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 REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

PUNJAB SINDH NWFP BALOCHISTAN

5TH Floor, Bahria Ground Floor Bungalow No. 15-A

8th Floor LDA Plaza, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Egerton Road, Lahore. Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (042) 6304926-7 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
helpdesk@smeda.org.pk Helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk

June, 2006
Pre-feasibility Study Oxygen Gas Producing Plant

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 ................................................................................................................ 5
3.1.1 Strengths ..................................................................................................5
3.1.2 Weaknesses..............................................................................................5
3.1.3 Opportunities ...........................................................................................5
3.1.4 Threats .....................................................................................................6
3.2 KEY SUCCESS FACTORS / PRACTICAL TIPS FOR SUCCESS .......................................... 6
3.2.1 Sales promotion........................................................................................6
3.2.2 Other Success Factors ..............................................................................6
4 PROJECT PROFILE.................................................................................................................... 6
4.1 OPPORTUNITY RATIONALE.............................................................................................. 6
4.2 PROJECT BRIEF................................................................................................................... 7
4.3 PROPOSED BUSINESS LEGAL STATUS ............................................................................ 8
4.4 MARKET ENTRY TIME....................................................................................................... 8
4.5 PROPOSED LOCATION....................................................................................................... 8
4.6 PROJECT CAPACITY........................................................................................................... 8
4.7 PROJECT INVESTMENT ................................................................................................... 12
4.8 PROJECT PARAMETERS .................................................................................................. 12
5 MARKET INFORMATION ....................................................................................................... 12
5.1 OXYGEN GAS PRODUCERS IN PAKISTAN..................................................................... 12
6 PRODUCT................................................................................................................................... 13
6.1 PRODUCTION PROCESS FLOW ....................................................................................... 13
6.1.1 Process SKID .........................................................................................15
6.1.2 Expansion Engine...................................................................................19
6.1.3 Cylinder Filling Manifold/Station...........................................................21
7 TECHNOLOGY AND PROCESSES.......................................................................................... 22
7.1 MACHINERY REQUIREMENT ......................................................................................... 22
7.2 LAND REQUIREMENT ............................................................................................................ 24
7.3 BUILDING REQUIREMENT ...................................................................................................... 24
7.4 MACHINERY REQUIREMENT .................................................................................................. 25
7.5 FITTINGS & INSTALLATIONS REQUIREMENT ............................................................. 25
7.6 OFFICE EQUIPMENTS REQUIREMENT........................................................................... 25
7.7 FURNITURE & FIXTURES REQUIREMENT..................................................................... 26
7.8 VEHICLES REQUIREMENT .............................................................................................. 26
7.9 RAW MATERIAL REQUIREMENT ............................................................................................. 26
7.10 HUMAN RESOURCE REQUIREMENTS....................................................................................... 27
7.11 UTILITIES REQUIREMENT ...................................................................................................... 28
8 FINANCIAL ANALYSIS............................................................................................................ 29
8.1 PROJECT COST ...................................................................................................................... 29
8.2 PROFIT & LOSS STATEMENT .................................................................................................. 30
8.3 BALANCE SHEET ................................................................................................................... 31
8.4 CASH-FLOW STATEMENT ....................................................................................................... 32
9 KEY ASSUMPTIONS................................................................................................................. 34

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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

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Pre-feasibility Study Oxygen Gas Producing Plant

1 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 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.

2 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 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

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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.

3 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
3.1.1 Strengths
 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
3.1.2 Weaknesses
 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.
3.1.3 Opportunities
 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.

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3.1.4 Threats
 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.
3. 2 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.

4 PROJECT PROFILE
4. 1 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:-

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Table 1: Elements of Atmospheric Air

Element Percentage Composition Boiling Point at
by volume atmospheric
Pressure
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.
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

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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 pre-
feasibility 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 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.

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SMALL CAPACITY

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

1. Capacity: 25CuM/Hr. 30 40 50
Oxygen 155 bar uM/Hr. um/Hr. Cum/Hr.
Pressure*(upto) 155 bar 155 bar 155 bar
Nitrogen** (as 80 CuM/Hr 100 150 200 um/Hr.
second product) uM/Hr um/Hr
2. Purity: Oxygen 99.6% 99.6% 99.6% 99.6%
Nitrogen 96%-96.6% 96%- 96%- 96%-
(Optional upto 96.6% 96.6% 96.6%
99.999%)
3. Power 55 KW 70 KW 80 KW 95 KW
Connected
4. Power 40 KW 45 KW 60 KW 70 KW
Consumed
(abt.)
5. Power Supply 415 Volts 415 Volts 415 Volts 415 Volts
6. Air Capacity 150 200 200 300
Cum/Hr Cum/Hr. Cum/Hr. Cum/Hr
7. Starting 60 55 55 55
Pressure Kg/sq.cm.
8. Working 50 40Kg/sq.c 40Kg/sq.c 40Kg/sq.c
Pressure (abt) Kg/sq.cm. m m m
9. Starting Time 8 Hours 8 Hours 7 Hours 7 Hours
(After Defrost)
10. Starting Time 40 Mts. 40 Mts. 40 Mts. 40 Mts.
(After Tripping)
11 Areas Required 6M x 8 M 6 M x 10 8Mx 8 M x 12
. M 10M M
12 Assembly 7M 7M 7.5 M 7.5 M
. Height
13 Weight (About) 14 Tons 16 Tons 18 Tons 19 Tons
.
14 Air Separation Type- Type- Type Type
. Column Boschi Boschi Boschi Boschi

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MEDIUM CAPACITY

S.No Model UB-60 UB-80 UB-100 UB-150

.
1. Capacity: Oxygen 60 CuM/Hr. 80 CuM/Hr. 100 Cum/Hr. 150 Cum/Hr.
Pressure*(upto 155 bar 155 bar 155 bar 155 bar
Nitrogen** (as 200 250 CuM/Hr. 300 Cum/Hr 500 Cum/Hr.
second product) CuM/Hr
2. Purity *** 99.6% 99.6% 99.6% 99.6%
Oxygen
Nitrogen 96%- 96%- 96%- 96%-
(Optional upto 99.99% 99.99% 99.99% 99.99%
99.999%)
3. Power Connected 110 KW 130 KW 150 KW 250 KW
4. Power Consumed 88 KW 95 KW 105 KW 165 KW
(abt.)
5. Power Supply 415 415 Volts 415 415 Volts
Volts Volts
6. Air Capacity 400 500 600 900
Cum/Hr Cum/Hr Cum/Hr Cum/Hr
7. Starting 45 45 45 45
Pressure Kg/sq.c Kg/sq.cm Kg/sq.c Kg/sq.cm
m.. . m. .
8. Working Pressure 50 30- 30- 30-
(abt) Kg/sq.cm. 40Kg/sq.cm 40Kg/sq.c 40Kg/sq.c
m m
9. Starting Time 8 Hours 7Hours 6 Hours 6 Hours
(After Defrost)
10. Starting Time 40 Mts. 30 Mts. 20 Mts. 20 Mts.
(After Tripping)
11. Areas Required 12M x 15 12M x 15 14 M x 14M x 15
M M 15M 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 Type- Type- Type- Type-
Column Boschi Boschi Boschi Boschi

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HIGHER CAPACITY

S.No Model UB-200 UB-300 UB-400 UB-500

.
1. Capacity: 200 300 400 500
Oxygen CuM/Hr. CuM/Hr. Cum/Hr. Cum/Hr.
Pressure*
Nitrogen** (as 800 1200 1400 2000
second product) CuM/Hr. CuM/Hr. Cum/Hr. Cum/Hr.
2. Purity 99.6% 99.6% 99.6% 99.6%
(Optional upto
99.999%)
Nitrogen 96%- 96%- 96%- 96%-
(Optional upto 99.99% 99.99% 99.99% 99.99%
99.999%)
3. Power Connected 300 KW 400 KW 600 KW 750 KW
4. Power 220 KW 330KW 400 KW 500 KW
Consumed
(abt.)
5. Power Supply 415 Volts 415 Volts 415 Volts 415 Volts
6. Air Capacity 1200 Cum/Hr 1800 Cum/Hr. 2400 3000 Cum/Hr.
Cum/Hr.
7. Starting 45 45 Kg/sq.cm. 45 45 Kg/sq.cm.
Pressure Kg/sq.cm. Kg/sq.cm.
8. Working 36Kg/sq.cm 36Kg/sq.cm 30Kg/sq.c 30Kg/sq.c
Pressure (abt) . . m m
9. Starting Time 6Hours 5Hours 5Hours 5Hours
(After Defrost)
10. Starting Time 20 Mts. 20 Mts. 20 Mts. 20 Mts.
(After Tripping)
11. Areas Required 14M x 15 M 15M x 16 15M x 18M x
M 18M 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 Type- Type- Type-Boschi Type-Boschi
Column Boschi Boschi

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4. 7 PROJECT INVESTMENT

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

Table 2: Project Cost

Capital Investment 96,379,600
Working Capital Requirement 3,448,531
Total Investment ________________99,828,131

4. 8 PROJECT PARAMETERS

Capacity Human Resource Technology/Machinery Location

500 cubic meters 66 imported Raiwind Road,
per hour Lahore
Financial Summary
Project Cost IRR NPV (Rs.) Payback period
Rs. 99,828,131 26.76 % 31,335,995 4.06 yrs

5 MARKET INFORMATION
5. 1 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 ADDRESS
No.
1- Fine Gas Company (Pvt.) Ltd. Kot Lakh Pat, Lahore
2- BOC Gas Limited Shalimar Link Road, Lahore.
3- Medi Gas (Pvt.) Ltd. Kot Lakh Pat, Lahore

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6 PRODUCT
6. 1 PRODUCTION PROCESS FLOW

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EQUIPMENT SCHEDULE LEGENDS

Serial # Description CA Air
1 Suction Filter CWS Cooling Water Supply
2 Stage Air Compressor CWR Cooling Water Return
3 After cooler O2 Oxygen
4 Moisture separator N2 Nitrogen
5 Chilling Unit PL Poor Liquid
6 Refrigeration Unit RL Rich Liquid
7 Oil Absorber  Thermocouple
8a Molecular Sieve Battery
8b Molecular Sieve Battery Notes
9 Reactivation Heater ----- Oxygen
10 Defrost Air Heater ----- Air
11 Dust Filter ----- Defrost air
12 Outer Shell ----- Nitrogen
13 Heat Exchanger No 1 ----- Rich Liquid
14 Expansion Engine ----- Poor Liquid
15 Liquifier  Valve
16 Bottom Column  Expansion valve
17 Condenser  Temperature Indicator
18 Top Column
19 Sub cooler
20 Liquid Oxygen Pump
21 Filling Manifold

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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Pre-feasibility Study Oxygen Gas Producing Plant

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 TECHNOLOGY AND PROCESSES

7. 1 MACHINERY REQUIREMENT

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 1

Air Compressor Imported 1
Process skidof oxygen Sall Imported 1
Expansion Engine Imported 1
Air separation unit Imported 1
High pressure filling manifold of Imported Set
oxygen
Liquid oxygen pump Imported 1
Cooling Tower of Oxygen Imported 1
Electrical Panel of oxygen Imported 1
Water softener of oxygen Imported 1

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

Pak Rupee Conversion
Pak Rupees

The Plant & Machinery described above comprise following components:

SR. QTY ITEM DESCRIPTION

NO.
1 One SUCTION FILTER A high efficiency filter supplied with the
compressor
2 One 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.
3 One 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 Oxygen Gas Producing Plant

neatly mounted on 3) Moisture separator

skid /platform 4) Chilling unit with freon unit
complete with 5) Oil absorber filled with alumina
interconnecting 6) Molecular sieve battery on skid (Zeochem,
piping and ready Switzerland)
for installation of 7) Defrost heater
Oxygen Plant is 8) Gas/Air/water line as per standard layout on
optional. 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.
4 One EXPANSION Complete with motor/starter/ starter shall be of
ENGINE OF Siemens /ABB/ with hydraulic valve control,
OXYGEN 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 (Air separation column –cold box) consists of
SEPARATION outlet steel casing, main heat exchanger, liquifier,
UNIT (COLD bottom column, top column, condenser, sub
BOX)OF cooler, liquid oxygen and nitrogen filter. Cooling
OXYGEN 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 For filling high-pressure Oxygen gas to
FILLING Cylinders. It consists of main High Pressure
MANIFOLDOF Isolation Valve and Pigtail connection with
OXYGEN individual Valve with Pressure Gauge and Safety
Relief Valve.
7 One LIQUID OXYGEN Horizontal single acting pump with Piston, Piston
PUMP OF Rings, Safety Devices, Non-Return Valves with
OXYGEN 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 Induced Draft-Rotary Sprinkler type with
TOWER OF Aluminium Casting Fan, FRP Body with suitable
OXYGEN 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.

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9 One ELECTRICAL Electrical Panel for supply of electricity to

PANEL OF individual motors. It has a bank of on/off
OXYGEN switches and fuses. This enables the Operator to
control all the Motors from one point.
10 One WATER Made of HDPE having single mutiport valve for
SOFTENER OF different plant valve for different operations.
OXYGEN 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

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).

Total Land Cost

Items Total Kanals Cost per Kanal
in (Rs.)
Total Land Cost 4 1,000,000 4,000,000

i. including acquisition & documentation charges

7. 3 Building Requirement

Building & Civil works Space Construction Cost Total Cost

Req. Sq. Per Sq. Ft.
ft Rupees Rupees
Production 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 2,200 100 220,000
Plot Area
Grounds & Tracks - - Open Plot 4,500 125 562,500
Area
Total Space Requirement (sq.ft) 18,000 7,422,500
& Infrastructure Cost

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7. 4 Machinery Requirement

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

Machine Description Make Qty. Cost ($) Conversion Total Cost

Rate 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

7. 5 FITTINGS & INSTALLATIONS REQUIREMENT

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

Items Qty. Cost per unit Total Cost

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 4 15,000 60,000
150
TOTAL 819,600

7. 6 OFFICE EQUIPMENTS REQUIREMENT

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:oxygen@universalboschi.com;oxygenub@vsnl.net
Web: www.oxygen-plants.com; www.air-separation-plants.com

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7. 7 FURNITURE & FIXTURES REQUIREMENT

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

Items Qty. Cost per unit Total Cost

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

7. 8 VEHICLES REQUIREMENT

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

7. 9 Raw Material Requirement

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.

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7.10 Human Resource Requirements

Description No. of Number of Per Month Annual

Shifts Employees Salary Salary
PRODUCTION STAFF
Production 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 COST
Admin. 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 COST
Marketing 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 Cost
Factory Wages 4,206,000
*Other Benefits 420,600
Total 4,626,600
Administrative Cost
Salary 1,980,000
Other Benefits 198,000
Total 2,178,000
Marketing Cost
Salary 1,176,000
Other Benefits 117,600

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Pre-feasibility Study Oxygen Gas Producing Plant

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

7.11 Utilities Requirement

1. Electricity
2. Water
3. Telephone
4. Sui Gas

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8 FINANCIAL ANALYSIS
8. 1 Project Cost

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 Capital
Current 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

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8. 2 Profit & Loss Statement

Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - Year - IX Year - X
VIII
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 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
Expenses
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
Charges
Mark up on Long Term - 6,638,571 5,240,977 3,843,383 2,445,789 1,048,195 - - - -
Loans
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 - - 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
brought forward
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
carried to the Balance
Sheet

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8. 3 Balance Sheet
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 Deposits
Electricity 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 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
(Cylinders) :
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 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
Participation Fund
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

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8. 4 Cash-flow Statement
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
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
Provision 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 3,135,355
Depreciation 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 & (1,549,768) (107,327) (122,427) (138,494) (193,154) (177,958) (198,344) (220,458) (227,190) (242,382)
Other Receivables
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 Sources
Sponsors' Equity 49,914,065 - - - - - - - - -
Debt Financing 49,914,065
Long 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 65,202,032
Applications:
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

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

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9 KEY ASSUMPTIONS

Projected Life of The Project in Years 10

Sponsors' Equity 50%
Debt Financing 50%
Annual Mark Up Rate (Short Term & Long Term) 14%
Debt Tenure in Years 5
General Inflation Rate 5%
Operating Assumptions
Total No. of Days in One Year 365
Total No. of Months in One Year 12
No of Working Days in One Year 300
No. of Shift 3
Working Hours per shift 8
Expected Production Capacity - 1st Year 70%
Expected Production Growth Rate 5%
Depreciation Rate Assumptions
Land 0%
Buildings 5% of the Written Down Value
Plant & Machinery 10% of the Written Down Value
Fittings & Installations 10% of the Written Down Value
Office Equipments 20% of the Written Down Value
Furniture & Fixtures 10% of the Written Down Value
Vehicles 20% of the Written Down Value
Long Term Security Deposits
Electricity 2 months bill
Long Term Security Deposits Against Cylinders
Deposit received against Cylinders 50% of the Cost of Cylinder
No. of Cylinders in respect of which security is received 50% of the Total Cylinders
purchased
Working Capital Turnover Assumptions
Finished Goods 20
Stores and Spares 120 Days Stores & Spares
Consumption
Accounts Receivable - credit policy 45 Days
Accounts Payable - Expenses 30 Days of Total Annual
Expenditure
Advances & Prepayments
Advances to Staff 20% of the one month's salary

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Pre-feasibility Study Oxygen Gas Producing Plant

Loans to Staff 10% of the Total annual salary

Advances against expenses 5% of the traveling, entertainment,
repair, vehicle running, sale
promotion and other general
Advance Income Tax
Electricity per month
2,000
Telephone 6 sets per month
300
Prepaid Insurance 90 Days Insurance Cost
Long Term Loan
Term 5 Years
Total Installments 10 bi-annually
Installments 2 per year
Markup 14% or 7.0% (arrear)
Sales Tax Payable 1 month's Annual Sales Tax
Revenue Assumptions - Sale price & Production Mix
Per 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 27
Rate of Sales Tax 15%
Cost of Sales
Salaries & Wages Section 8.11 of this pre-feasibility report
Other Benefits & Perquisites 10% of the Salaries & Wages
Inflation Rate for Salaries & Wages 10%
Stores & spares Consumed 4.5% of the Turnover
Chemicals Consumed 0.5% of the Turnover
Oils & Lubricants Consumed 0.5% of the Turnover
Repair & Maintenance
Machinery 2%of the Cost.
Vehicles 5%of the Cost.
Building 3%of the Cost.
increase in rates of repair 50%after year 4
Machinery & 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 Assumptions
Salaries & Wages Section 8.11 of this pre-feasibility report

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Pre-feasibility Study Oxygen Gas Producing Plant

Inflation Rate for Salaries & Wages 10%

Traveling & Conveyance 0.5% of the Turnover
Printing & Stationary .4% of the Turnover
Consultancy Charges
Audit Fee 75,000 Rupee
Out of Pocket Expenses 10,000 Rupee
Policy ( 0 cost from 1st Year onward) 250,000 Rupee
Manual
Income Tax & Sales Tax Consultancy 50,000 Rupee
Inflation rate of Consultancy charges 10%
Entertainment .5% of the Turnover
Telephone Fax and Postage .65% of the Turnover
Utility Charges .3% of the Turnover
Office vehicles insurance rate 4% of Written down value
Repair & Maintenance 10% of the Cost.
Miscellaneous Expenses .15% of the Turnover
Marketing Expenses Assumptions
Salaries & Wages Section 8.11 of this pre-feasibility
report
Inflation Rate for Salaries & Wages 10%
Vehicle Running Expenses
Consumption per ltr. Rate per liter/kg Traveling per day Annual Tours
2 Cars - Suzuki 18 Km per kg CNG 32 50 300
Cultus
3 Loader 6 km per Diesel 38 120 150
Shahzor liter
4 Motor Cycle 50 Km per kg Petrol 58.4 80 300
Vehicle Repair 15% of Cost
Promotional Expenses Per unit
book lets 25
Sign Boards 2,000
Newspaper Advertisements 20,000
expenses incurred up to 4th Year
Other Income - includes profit on Bank deposits, and 0.5% of turnover
scrap of spare parts & salt scrape
Bank Charges .1% of turnover
Other Charges - WPPF 5% of the profit
before tax
Income Tax Rate 25% of Total annual
Turnover

PREF-97/June, 2006/ Rev 1 36