6,638,571 75,014 958,668 7,672,253 18,214,700 4,553,675 13,661,025 16,435,987 30,097,012
5,240,977 82,703 1,257,912 6,581,592 23,900,328 5,975,082 17,925,246 30,097,012 48,022,258
3,843,383 91,180 1,576,701 5,511,264 29,957,312 7,489,328 22,467,984 48,022,258 70,490,242
2,445,789 100,526 1,926,499 4,472,814 36,603,472 9,150,868 27,452,604 70,490,242 97,942,846
1,048,195 110,830 2,279,849 3,438,874 43,317,126 10,829,282 32,487,845 97,942,846 130,430,691
122,190 2,640,272 2,762,462 50,165,169 12,541,292 37,623,877 130,430,691 168,054,568
134,715 2,974,473 3,109,187 56,514,981 14,128,745 42,386,235 168,054,568 210,440,803
143,609 3,110,448 3,254,057 59,098,521 14,774,630 44,323,891 210,440,803 254,764,694
150,789 3,135,355 3,286,144 59,571,742 14,892,936 44,678,807 254,764,694 299,443,501
30
8. 3
Balance Sheet
Year - I Year - II RUPEES 78,908,092 3,417,120 2,401,602 1,350,254 1,657,096 9,248,314 43,948,868 58,606,133 140,931,345 49,914,065 30,097,012 80,011,078 29,948,439 8,750,000 Year - III RUPEES 71,524,095 3,417,120 2,547,185 1,488,655 1,779,522 10,196,266 59,303,487 75,315,115 150,256,331 49,914,065 48,022,258 97,936,324 19,965,626 8,750,000 Year - IV RUPEES 64,907,377 3,417,120 2,711,554 1,641,242 1,918,016 11,241,383 78,436,072 95,948,267 164,272,764 49,914,065 70,490,242 120,404,308 9,982,813 8,750,000 Year - V RUPEES 58,972,921 3,417,120 2,942,622 1,809,469 2,111,170 12,393,625 101,845,177 121,102,063 183,492,104 49,914,065 97,942,846 147,856,911 8,750,000 Year - VI RUPEES 53,645,997 3,417,120 3,166,509 1,994,940 2,289,128 13,663,971 129,633,457 150,748,005 207,811,122 49,914,065 130,430,691 180,344,756 8,750,000 Year - VII RUPEES 48,860,767 3,417,120 3,418,277 2,199,421 2,487,472 15,064,528 172,239,912 195,409,611 247,687,498 49,914,065 168,054,568 217,968,633 8,750,000 Year - VIII RUPEES 44,559,107 3,417,120 3,701,921 2,424,862 2,707,931 16,608,643 219,158,590 244,601,946 292,578,174 49,914,065 210,440,803 260,354,869 8,750,000 Year - IX RUPEES 40,689,606 3,417,120 4,005,218 2,584,956 2,935,121 17,705,178 266,922,944 294,153,417 338,260,144 49,914,065 254,764,694 304,678,760 8,750,000 Year - X RUPEES 37,206,705 3,417,120 4,335,563 2,714,204 3,177,504 18,590,437 314,239,897 343,057,605 383,681,430 49,914,065 299,443,501 349,357,566 8,750,000 RUPEES 87,156,315 3,417,120 2,172,002 1,224,720 1,549,768 8,388,493 30,992,152 44,327,136 134,900,571 49,914,065 16,435,987 66,350,053 39,931,252 8,750,000
Tangible Fixed Assets Long Term Deposits Electricity Current Assets: Stock in Trade Stores & Spares Other Receivables Accounts Receivable Cash in Hand / Bank
Capital Introduced Accumulated Profits Long Term Loan Long Term Deposits (Cylinders) : Current Liabilities: Long Term Loan Accrued Charges Mark - up payable Workers' Profit Participation Fund Sales Tax Payable Provision for Taxation
9,982,813 2,403,888 1,153,403 850,500 5,478,662 19,869,266 134,900,571
9,982,813 2,644,409 3,144,586 958,668 937,676 4,553,675 22,221,828 140,931,345
9,982,813 2,908,997 2,445,789 1,257,912 1,033,788 5,975,082 23,604,381 150,256,331
9,982,813 3,200,058 1,746,992 1,576,701 1,139,751 7,489,328 25,135,643 164,272,764
9,982,813 3,520,241 1,048,195 1,926,499 1,256,576 9,150,868 26,885,192 183,492,104
3,872,462 349,398 2,279,849 1,385,375 10,829,282 18,716,366 207,811,122
4,259,924 2,640,272 1,527,376 12,541,292 20,968,865 247,687,498 4,686,155 2,974,473
5,151,197 3,110,448
5,660,710 3,135,355
1,683,932 14,128,745 23,473,305 292,578,174
1,795,108 14,774,630 24,831,384 338,260,144
1,884,864 14,892,936 25,573,864 383,681,430
31
8. 4
Cash-flow Statement
Year - I Year - II RUPEES 18,214,700 958,668 8,248,223 27,421,591 (229,601) (125,534) (107,327) (859,821) 240,522 3,144,586 87,176 2,150,002 29,571,593 1,153,403 9,982,813 5,478,662 16,614,878 12,956,715 30,849,776 958,668 9,982,813 4,553,675 15,495,157 15,354,620 Year - III RUPEES 23,900,328 1,257,912 7,383,997 32,542,237 (145,583) (138,401) (122,427) (947,952) 264,587 (698,797) 96,112 (1,692,460) 36,348,391 1,257,912 9,982,813 5,975,082 17,215,807 19,132,584 Year - IV RUPEES 29,957,312 1,576,701 6,616,719 38,150,731 (164,369) (152,587) (138,494) (1,045,117) 291,061 (698,797) 105,963 (1,802,340) 42,457,947 1,576,701 9,982,813 7,489,328 19,048,842 23,409,105 48,848,459 1,926,499 9,982,813 9,150,868 21,060,179 27,788,280 Year - V RUPEES 36,603,472 1,926,499 5,934,456 44,464,426 (231,068) (168,227) (193,154) (1,152,242) 320,184 (698,797) 116,825 (2,006,479) 55,715,586 2,279,849 10,829,282 13,109,130 42,606,455 Year - VI RUPEES 43,317,126 2,279,849 5,326,924 50,923,899 (223,887) (185,471) (177,958) (1,270,347) 352,220 (698,797) 128,799 (2,075,440) 62,100,243 2,640,272 12,541,292 15,181,564 46,918,678 Year - VII RUPEES 50,165,169 2,640,272 4,785,230 57,590,671 (251,768) (204,481) (198,344) (1,400,557) 387,463 (349,398) 142,001 (1,875,086) 64,867,571 2,974,473 14,128,745 17,103,218 47,764,354 Year - VIII RUPEES 56,514,981 2,974,473 4,301,659 63,791,112 (283,643) (225,441) (220,458) (1,544,114) 426,231 0 156,556 (1,690,870) Year - IX RUPEES 59,098,521 3,110,448 3,869,501 66,078,471 (303,297) (160,094) (227,190) (1,096,536) 465,041 0 111,177 (1,210,900) 65,202,032 3,110,448 14,774,630 17,885,079 47,316,954 Year - X RUPEES 59,571,742 3,135,355 3,482,901 66,189,998 (330,345) (129,248) (242,382) (885,259) 509,513 0 89,755 (987,966) RUPEES 21,914,650 1,153,403 9,223,285 32,291,337 (2,172,002) (1,224,720) (1,549,768) (8,388,493) 2,403,888 850,500 (10,080,596) 49,914,065 49,914,065 8,750,000 108,578,131 130,788,872 96,379,600 3,417,120 99,796,720 30,992,152
Profit before Taxation Provision for WPPF Depreciation Stock in Trade Stores & Spares Advances, Deposits & Other Receivables Accounts Receivable Accrued Charges Mark - up payable Sales Tax Payable Cash -other Sources Sponsors' Equity Debt Financing Long Term Deposits : Total Sources Applications: Fixed Assets WPPF Paid Long Term Deposits Re -Payment of Loan Taxation Cash
32
Increase/(Decrease) Opening Balance Closing Balance
30,992,152
30,992,152 43,948,868
43,948,868 59,303,487
59,303,487 78,436,072
78,436,072 101,845,177
101,845,177 129,633,457
129,633,457 172,239,912
172,239,912 219,158,590
219,158,590 266,922,944
266,922,944 314,239,897
33
KEY ASSUMPTIONS
10 50% 50% 14% 5 5% 365 12 300 3 8 70% 5% 0% 5% 10% 10% 20% 10% 20% 2
Projected Life of The Project in Years Sponsors' Equity Debt Financing Annual Mark Up Rate (Short Term & Long Term) Debt Tenure in Years General Inflation Rate Operating Assumptions Total No. of Days in One Year Total No. of Months in One Year No of Working Days in One Year No. of Shift Working Hours per shift Expected Production Capacity - 1st Year Expected Production Growth Rate Depreciation Rate Assumptions Land Buildings Plant & Machinery Fittings & Installations Office Equipments Furniture & Fixtures Vehicles Long Term Security Deposits Electricity Long Term Security Deposits Against Cylinders Deposit received against Cylinders No. of Cylinders in respect of which security is received Working Capital Turnover Assumptions Finished Goods Stores and Spares Accounts Receivable - credit policy Accounts Payable - Expenses Advances & Prepayments Advances to Staff
of the Written Down Value of the Written Down Value of the Written Down Value of the Written Down Value of the Written Down Value of the Written Down Value months bill
50% of the Cost of Cylinder 50% of the Total Cylinders purchased 20 120 Days Stores & Consumption 45 Days 30 Days of Total Expenditure 20% of the one month's salary
Spares
Annual
34
Pre-feasibility Study Loans to Staff Advances against expenses
Oxygen Gas Producing Plant 10% of the Total annual salary 5% of the traveling, entertainment, repair, vehicle running, sale promotion and other general per month 2,000 6 sets per month 300 90 Days Insurance Cost
Advance Income Tax Electricity Telephone Prepaid Insurance Long Term Loan Term Total Installments Installments Markup Sales Tax Payable Revenue Assumptions - Sale price & Production Mix Per hour production in cubic meters Per Day Cylinder Filling Particulars Sale price of Oxygen per Cubic Meter Rate of Sales Tax Cost of Sales Salaries & Wages Other Benefits & Perquisites Inflation Rate for Salaries & Wages Stores & spares Consumed Chemicals Consumed Oils & Lubricants Consumed Repair & Maintenance Machinery Vehicles Building increase in rates of repair Machinery & equipment insurance rate Other Overhead Charges Administrative Expense Assumptions Salaries & Wages
5 Years 10 bi-annually 2 per year 14% or 7.0% (arrear) 1 month's Annual Sales Tax 500 2,000 Ex-Factory Price excluding sales tax 27 15% Section 8.11 of this pre-feasibility report 10% of the Salaries & Wages 10% 4.5% of the Turnover 0.5% of the Turnover 0.5% of the Turnover
2% 5% 3% 50% 1%
of the Cost. of the Cost. of the Cost. after year 4 of Written down value of the Machinery & Equipments. 1% of Total Cost of Goods Manufactured excluding overhead cost. Section 8.11 of this pre-feasibility report
35
Pre-feasibility Study Inflation Rate for Salaries & Wages Traveling & Conveyance Printing & Stationary Consultancy Charges Audit Fee Out of Pocket Expenses Policy ( 0 cost from 1st Year onward) Manual Income Tax & Sales Tax Consultancy Inflation rate of Consultancy charges Entertainment Telephone Fax and Postage Utility Charges Office vehicles insurance rate Repair & Maintenance Miscellaneous Expenses Marketing Expenses Assumptions Salaries & Wages Inflation Rate for Salaries & Wages Vehicle Running Expenses Consumption per ltr. 2 Cars - Suzuki 18 Km per kg Cultus 3 Loader 6 km per Shahzor liter 4 Motor Cycle 50 Km per kg Vehicle Repair Promotional Expenses book lets Sign Boards Newspaper Advertisements expenses incurred up to 4th Year Other Income - includes profit on scrap of spare parts & salt scrape Bank Charges Other Charges - WPPF Income Tax Rate
Oxygen Gas Producing Plant 10% 0.5% of the Turnover .4% of the Turnover 75,000 Rupee 10,000 Rupee 250,000 Rupee 50,000 10% .5% .65% .3% 4% 10% .15% Rupee of the Turnover of the Turnover of the Turnover of Written down value of the Cost. of the Turnover
Section 8.11 of this pre-feasibility report 10% Traveling per day 50 120 Annual Tours 300 150
Rate per liter/kg CNG 32 Diesel Petrol 38 58.4
80 300 15% of Cost Per unit 25 2,000 20,000 0.5% of turnover .1% of turnover 5% of the profit before tax 25% of Total annual Turnover
Bank deposits, and
36

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Feasibility Study

OXYGEN GAS PRODUCING PLANT

Small and Medium Enterprise Development Authority

Oxygen Gas Producing Plant

3.1.1 3.1.2 3.1.3 3.1.4

KEY SUCCESS FACTORS / PRACTICAL TIPS FOR SUCCESS .......................................... 6

MARKET INFORMATION ....................................................................................................... 12 5.1 OXYGEN GAS PRODUCERS IN PAKISTAN..................................................................... 12

PRODUCT................................................................................................................................... 13 6.1 PRODUCTION PROCESS FLOW ....................................................................................... 13

6.1.1 6.1.2 6.1.3

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

PURPOSE OF THE DOCUMENT

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT

PREF-97/June, 2006/ Rev 1

Pre-feasibility Study 3.1.4 Threats 3. 2

Oxygen Gas Producing Plant

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

Following is the detailed description of oxygen plants with available capacities.

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

415 Volts 200 Cum/Hr. 55 40Kg/sq.c m 8 Hours 40 Mts. 6 M x 10 M 7M 16 Tons TypeBoschi

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

9. 10. 11. 12. 13. 14.

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

UB-400 400 Cum/Hr. 1400 Cum/Hr. 99.6%

UB-500 500 Cum/Hr. 2000 Cum/Hr. 99.6%

96%99.99% 300 KW 220 KW

96%99.99% 400 KW 330KW

96%99.99% 600 KW 400 KW

96%99.99% 750 KW 500 KW

PREF-97/June, 2006/ Rev 1

Pre-feasibility Study 4. 7 PROJECT INVESTMENT

Oxygen Gas Producing Plant

96,379,600 3,448,531 ________________99,828,131

Financial Summary IRR NPV (Rs.) 26.76 % 31,335,995

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant

PREF-97/June, 2006/ Rev 1

Oxygen Gas Producing Plant