smeda oxygen gas producing plant

Feasibility Study

OOXXYYGGEENN GGAASS PPRROODDUUCCIINNGG PPLLAANNTT

Small and Medium Enterprise Development AuthorityGovernment of Pakistan

www.smeda.org.pk

HEAD OFFICE

6th & 8th Floor LDA Plaza, Egerton Road, Lahore.Tel: (042) 111-111-456Fax: (042) 6304926-7

[email protected]

REGIONAL OFFICE PUNJAB

REGIONAL OFFICE SINDH

REGIONAL OFFICE NWFP

REGIONAL OFFICE BALOCHISTAN

8th Floor LDA Plaza, Egerton Road, Lahore.Tel: (042) 111-111-456Fax: (042) [email protected]

5TH Floor, BahriaComplex II, M.T. Khan Road,

Karachi.Tel: (021) 111-111-456

Fax: (021) [email protected]

Ground FloorState Life Building

The Mall, Peshawar.Tel: (091) 9213046-47


Bungalow No. 15-AChaman Housing Scheme

Airport Road, Quetta.Tel: (081) 831623, 831702


June, 2006

Pre-feasibility Study Oxygen Gas Producing Plant

PREF-97/June, 2006/ Rev 1 2

1 INTRODUCTION TO SMEDA.................................................................................................... 4

2 PURPOSE OF THE DOCUMENT............................................................................................... 4

3 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT..................... 5

3.1 SWOT ANALYSIS ................................................................................................................ 53.1.1 Strengths ..................................................................................................53.1.2 Weaknesses..............................................................................................53.1.3 Opportunities ...........................................................................................53.1.4 Threats .....................................................................................................6

3.2 KEY SUCCESS FACTORS / PRACTICAL TIPS FOR SUCCESS.......................................... 63.2.1 Sales promotion........................................................................................63.2.2 Other Success Factors ..............................................................................6

4 PROJECT PROFILE.................................................................................................................... 6

4.1 OPPORTUNITY RATIONALE.............................................................................................. 64.2 PROJECT BRIEF................................................................................................................... 74.3 PROPOSED BUSINESS LEGAL STATUS ............................................................................ 84.4 MARKET ENTRY TIME....................................................................................................... 84.5 PROPOSED LOCATION....................................................................................................... 84.6 PROJECT CAPACITY........................................................................................................... 84.7 PROJECT INVESTMENT ................................................................................................... 124.8 PROJECT PARAMETERS .................................................................................................. 12

5 MARKET INFORMATION ....................................................................................................... 12

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

6 PRODUCT................................................................................................................................... 13

6.1 PRODUCTION PROCESS FLOW ....................................................................................... 136.1.1 Process SKID.........................................................................................156.1.2 Expansion Engine...................................................................................196.1.3 Cylinder Filling Manifold/Station...........................................................21

7 TECHNOLOGY AND PROCESSES.......................................................................................... 22

7.1 MACHINERY REQUIREMENT ......................................................................................... 227.2 LAND REQUIREMENT ............................................................................................................ 247.3 BUILDING REQUIREMENT ...................................................................................................... 247.4 MACHINERY REQUIREMENT .................................................................................................. 257.5 FITTINGS & INSTALLATIONS REQUIREMENT ............................................................. 257.6 OFFICE EQUIPMENTS REQUIREMENT........................................................................... 257.7 FURNITURE & FIXTURES REQUIREMENT..................................................................... 267.8 VEHICLES REQUIREMENT .............................................................................................. 267.9 RAW MATERIAL REQUIREMENT............................................................................................. 267.10 HUMAN RESOURCE REQUIREMENTS....................................................................................... 277.11 UTILITIES REQUIREMENT ...................................................................................................... 28

8 FINANCIAL ANALYSIS............................................................................................................ 29

8.1 PROJECT COST ...................................................................................................................... 298.2 PROFIT & LOSS STATEMENT .................................................................................................. 308.3 BALANCE SHEET ................................................................................................................... 318.4 CASH-FLOW STATEMENT....................................................................................................... 32

9 KEY ASSUMPTIONS................................................................................................................. 34



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. PREF-97

Prepared by SMEDA-Punjab

Issue Date June 2006

Issued by Library Officer



11 IINNTTRROODDUUCCTTIIOONN TTOO SSMMEEDDAA

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 SMEDA’s 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.

22 PPUURRPPOOSSEE OOFF TTHHEE DDOOCCUUMMEENNTT

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 don’t 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.

33 CCRRUUCCIIAALL FFAACCTTOORRSS && SSTTEEPPSS IINN DDEECCIISSIIOONN MMAAKKIINNGG FFOORRIINNVVEESSTTMMEENNTT

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.

33..11 SSWWOOTT AANNAALLYYSSIISS

33..11..11 SSttrreennggtthhss

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

33..11..22 WWeeaakknneesssseess

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.

33..11..33 OOppppoorrttuunniittiieess

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.



33..11..44 TThhrreeaattss

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.

33..22 KKEEYY SSUUCCCCEESSSS FFAACCTTOORRSS // PPRRAACCTTIICCAALL TTIIPPSS FFOORR SSUUCCCCEESSSS

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:

33..22..11 SSaalleess pprroommoottiioonn

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 alongwith the use of other automated marketing techniques.

33..22..22 OOtthheerr SSuucccceessss FFaaccttoorrss

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.

44 PPRROOJJEECCTT PPRROOFFIILLEE

44..11 OOPPPPOORRTTUUNNIITTYY RRAATTIIOONNAALLEE

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:-



Table 1: Elements of Atmospheric AirElement Percentage Composition

by volumeBoiling Point at

atmosphericPressure

Nitrogen (N2) 78.03% -195.5 Deg.C.Oxygen (O2) 20.99% -182.7 Deg.C.

Argon (A) 0.9323% -185.5 Deg.C.Carbon Dioxide (CO2) 0.03% -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.

44..22 PPRROOJJEECCTT BBRRIIEEFF

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



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.

44..33 PPRROOPPOOSSEEDD BBUUSSIINNEESSSS LLEEGGAALL SSTTAATTUUSS

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 pre-feasibility assumes the legal status of a sole proprietorship.

44..44 MMAARRKKEETT EENNTTRRYY TTIIMMEE

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.

44..55 PPRROOPPOOSSEEDD LLOOCCAATTIIOONN

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.

44..66 PPRROOJJEECCTT CCAAPPAACCIITTYY

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 24

Production Capacity in cubic meters per hour 500

Production Capacity in Cylinders per day 2,000

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



SMALL CAPACITY

S.No. Model UB-25 UB-30 UB-40 UB-50

Capacity: Oxygen Pressure*(upto)

25CuM/Hr.155 bar

30 uM/Hr.155 bar

40 um/Hr.155 bar

50 Cum/Hr. 155 bar

1.

Nitrogen** (as second product)

80 CuM/Hr 100 uM/Hr

150 um/Hr

200 um/Hr.

Purity: Oxygen 99.6% 99.6% 99.6% 99.6% 2.

Nitrogen (Optional upto 99.999%)

96%-96.6% 96%-96.6%

96%-96.6%

96%-96.6%

3. Power Connected

55 KW 70 KW 80 KW 95 KW

4. Power Consumed (abt.)

40 KW 45 KW 60 KW 70 KW

5. Power Supply 415 Volts 415 Volts 415 Volts 415 Volts

6. Air Capacity 150 Cum/Hr

200 Cum/Hr.

200 Cum/Hr.

300 Cum/Hr

7. Starting Pressure

60 Kg/sq.cm.

55 55 55

8. Working Pressure (abt)

50 Kg/sq.cm.

40Kg/sq.cm

40Kg/sq.cm

40Kg/sq.cm

9. Starting Time (After Defrost)

8 Hours 8 Hours 7 Hours 7 Hours

10. Starting Time (After Tripping)

40 Mts. 40 Mts. 40 Mts. 40 Mts.

11.

Areas Required 6M x 8 M 6 M x 10 M

8 M x 10M

8 M x 12 M

12.

Assembly Height

7 M 7 M 7.5 M 7.5 M

13.

Weight (About) 14 Tons 16 Tons 18 Tons 19 Tons

14.

Air Separation Column

Type-Boschi

Type-Boschi

TypeBoschi

TypeBoschi


PREF-97/June, 2006/ Rev 1 10

MEDIUM CAPACITY

S.No.

Model UB-60 UB-80 UB-100 UB-150

Capacity: Oxygen Pressure*(upto

60 CuM/Hr.155 bar

80 CuM/Hr.155 bar

100 Cum/Hr.155 bar

150 Cum/Hr.155 bar

1.


200 CuM/Hr

250 CuM/Hr. 300 Cum/Hr 500 Cum/Hr.

Purity *** Oxygen

99.6% 99.6% 99.6% 99.6% 2.

Nitrogen(Optional upto 99.999%)

96%-99.99%

96%-99.99%

96%-99.99%

96%-99.99%

3. Power Connected 110 KW 130 KW 150 KW 250 KW


88 KW 95 KW 105 KW 165 KW

5. Power Supply 415 Volts

415 Volts 415 Volts

415 Volts

6. Air Capacity 400 Cum/Hr

500 Cum/Hr

600 Cum/Hr

900 Cum/Hr


45 Kg/sq.cm..

45 Kg/sq.cm.

45 Kg/sq.cm.

45 Kg/sq.cm.


50 Kg/sq.cm.

30-40Kg/sq.cm

30-40Kg/sq.cm

30-40Kg/sq.cm


8 Hours 7Hours 6 Hours 6 Hours


40 Mts. 30 Mts. 20 Mts. 20 Mts.

11. Areas Required 12M x 15 M

12M x 15 M

14 M x 15M

14M x 15 M

12. Assembly Height 8.0 M 9.0 M 9.5 M 9.5 M

13. Weight (About) 20 Tons 25 Tons 30 Tons 40 Tons

14. Air Separation Column

Type-Boschi

Type-Boschi

Type-Boschi

Type-Boschi


PREF-97/June, 2006/ Rev 1 11

HIGHER CAPACITY

S.No.

Model UB-200 UB-300 UB-400 UB-500

Capacity: Oxygen Pressure*

200 CuM/Hr.

300 CuM/Hr.

400 Cum/Hr.

500 Cum/Hr.

1.


800 CuM/Hr.

1200 CuM/Hr.

1400 Cum/Hr.

2000 Cum/Hr.

Purity(Optional upto 99.999%)

99.6% 99.6% 99.6% 99.6% 2.

Nitrogen(Optional upto 99.999%)

96%-99.99%

96%-99.99%

96%-99.99%

96%-99.99%

3. Power Connected 300 KW 400 KW 600 KW 750 KW


220 KW 330KW 400 KW 500 KW

5. Power Supply 415 Volts 415 Volts 415 Volts 415 Volts

6. Air Capacity 1200 Cum/Hr 1800 Cum/Hr. 2400 Cum/Hr.

3000 Cum/Hr.


45 Kg/sq.cm.

45 Kg/sq.cm. 45 Kg/sq.cm.

45 Kg/sq.cm.


36Kg/sq.cm.

36Kg/sq.cm.

30Kg/sq.cm

30Kg/sq.cm


6Hours 5Hours 5Hours 5Hours


20 Mts. 20 Mts. 20 Mts. 20 Mts.

11. Areas Required 14M x 15 M 15M x 16 M

15M x 18M

18M x 20M

12. Assembly Height 9.5 M 9.5 M 10 M 10 M

13. Weight (About) 50 Tons 60 Tons 70 Tons 80Tons

14. Air Separation Column

Type-Boschi

Type-Boschi

Type-Boschi Type-Boschi


PREF-97/June, 2006/ Rev 1 12

44..77 PPRROOJJEECCTT IINNVVEESSTTMMEENNTT

Total Project cost is Rs.99.82 million worked out in the following table:-.

Table 2: Project CostCapital Investment 96,379,600Working Capital Requirement 3,448,531Total Investment ________________99,828,131

44..88 PPRROOJJEECCTT PPAARRAAMMEETTEERRSS

Capacity Human Resource Technology/Machinery Location500 cubic meters

per hour66 imported Raiwind Road,

LahoreFinancial Summary

Project Cost IRR NPV (Rs.) Payback periodRs. 99,828,131 26.76 % 31,335,995 4.06 yrs

55 MMAARRKKEETT IINNFFOORRMMAATTIIOONN

55..11 OOXXYYGGEENN GGAASS PPRROODDUUCCEERRSS IINN PPAAKKIISSTTAANN

Major oxygen gas producing units currently in operation in Pakistan are reproduced below:

Table 3: Major PlayersSr. No.

COMPANY NAME ADDRESS

1- Fine Gas Company (Pvt.) Ltd. Kot Lakh Pat, Lahore2- BOC Gas Limited Shalimar Link Road, Lahore.3- Medi Gas (Pvt.) Ltd. Kot Lakh Pat, Lahore


PREF-97/June, 2006/ Rev 1 13

66 PPRROODDUUCCTT

66..11 PPRROODDUUCCTTIIOONN PPRROOCCEESSSS FFLLOOWW


PREF-97/June, 2006/ Rev 1 14

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.

EQUIPMENT SCHEDULE LEGENDSSerial # Description CA Air1 Suction Filter CWS Cooling Water Supply2 Stage Air Compressor CWR Cooling Water Return3 After cooler O2 Oxygen4 Moisture separator N2 Nitrogen5 Chilling Unit PL Poor Liquid6 Refrigeration Unit RL Rich Liquid7 Oil Absorber Thermocouple8a Molecular Sieve Battery8b Molecular Sieve Battery Notes9 Reactivation Heater ----- Oxygen10 Defrost Air Heater ----- Air11 Dust Filter ----- Defrost air12 Outer Shell ----- Nitrogen13 Heat Exchanger No 1 ----- Rich Liquid14 Expansion Engine ----- Poor Liquid15 Liquifier Valve16 Bottom Column Expansion valve17 Condenser Temperature Indicator18 Top Column19 Sub cooler20 Liquid Oxygen Pump21 Filling Manifold


PREF-97/June, 2006/ Rev 1 15

66..11..11 PPrroocceessss SSKKIIDD

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


PREF-97/June, 2006/ Rev 1 16

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).


PREF-97/June, 2006/ Rev 1 17

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.


PREF-97/June, 2006/ Rev 1 18

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.


PREF-97/June, 2006/ Rev 1 19

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.

66..11..22 EExxppaannssiioonn EEnnggiinnee

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.


PREF-97/June, 2006/ Rev 1 20

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.


PREF-97/June, 2006/ Rev 1 21

66..11..33 CCyylliinnddeerr FFiilllliinngg MMaanniiffoolldd//SSttaattiioonn

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.


PREF-97/June, 2006/ Rev 1 22

77 TTEECCHHNNOOLLOOGGYY AANNDD PPRROOCCEESSSSEESS

77..11 MMAACCHHIINNEERRYY RREEQQUUIIRREEMMEENNTT

Following table shows the plant & machinery requirement for setting up a Oxygen Manufacturing Unit.

Table 4 Machinery Detail

Machine Description Make No. of Units

Suction Filter imported 1Air Compressor Imported 1Process skidof oxygen Sall Imported 1Expansion Engine Imported 1Air separation unit Imported 1High pressure filling manifold of oxygen

Imported Set

Liquid oxygen pump Imported 1Cooling Tower of Oxygen Imported 1Electrical Panel of oxygen Imported 1Water softener of oxygen Imported 1

Value of the Plant & Machinery (Quotation enclosed ) USD 750,000/-Pak Rupee ConversionPak Rupees

The Plant & Machinery described above comprise following components:

SR. NO.

QTY ITEM DESCRIPTION

1 One SUCTION FILTER A high efficiency filter supplied with the compressor

2 One AIR COMPRESSOR OF OXYGEN

This is 4-multistage heavy duty water cooled air compressor with fly wheel inter cooler, foundation bolts, motor pulley, motor, v belt, guard and slide rails and air filter. This is used to compress atmospheric air complete with ABBMotor and Starter.

3 One PROCESS SKIDOF OXYGEN SAll the above equipments are

This consists of the following items for Air Separation Plant1) After cooler with tank2) Nitrogen cooler with tank


PREF-97/June, 2006/ Rev 1 23

neatly mounted on skid /platform complete with interconnecting piping and ready for installation of Oxygen Plant is optional.

3) Moisture separator 4) Chilling unit with freon unit5) Oil absorber filled with alumina6) Molecular sieve battery on skid (Zeochem, Switzerland)7) Defrost heater8) Gas/Air/water line as per standard layout on skid /platform prefabricated and ready for installation.9) Water pump.10) Inlet & outlet water lines11) Drain manifold complete with ball valves for draining moisture.

4 One EXPANSION ENGINE OF OXYGEN

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.

5 One AIR SEPARATION UNIT (COLD BOX)OF OXYGEN

(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)

6 Set HIGH PRESSURE FILLING MANIFOLDOF OXYGEN

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.

7 One LIQUID OXYGEN PUMP OF OXYGEN

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.

8 One COOLING TOWER OF 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.


PREF-97/June, 2006/ Rev 1 24

9 One ELECTRICAL PANEL OF OXYGEN

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.

10 One WATER SOFTENER OF OXYGEN

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

77..22 LLaanndd RReeqquuiirreemmeenntt

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 Kanals Cost per KanalTotal Land Cost

in (Rs.)Total Land Cost 4 1,000,000 4,000,000

i. including acquisition & documentation charges

77..33 BBuuiillddiinngg RReeqquuiirreemmeenntt

Construction Cost Per Sq. Ft.

Total CostBuilding & Civil works Space Req. Sq.

ft Rupees RupeesProduction Hall - Machinery Area 4,500 600 2,700,000 Finished Goods Store 5,000 550 2,750,000 Management Offices 1,000 750 750,000 Accessories Store 400 550 220,000 Toilets 400 550 220,000 Loading, unloading Bay - - Open Plot Area

2,200 100 220,000

Grounds & Tracks - - Open Plot Area

4,500 125 562,500

Total Space Requirement (sq.ft) & Infrastructure Cost

18,000 7,422,500


PREF-97/June, 2006/ Rev 1 25

77..44 MMaacchhiinneerryy RReeqquuiirreemmeenntt

Following table shows the plant & machinery requirement for setting up a Oxygen Manufacturing Unit.

Machine Description Make Qty. Cost ($) Conversion Rate

Total Cost in Rupees

Machinery – (Supplier Contact)1 imported 1 set 750,000 60.20 45,150,000

Cylinders Cost in Rs. Qty.

Cylinders Purchased local 10,000 3,500 35,000,000

Total 80,150,000

77..55 FFIITTTTIINNGGSS && IINNSSTTAALLLLAATTIIOONNSS RREEQQUUIIRREEMMEENNTT

Following fittings & installations are required for factory and management offices.

Cost per unit Total CostItems Qty.Rupees Rupees

Air Conditioners Haier 6 23,500 141,000 Generator 165 KVA - Local 1 85,000 85,000 Electric Installations 400,000 Weighing Scales 2 65,000 130,000 Fire Fighting Equipments 8 450 3,600 Water Pump ( 2.0 H.P ) including boaring 150

4 15,000 60,000

TOTAL 819,600

77..66 OOFFFFIICCEE EEQQUUIIPPMMEENNTTSS RREEQQUUIIRREEMMEENNTT

Following office equipments are required for factory and management offices.

Items Qty. Cost per unit (Rs.) Total Cost (Rs.)Computers 4 25,000 100,000 Printers 2 25,000 50,000 Fax Machine 1 10,000 10,000 Telephone Exchange 1 20,000 20,000 Telephone Sets 15 500 7,500 TOTAL 187,500 1

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.: +91-124-4386234E-mail:[email protected];[email protected]: www.oxygen-plants.com; www.air-separation-plants.com


PREF-97/June, 2006/ Rev 1 26

77..77 FFUURRNNIITTUURREE && FFIIXXTTUURREESS RREEQQUUIIRREEMMEENNTT

Following furniture & fixtures are required for factory and management offices.

Cost per unit Total CostItems Qty.Rupees Rupees

Executive Tables 5 7,500 37,500 Conference Room Table 1 18,000 18,000 Accounts & Marketing Office Tables 7 4,500 31,500 Other Tables 4 4,500 18,000 Computer Tables 4 2,000 8,000 Management Room Table 2 6,500 13,000 Reception Table 1 3,500 3,500 Executive Chairs 5 3,000 15,000 Conference Room Chairs 12 1,000 12,000 Accounts & Marketing Office Chairs 7 1,000 7,000 Computer Chairs 4 750 3,000 Management Room Chairs 1 1,500 1,500 Other Chairs 20 500 10,000 File Cabinets 45,000 Interior & Glass Work 200,000 Total 423,000

77..88 VVEEHHIICCLLEESS RREEQQUUIIRREEMMEENNTT

The schedule for Vehicles required for the Project is presented below:

items No. Cost (Rs.) Total Cost (Rs.)

Cars - Suzuki Cultus 2 600,000 1,200,000 Loader Shahzor 3 650,000 1,950,000 Motor Cycle 4 55,000 220,000 Cycle 2 3,500 7,000 Total 3,377,000

77..99 RRaaww MMaatteerriiaall RReeqquuiirreemmeenntt

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.


PREF-97/June, 2006/ Rev 1 27

77..1100 HHuummaann RReessoouurrccee RReeqquuiirreemmeennttss

Description No. of Shifts

Number of Employees

Per Month Salary

Annual Salary

PRODUCTION STAFFProduction Manager 1 1 40,000 480,000 Plant Engineer 1 1 20,000 240,000 Technical Supervisor 3 1 13,000 468,000 Machine operators 3 4 6,000 864,000 Quality Inspector 1 2 8,000 192,000 Skilled Labour 3 5 4,500 810,000 Un-skilled Labor ( helpers ) 3 8 4,000 1,152,000 Total Direct Labor 4,206,000 ADMINISTRATIVE COSTAdmin. Manager 1 1 35,000 420,000 Finance Manager 1 1 40,000 480,000 Accounts Officer 1 2 8,000 192,000 Purchase Officer 1 2 8,000 192,000 Operator/ Receptionist 1 1 5,000 60,000 Office Boys 1 2 4,000 96,000 Driver 1 4 4,500 216,000 Security Guard, Gate Keepers 3 2 4,500 324,000 Sweeper 1 2 2,500 60,000 Total Administrative Salaries 1,980,000 MARKETING & SELLING COSTMarketing Manager 1 1 40,000 480,000 Asst. Manager 1 1 18,000 216,000 Sales Officer 1 5 8,000 480,000 Total Marketing Salaries 1,176,000 Direct Production CostFactory Wages 4,206,000 *Other Benefits 420,600 Total 4,626,600 Administrative CostSalary 1,980,000 Other Benefits 198,000 Total 2,178,000 Marketing CostSalary 1,176,000 Other Benefits 117,600


PREF-97/June, 2006/ Rev 1 28

Total 1,293,600 * Other benefits include EOBI, Social Security, Gratuity, Medical and Other welfare expenses.

77..1111 UUttiilliittiieess RReeqquuiirreemmeenntt

1. Electricity2. Water3. Telephone4. Sui Gas


PREF-97/June, 2006/ Rev 1 29

88 FFIINNAANNCCIIAALL AANNAALLYYSSIISS

88..11 PPrroojjeecctt CCoosstt

Fixed Capital Expenditure RUPEES

Land 4,000,000 Buildings 7,422,500 Plant & Machinery 80,150,000 Fittings & Installations 819,600 Office Equipments 187,500 Furnitures & Fixtures 423,000 Vehicles 3,377,000

96,379,600 Working CapitalCurrent Assets:Stock in Trade 2,172,002 Stores & Spares 1,224,720 Advances, Deposits & Other Receivables 1,549,768 Accounts Receivable 8,388,493

13,334,983 Accrued & Other Charges 2,403,888 Workers' Profit Participation Fund 1,153,403 Sales Tax Payable 850,500 Provision for Taxation 5,478,662

9,886,453 Total Working Capital Reqd. 3,448,531

99,828,131 Financed By:Sponsors' Equity 49,914,065 Debt Financing 49,914,065

99,828,131


PREF-97/June, 2006/ Rev 1 30

88..22 PPrrooffiitt && LLoossss SSttaatteemmeenntt

Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year -VIII

Year - IX Year - X

RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES

Sales - Net of Sales Tax 68,040,000 75,014,100 82,703,045 91,180,107 100,526,068 110,829,990 122,190,064 134,714,546 143,608,669 150,789,103 Cost of Sales 37,467,028 41,427,637 43,938,936 46,774,305 50,760,221 54,622,280 58,965,282 63,858,131 69,090,009 74,788,468 Gross Profit 30,572,972 33,586,463 38,764,109 44,405,802 49,765,847 56,207,710 63,224,782 70,856,415 74,518,660 76,000,635 Operating Expenses:Administrative Expenses 4,878,614 4,966,511 5,361,084 5,813,513 6,325,991 6,901,651 7,544,513 8,259,468 8,929,413 9,605,599 Marketing & Selling Expenses

2,898,465 3,108,069 3,334,620 3,579,614 2,866,201 3,104,209 3,363,587 3,646,351 3,954,712 4,291,095

Total Op. Expenses 7,777,079 8,074,580 8,695,704 9,393,127 9,192,192 10,005,860 10,908,101 11,905,820 12,884,125 13,896,694

Operating Profit 22,795,892 25,511,883 30,068,404 35,012,675 40,573,655 46,201,851 52,316,681 58,950,595 61,634,535 62,103,941 Other Income 340,200 375,071 413,515 455,901 502,630 554,150 610,950 673,573 718,043 753,946 Total Op. Profit 23,136,092 25,886,953 30,481,920 35,468,576 41,076,285 46,756,001 52,927,632 59,624,168 62,352,578 62,857,886 Financial & Other ChargesMark up on Long Term Loans

- 6,638,571 5,240,977 3,843,383 2,445,789 1,048,195 - - - -

Bank Charges 68,040 75,014 82,703 91,180 100,526 110,830 122,190 134,715 143,609 150,789 Other Charges 1,153,403 958,668 1,257,912 1,576,701 1,926,499 2,279,849 2,640,272 2,974,473 3,110,448 3,135,355

1,221,443 7,672,253 6,581,592 5,511,264 4,472,814 3,438,874 2,762,462 3,109,187 3,254,057 3,286,144

Profit before Taxation 21,914,650 18,214,700 23,900,328 29,957,312 36,603,472 43,317,126 50,165,169 56,514,981 59,098,521 59,571,742 Taxation 5,478,662 4,553,675 5,975,082 7,489,328 9,150,868 10,829,282 12,541,292 14,128,745 14,774,630 14,892,936 Profit after Taxation 16,435,987 13,661,025 17,925,246 22,467,984 27,452,604 32,487,845 37,623,877 42,386,235 44,323,891 44,678,807 Accumulated Profits -brought forward

- 16,435,987 30,097,012 48,022,258 70,490,242 97,942,846 130,430,691 168,054,568 210,440,803 254,764,694

Accumulated Profits -carried to the Balance Sheet

16,435,987 30,097,012 48,022,258 70,490,242 97,942,846 130,430,691 168,054,568 210,440,803 254,764,694 299,443,501


PREF-97/June, 2006/ Rev 1 31

88..33 BBaallaannccee SShheeeett

Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X

RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES Tangible Fixed Assets 87,156,315 78,908,092 71,524,095 64,907,377 58,972,921 53,645,997 48,860,767 44,559,107 40,689,606 37,206,705

Long Term DepositsElectricity 3,417,120 3,417,120 3,417,120 3,417,120 3,417,120 3,417,120 3,417,120 3,417,120 3,417,120 3,417,120 Current Assets:Stock in Trade 2,172,002 2,401,602 2,547,185 2,711,554 2,942,622 3,166,509 3,418,277 3,701,921 4,005,218 4,335,563 Stores & Spares 1,224,720 1,350,254 1,488,655 1,641,242 1,809,469 1,994,940 2,199,421 2,424,862 2,584,956 2,714,204 Other Receivables 1,549,768 1,657,096 1,779,522 1,918,016 2,111,170 2,289,128 2,487,472 2,707,931 2,935,121 3,177,504 Accounts Receivable 8,388,493 9,248,314 10,196,266 11,241,383 12,393,625 13,663,971 15,064,528 16,608,643 17,705,178 18,590,437 Cash in Hand / Bank 30,992,152 43,948,868 59,303,487 78,436,072 101,845,177 129,633,457 172,239,912 219,158,590 266,922,944 314,239,897

44,327,136 58,606,133 75,315,115 95,948,267 121,102,063 150,748,005 195,409,611 244,601,946 294,153,417 343,057,605 134,900,571 140,931,345 150,256,331 164,272,764 183,492,104 207,811,122 247,687,498 292,578,174 338,260,144 383,681,430

Capital Introduced 49,914,065 49,914,065 49,914,065 49,914,065 49,914,065 49,914,065 49,914,065 49,914,065 49,914,065 49,914,065 Accumulated Profits 16,435,987 30,097,012 48,022,258 70,490,242 97,942,846 130,430,691 168,054,568 210,440,803 254,764,694 299,443,501

66,350,053 80,011,078 97,936,324 120,404,308 147,856,911 180,344,756 217,968,633 260,354,869 304,678,760 349,357,566 Long Term Loan 39,931,252 29,948,439 19,965,626 9,982,813 - - - - - -

Long Term Deposits(Cylinders) :

8,750,000 8,750,000 8,750,000 8,750,000 8,750,000 8,750,000 8,750,000 8,750,000 8,750,000 8,750,000

Current Liabilities:Long Term Loan 9,982,813 9,982,813 9,982,813 9,982,813 9,982,813 - - - - - Accrued Charges 2,403,888 2,644,409 2,908,997 3,200,058 3,520,241 3,872,462 4,259,924 4,686,155 5,151,197 5,660,710 Mark - up payable - 3,144,586 2,445,789 1,746,992 1,048,195 349,398 Workers' Profit Participation Fund

1,153,403 958,668 1,257,912 1,576,701 1,926,499 2,279,849 2,640,272 2,974,473 3,110,448 3,135,355

Sales Tax Payable 850,500 937,676 1,033,788 1,139,751 1,256,576 1,385,375 1,527,376 1,683,932 1,795,108 1,884,864 Provision for Taxation 5,478,662 4,553,675 5,975,082 7,489,328 9,150,868 10,829,282 12,541,292 14,128,745 14,774,630 14,892,936

19,869,266 22,221,828 23,604,381 25,135,643 26,885,192 18,716,366 20,968,865 23,473,305 24,831,384 25,573,864 134,900,571 140,931,345 150,256,331 164,272,764 183,492,104 207,811,122 247,687,498 292,578,174 338,260,144 383,681,430


PREF-97/June, 2006/ Rev 1 32

88..44 CCaasshh--ffllooww SSttaatteemmeenntt

Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X

RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES RUPEESProfit before Taxation 21,914,650 18,214,700 23,900,328 29,957,312 36,603,472 43,317,126 50,165,169 56,514,981 59,098,521 59,571,742Provision for WPPF 1,153,403 958,668 1,257,912 1,576,701 1,926,499 2,279,849 2,640,272 2,974,473 3,110,448 3,135,355Depreciation 9,223,285 8,248,223 7,383,997 6,616,719 5,934,456 5,326,924 4,785,230 4,301,659 3,869,501 3,482,901

32,291,337 27,421,591 32,542,237 38,150,731 44,464,426 50,923,899 57,590,671 63,791,112 66,078,471 66,189,998 Stock in Trade (2,172,002) (229,601) (145,583) (164,369) (231,068) (223,887) (251,768) (283,643) (303,297) (330,345)Stores & Spares (1,224,720) (125,534) (138,401) (152,587) (168,227) (185,471) (204,481) (225,441) (160,094) (129,248)Advances, Deposits & Other Receivables

(1,549,768) (107,327) (122,427) (138,494) (193,154) (177,958) (198,344) (220,458) (227,190) (242,382)

Accounts Receivable (8,388,493) (859,821) (947,952) (1,045,117) (1,152,242) (1,270,347) (1,400,557) (1,544,114) (1,096,536) (885,259)Accrued Charges 2,403,888 240,522 264,587 291,061 320,184 352,220 387,463 426,231 465,041 509,513 Mark - up payable - 3,144,586 (698,797) (698,797) (698,797) (698,797) (349,398) 0 0 0 Sales Tax Payable 850,500 87,176 96,112 105,963 116,825 128,799 142,001 156,556 111,177 89,755

(10,080,596) 2,150,002 (1,692,460) (1,802,340) (2,006,479) (2,075,440) (1,875,086) (1,690,870) (1,210,900) (987,966)Cash -other SourcesSponsors' Equity 49,914,065 - - - - - - - - - Debt Financing 49,914,065Long Term Deposits : 8,750,000 - - - - - - - - -

108,578,131 - - - - - - - - - Total Sources 130,788,872 29,571,593 30,849,776 36,348,391 42,457,947 48,848,459 55,715,586 62,100,243 64,867,571 65,202,032Applications:Fixed Assets 96,379,600 - - - - - - - - - WPPF Paid - 1,153,403 958,668 1,257,912 1,576,701 1,926,499 2,279,849 2,640,272 2,974,473 3,110,448 Long Term Deposits 3,417,120 Re -Payment of Loan - 9,982,813 9,982,813 9,982,813 9,982,813 9,982,813 - - - - Taxation - 5,478,662 4,553,675 5,975,082 7,489,328 9,150,868 10,829,282 12,541,292 14,128,745 14,774,630

99,796,720 16,614,878 15,495,157 17,215,807 19,048,842 21,060,179 13,109,130 15,181,564 17,103,218 17,885,079 Cash 30,992,152 12,956,715 15,354,620 19,132,584 23,409,105 27,788,280 42,606,455 46,918,678 47,764,354 47,316,954


PREF-97/June, 2006/ Rev 1 33

Increase/(Decrease)Opening Balance - 30,992,152 43,948,868 59,303,487 78,436,072 101,845,177 129,633,457 172,239,912 219,158,590 266,922,944Closing Balance 30,992,152 43,948,868 59,303,487 78,436,072 101,845,177 129,633,457 172,239,912 219,158,590 266,922,944 314,239,897


PREF-97/June, 2006/ Rev 1 34

99 KKEEYY AASSSSUUMMPPTTIIOONNSS

Projected Life of The Project in Years 10Sponsors' Equity 50%Debt Financing 50%Annual Mark Up Rate (Short Term & Long Term) 14%Debt Tenure in Years 5General Inflation Rate 5%Operating AssumptionsTotal No. of Days in One Year 365Total No. of Months in One Year 12No of Working Days in One Year 300No. of Shift 3Working Hours per shift 8Expected Production Capacity - 1st Year 70%Expected Production Growth Rate 5%Depreciation Rate AssumptionsLand 0%Buildings 5% of the Written Down ValuePlant & Machinery 10% of the Written Down ValueFittings & Installations 10% of the Written Down ValueOffice Equipments 20% of the Written Down ValueFurniture & Fixtures 10% of the Written Down ValueVehicles 20% of the Written Down ValueLong Term Security DepositsElectricity 2 months billLong Term Security Deposits Against CylindersDeposit received against Cylinders 50% of the Cost of CylinderNo. of Cylinders in respect of which security is received 50% of the Total Cylinders

purchasedWorking Capital Turnover AssumptionsFinished Goods 20Stores and Spares 120 Days Stores & Spares

ConsumptionAccounts Receivable - credit policy 45 DaysAccounts Payable - Expenses 30 Days of Total Annual

ExpenditureAdvances & PrepaymentsAdvances to Staff 20% of the one month's salary


PREF-97/June, 2006/ Rev 1 35

Loans to Staff 10% of the Total annual salaryAdvances against expenses 5% of the traveling, entertainment,

repair, vehicle running, sale promotion and other general

Advance Income TaxElectricity

2,000 per month

Telephone 6 sets 300

per month

Prepaid Insurance 90 Days Insurance CostLong Term LoanTerm 5 Years Total Installments 10 bi-annually Installments 2 per yearMarkup 14% or 7.0% (arrear) Sales Tax Payable 1 month's Annual Sales TaxRevenue Assumptions - Sale price & Production MixPer hour production in cubic meters 500 Per Day Cylinder Filling 2,000

Particulars Ex-Factory Price excluding sales tax

Sale price of Oxygen per Cubic Meter 27Rate of Sales Tax 15% Cost of SalesSalaries & Wages Section 8.11 of this pre-feasibility reportOther Benefits & Perquisites 10% of the Salaries & WagesInflation Rate for Salaries & Wages 10%Stores & spares Consumed 4.5% of the TurnoverChemicals Consumed 0.5% of the TurnoverOils & Lubricants Consumed 0.5% of the TurnoverRepair & MaintenanceMachinery 2% of the Cost.Vehicles 5% of the Cost.Building 3% of the Cost.increase in rates of repair 50% after year 4Machinery & equipment insurance rate 1% of Written down value of the Machinery &

Equipments.Other Overhead Charges 1% of Total Cost of Goods Manufactured

excluding overhead cost.Administrative Expense AssumptionsSalaries & Wages Section 8.11 of this pre-feasibility report


PREF-97/June, 2006/ Rev 1 36

Inflation Rate for Salaries & Wages 10%Traveling & Conveyance 0.5% of the TurnoverPrinting & Stationary .4% of the TurnoverConsultancy ChargesAudit Fee 75,000 RupeeOut of Pocket Expenses 10,000 RupeePolicy Manual

( 0 cost from 1st Year onward) 250,000 Rupee

Income Tax & Sales Tax Consultancy 50,000 RupeeInflation rate of Consultancy charges 10%Entertainment .5% of the TurnoverTelephone Fax and Postage .65% of the TurnoverUtility Charges .3% of the TurnoverOffice vehicles insurance rate 4% of Written down valueRepair & Maintenance 10% of the Cost.Miscellaneous Expenses .15% of the TurnoverMarketing Expenses AssumptionsSalaries & Wages Section 8.11 of this pre-feasibility

reportInflation Rate for Salaries & Wages 10%Vehicle Running Expenses

Consumption per ltr. Rate per liter/kg Traveling per day Annual Tours2 Cars - Suzuki

Cultus18 Km per kg CNG 32 50 300

3 Loader Shahzor

6 km per liter

Diesel 38 120 150

4 Motor Cycle 50 Km per kg Petrol 58.4 80 300Vehicle Repair 15% of CostPromotional Expenses Per unitbook lets 25 Sign Boards 2,000 Newspaper Advertisements 20,000 expenses incurred up to 4th YearOther Income - includes profit on Bank deposits, and scrap of spare parts & salt scrape

0.5% of turnover

Bank Charges .1% of turnoverOther Charges - WPPF 5% of the profit

before taxIncome Tax Rate 25% of Total annual

Turnover