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Feasibility Study
OOXXYYGGEENN GGAASS PPRROODDUUCCIINNGG PPLLAANNTT
Small and Medium Enterprise Development AuthorityGovernment of Pakistan
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
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
Pre-feasibility Study Oxygen Gas Producing Plant
PREF-97/June, 2006/ Rev 1 4
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
Pre-feasibility Study Oxygen Gas Producing Plant
PREF-97/June, 2006/ Rev 1 5
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.
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.
Pre-feasibility Study Oxygen Gas Producing Plant
PREF-97/June, 2006/ Rev 1 6
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.
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.
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:-
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Table 1: Elements of Atmospheric AirElement Percentage Composition
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
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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.
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.
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
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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
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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.
Pre-feasibility Study Oxygen Gas Producing Plant
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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.
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.
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Final separation of the two fractions is achieved in the upper column. Both the poor liquid are carried into the upper column by two Expansion Valves and the pressure drops from 4.5/5.0 Kgs. /Cm2 in the lower column to 0.5 Kgs. /Cm2 in the upper column. The rich liquid enters the middle of the Upper column and as it flows down, Nitrogen evaporates and Oxygen continues as liquid. The Liquid Nitrogen (Poor Liquid) enters the top of the column and as it is flows down the column, it comes in contact with any evaporating Oxygen and condenses the same into liquid, while the Nitrogen itself becomes a Gas as it is more volatile. This process takes place in each Gas as it is more volatile. This process takes place in each tray. The entire gaseous Nitrogen is piped out from the top of the column through Heat Exchangers.
Similarly the Liquid Oxygen at the bottom of the column is carried away to a Liquid Oxygen Pump from which it is compressed and again passed through the Heat Exchangers into the Gas Cylinders in the cylinder filling station. As the Liquid Oxygen travels through the Heat Exchangers, it evaporates into gaseous oxygen filling the cylinder with gas and giving up its cold to the incoming air Generally the purity of Oxygen will be 99.5% and Nitrogen about 96%, when the plant is operated exclusively for oxygen production.
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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77 TTEECCHHNNOOLLOOGGYY AANNDD PPRROOCCEESSSSEESS
77..11 MMAACCHHIINNEERRYY RREEQQUUIIRREEMMEENNTT
Following table shows the plant & machinery requirement for setting up a Oxygen Manufacturing Unit.
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
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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.
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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
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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
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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
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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
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.
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
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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
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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