SMEDA CNG Filling Station by Aizan_Umar

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									                                Pre-Feasibility Study


                         CNG FILLING STATION




          Small and Medium Enterprise Development Authority
                                         Government of Pakistan
                                               www.smeda.org.pk
                                                      HEAD OFFICE
                                       6th Floor, LDA Plaza, Egerton Road, Lahore
                                 Tel: (042) 111-111-456, Fax: (042) 6304926, 6304927
                                                  helpdesk@smeda.org.pk

    REGIONAL OFFICE               REGIONAL OFFICE               REGIONAL OFFICE             REGIONAL OFFICE
        PUNJAB                         SINDH                         NWFP                     BALOCHISTAN

8th Floor, LDA Plaza, Egerton        5TH Floor, Bahria                Ground Floor            Bungalow No. 15-A
           Road, Lahore.        Complex II, M.T. Khan Road,        State Life Building     Chaman Housing Scheme
     Tel: (042) 111-111-456               Karachi.                The Mall, Peshawar.           Airport Road, Quetta.
      Fax: (042) 6370474          Tel: (021) 111-111-456         Tel: (091) 9213046-47     Tel: (081) 831623, 831702
     helpdesk@smeda.org.pk          Fax: (021) 5610572             Fax: (091) 286908           Fax: (081) 831922
                                helpdesk-khi@smeda.org.pk     helpdesk-pew@smeda.org.pk   helpdesk-qta@smeda.org.pk




                                                  May, 2005
Pre-Feasibility Study                                                                                        CNG Filling Station


1      INTRODUCTION TO SMEDA................................................................................. 2
2      Purpose of the document............................................................................................ 2
3      Crucial Factors & Steps in decision making for investment........................................ 3
    3.1     Key Success Factors........................................................................................... 3
    3.2     Opportunities ..................................................................................................... 3
    3.3     Threats ............................................................................................................... 3
4      Project Profile............................................................................................................ 3
    4.1     Opportunity Rationale ........................................................................................ 3
    4.2     Project Brief....................................................................................................... 3
    4.3     Introduction to CNG .......................................................................................... 4
    4.4     Proposed Business Legal Status ......................................................................... 4
    4.5     Project Cost........................................................................................................ 4
    4.6     Viable Economic Size ........................................................................................ 5
    4.7     Proposed Capacity.............................................................................................. 5
    4.8     Proposed Location.............................................................................................. 5
    4.9     CNG Policy........................................................................................................ 5
    4.10 CNG Consultancy Services ................................................................................ 6
5      Market Analysis......................................................................................................... 6
    5.1     Target Customers ............................................................................................... 6
    5.2     Market Demand ................................................................................................. 6
    5.3     Market Supply ................................................................................................... 6
    5.4     Industry Growth................................................................................................. 6
6      REGULATIONS, Licenses and incentives................................................................. 7
    6.1     License............................................................................................................... 7
    6.2     Certificate (by HDIP) ......................................................................................... 7
    6.3     NOCs................................................................................................................. 7
    6.4     Incentives........................................................................................................... 8
       6.4.1      Sales Tax.................................................................................................... 8
       6.4.2      Custom Duty .............................................................................................. 8
    6.5      Regulatory Requirements ................................................................................... 8
       6.5.1      Quality Certificate ...................................................................................... 8
       6.5.2      List of Equipment....................................................................................... 8
       6.5.3      Income Tax on the Import of CNG Equipment ........................................... 8
    6.6      Income Tax ........................................................................................................ 8
7      The Project CONCEPT.............................................................................................. 9
    7.1      Project Cost........................................................................................................ 9
    7.2      Project Financing ............................................................................................... 9
    7.3      Project Details.................................................................................................... 9
       7.3.1      Location ..................................................................................................... 9
       7.3.2      Land........................................................................................................... 9
       7.3.3      Building ................................................................................................... 10
       7.3.4      Material Inputs ......................................................................................... 11
       7.3.5      CNG Equipment....................................................................................... 11
       7.3.6      Suppliers .................................................................................................. 12
       7.3.7      Stores & Spares ........................................................................................ 13
       7.3.8      Furniture and Fixtures .............................................................................. 13
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    7.3.9        Office Equipment ..................................................................................... 13
  7.4     Manpower Requirement ................................................................................... 13
8    Basis for Financial Projections................................................................................. 14
  8.1      Inflation Rate ................................................................................................... 14
  8.2      Revenue Assumptions ...................................................................................... 14
     8.2.1       No. of Cars ............................................................................................... 14
     8.2.2       Gas per Vehicle ........................................................................................ 14
  8.3      Depreciation on Assets..................................................................................... 15
     8.3.1       Accounting Profit ..................................................................................... 15
     8.3.2       Taxable Profit........................................................................................... 15
  8.4      First Year Allowance ....................................................................................... 15
  8.5      Multiple Shift Allowance ................................................................................. 15
  8.6      Amortization of Preliminary Expenses ............................................................. 16
  8.7      Working Capital............................................................................................... 16
     8.7.1       Accounts Receivables............................................................................... 16
     8.7.2       Advances to Employees............................................................................ 16
    8.7.3        Accrued Utilities and Power Expenses .................................................. 16
    8.7.4        Accounts Payable ..................................................................................... 16
     8.7.5       Sales Tax Payable..................................................................................... 16
  8.8      Sales Tax ......................................................................................................... 16
  8.9      Ratio/Financial Analysis .................................................................................. 16
  8.10 Alternative Investment Opportunity ................................................................. 17
9    Financial Analysis ................................................................................................... 18
  9.1      Project Costs .................................................................................................... 18
  9.2      Projected Income Statement ............................................................................. 19
  9.3      Projected Balance Sheet ................................................................................... 20
  9.4      Projected Cash Flow Statement ........................................................................ 21
  9.5      Revenues.......................................................................................................... 22
  9.6      Cost of Sales .................................................................................................... 23
  9.7      Working Capital............................................................................................... 24
  9.8      Ratio Analysis.................................................................................................. 25
10      Requirement for the License ................................................................................ 26




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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-34
 Revision                 2
 Prepared by              SMEDA-Punjab
 Issue Date               May, 2002
 Revised on               May, 2005
 Issued by                Library Officer




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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 the pre-feasibility study is primarily to facilitate potential entrepreneurs to
facilitate investment and provide an overview about CNG Filling Station business. The
project pre-feasibility may form the basis of an important investment decision and in order
to serve this objective, the document covers various aspects of the business concept
development, start-up, production, marketing, and finance and business management. The
document also provides sectoral information, brief on government policies and
international scenario, which have some bearing on the project itself.
This particular pre-feasibility is regarding “CNG Filling Station” which comes under
“Petroleum” sector.




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3    CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT

3.1 Key Success Factors
Following factors are the key in making this project profitable:
 Location of the project will play a pivotal role in the successful running of the CNG
    station. The daily turnover of the cars largely depends on this important factor.
 Selection of proper equipment is another key for carrying out the successful operations
of the proposed project.

3.2 Opportunities
The proposed project would have a number of competitive advantages:
 The project will provide cheaper fuel to its customers compared to the petroleum
  products which are already on the higher side.
 Government has exempted the imposition of sales tax and custom duties on the import
  of CNG kits and CNG plant and equipment,
 HDIP, a non-profitable organization working under the umbrella of Ministry of
  Petroleum and Natural Resources, provides consultancy services to the interested
  parties for setting up the CNG filling stations.

3.3 Threats
The proposed project will be facing the following threat:
 Market saturation over a longer period of time due to a large number of entrants
 Threat of increase in the prices of the natural gas by the government

4    PROJECT PROFILE

4.1 Opportunity Rationale
Due to the environment friendly nature and low cost of natural gas, Hydrocarbon
Development Institute of Pakistan (HDIP) has recognized the need and necessity to
promote the use of CNG as a fuel in automobiles. HDIP has pioneered the use of
environment friendly CNG in road transport as an economically viable fuel, which can
substitute the imported petroleum products.

4.2 Project Brief
The business of CNG filling station has marked its place in the country through growth
during the last few years. This growth has opened up new opportunities and more CNG
filling stations are being setup all over Pakistan. The prime reason for this is the low cost of
the fuel. Along with that, CNG fuel is less hazardous to the environment as compared to
the traditional petroleum fuel.



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4.3 Introduction to CNG
Natural Gas is one of the most valuable natural resources abundantly available in our
country. The people of Pakistan have been using the petroleum products as a fuel in their
automobiles, thus spending a huge amount of foreign exchange on import of petroleum
products. Moreover, the Government of Pakistan has taken certain concrete steps in order
to promote the use of natural gas as a fuel substitute in the automobiles. Due to the efforts
made by the Government and comparatively low prices of gas, more than 600,000*
vehicles have already been converted to operate on Compressed Natural Gas (CNG)
fueling system all over Pakistan.
Due to high cost of petroleum products, lots of vehicles are switching over to CNG. At
present, there are more than 6701 CNG stations operating in the Country and this number is
insufficient to meet the rising demand of CNG in the coming years.
The total project cost for setting up the CNG filling stations has been estimated at Rs.31.13
million. It includes land, building, CNG equipment and machinery, spares, along with the
preliminary expenses and working capital.
Compressed Natural Gas (CNG) is produced when the natural gas is compressed into
cylinders to be used as a fuel in the automobiles. The compressed natural gas has been used
as an automobile fuel since 1940, and over the years, the technology has been modified and
refined. In the recent years, the usage of CNG as an automobile fuel has significantly
increased because of its low cost and environment friendly nature.

4.4 Proposed Business Legal Status
The proposed legal structure of the business entity is either sole proprietorship or
partnership. Although selection totally depends upon the choice of the entrepreneur but this
financial feasibility is based on a Sole Proprietorship.

4.5 Project Cost
The cost of project has been estimated as Rs.31.13 million including land, civil works,
CNG equipment and office equipment. Preliminary expenses and gas security charges are
estimated at Rs.0.82 million and Rs.1.8 million respectively. The CNG equipment
comprises of gas compressor, dual hose dispenser, electric control panel, and storage
cascades/cylinders.

Table 4-1                  Project Investment
    Fixed Investment                                                                    Rs. 30,750,140
    Working Capital                                                                        Rs. 377,390
    Total Investment                                                                    Rs. 31,127,530
The proposed pre-feasibility is based on the assumption of 50% debt and 50% equity.
However this composition of debt and equity can be changed as per the requirement of the
investor.
The project seems to be viable with the following returns on investment.


1
    Source: International Association of Natural Gas Vehicles (IANGV) Feb, 2005 Statistics
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Table 4-2               Project Returns
 Internal rate of return (project)                                                  23.1%
 Internal rate of return (equity)                                                   45.1%
 Net Present Value @ 20%                                                     Rs. 3,401,246
 Payback period – based on cash inflows                                             4 years


4.6 Viable Economic Size
A minimum of 202 cars is required to be filled daily in order to operate at breakeven.
Considering the market trends and number of vehicles being converted into CNG fueling
system, initially the project would be able to attract and serve at-least 202 vehicles per day.

4.7 Proposed Capacity
The equipment for CNG filling station that has been considered for preparing this pre-
feasibility study is of British origin. This equipment is relatively more efficient and
effective of the all types of equipment available in the market. Various other types of
equipment are also available at a lower price. The chosen equipment is capable of refueling
50 vehicles per hour. Twin hose dispenser accompanies this equipment and it handles
refueling of two vehicles at a time.

4.8 Proposed Location
The proposed locations for the CNG Filling stations in Lahore are as follows
    Multan Road, Lahore
    Wapda Town, Lahore
    Model Town, Link Road, Lahore
    Johar Town, PIA Colony
The said project may also be established in commercial area of any other city.

4.9 CNG Policy
The Government of Pakistan has offered number of incentives for encouraging the use of
CNG in the country. Some of these are summarized below:
 Strong Government commitment to promote usage of CNG
 Liberal policy of providing license for CNG retailing
 Deregulated market price of CNG (for the consumers)
 Priority of providing natural gas connection to CNG stations
 Exemption of import duty and sales tax till June 2005 on import of machinery and
equipment, CNG kits and cylinders




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This has provided a boost to the industry, and so far, more than 600,000 vehicles have been
converted to CNG and 6702 CNG stations are operational. According to International
Association for Natural Gas Vehicles (IANGV) statistics, Pakistan is ranked third in the
CNG-using countries after Argentina and Brazil.

4.10 CNG Consultancy Services
HDIP is also offering consultancy services to the investors, which include the whole range
of activities like formation of company, selection of site, legal formalities, design of
station, specifications of the equipment, selection of equipment, selecting and appointing
the contractor, training of manpower, commissioning and supervision, etc.

5       MARKET ANALYSIS
The commercial application of CNG technology now forms an important element of
Government’s petroleum policy, which is reflected in the efforts made by the government
for installing 670 CNG stations in the country and converting 600,000 vehicles on CNG
fueling system till February 2005.

5.1 Target Customers
The target customers for the proposed project would be the vehicles running on CNG fuel.

5.2 Market Demand
At present there are more than 600,000 vehicles, which have been converted to CNG fuel,
and a large number of vehicles are further being converted.
Due to the increasing prices of petroleum products, the trend of converting cars to CNG
fueling system has been on a rise. However, there exist a large number of people who were
reluctant to convert their vehicles from petrol to gas due to safety concerns. Recently, many
car manufacturers have started manufacturing the cars with built-in CNG fueling system.
This change has led to enhancing the confidence in the minds of the general public
regarding the safety concerns, and now, more people are inclined towards purchasing these
factory-fitted CNG fueling system cars.

5.3 Market Supply
Total number of CNG stations in Pakistan is only 670, which is quite low for meeting the
growing demand of CNG. Apart from these 670 CNG stations, many new CNG stations are
being setup across the country.

5.4 Industry Growth
There has been a tremendous growth in the CNG sector over the yeas. The total number of
vehicles on CNG was 100,000 and CNG filling stations was 150 at the end of year 2000.
The number of CNG vehicles and CNG filling stations has increased to 210,000 vehicles

2
    As on Feb, 2005
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and 220 stations respectively and by the year 2005 they have tremendously grown up to
670 CNG Stations and 600,000 CNG fitted vehicles. The growth in terms of percentage is
given in the following table:

Table 5-1 Growth Percentage of Vehicles
             Year                      2004             2005     Percentage Increase
No. Of Vehicles on CNG                   450,000         600,000                33%
CNG Filling Stations                          550            670                22%
The above growth rates present an opportunity for the new entrants to earn profits by
setting up new CNG filling stations to meet the growing demand.

6    REGULATIONS, LICENSES AND INCENTIVES

6.1 License
Obtaining a license from Ministry of Petroleum and Natural Resources is a pre-requisite for
setting-up the CNG station. The cost associated with this license is Rs.25,000.

6.2 Certificate (by HDIP)
After the installation of the required equipment for CNG filling station, HDIP will inspect
the working of the equipment, and once satisfied, will issue a certificate verifying that the
installed equipment is up to the required standards. The cost associated with this
certification is Rs. 35,000.

6.3 NOCs
No Objection Certificate will be required from the following departments prior to the
commencement of the business:
 Concerned development authority of the city (Lahore Development Authority in case of
   Lahore)
 Traffic Engineering and Planning Authority (TEPA)
 Traffic Police (SSP)
 Department of Civil Defense
 National Highway Authority (NHA)
 Central Board of Revenue (CBR)
 Civil Administration-Tehsil Municipal Administration (TMA)
 Irrigation Department
 Forest Department
 Explosives Department
The cost associated for obtaining the above NOCs is estimated at Rs.100,000.




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6.4 Incentives

6.4.1 Sales Tax
The import of CNG equipment is exempted from sales tax vide SRO No.38 (1)/98 dated
21st January 1998 till June, 2005.
6.4.2 Custom Duty
The CNG equipment is also exempted from the custom duties as per the above-referred
SRO.

6.5 Regulatory Requirements

6.5.1 Quality Certificate
SRO.38 (1)/98 dated 21st January 1998 has been amended on April 11, 2002 and the
“Quality Certificate” from original manufacturer has been made mandatory. This certificate
should state that the equipment meets the safety standard as laid down in Pakistan CNG
Rules 1992. The designated third party inspector witnesses this Quality Certificate. The
cost of third party inspection is $500.

6.5.2 List of Equipment
The list of equipment and their various manufacturers has also been mentioned in the same
amended SRO whose import is exempted from custom duty and sales tax.

6.5.3 Income Tax on the Import of CNG Equipment
Income Tax, at the rate of 6%, is payable by the importer on the import of CNG equipment.

6.6 Income Tax
The income of the CNG filling station is not exempted from the income tax. The investor
has to pay tax on his/her income according to the nature of the business entity. The current
project is being operated as a private limited company, so the income tax is payable at the
rate of 45%.




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7    THE PROJECT CONCEPT

7.1 Project Cost
The details of the cost of project are as follows:

Table 7-1               Project Costs
 Item                                                                               Rupees
 Land (9,000 Sq. ft)                                                             17,000,000
 Building – Civil Works                                                           1,700,000
 CNG Equipment                                                                    8,732,100
 Stores & Spares                                                                    513,040
 Office Equipment                                                                   100,000
 Furniture & Fixtures                                                                85,000
 Gas Security                                                                     1,800,000
 Preliminary Expenses                                                               820,000
 Working Capital                                                                    377,390
 Total                                                                           31,127,530

7.2 Project Financing
The total cost of the project is Rs.31.13 million including the working capital of Rs.0.377
million. The sponsors of the project will contribute Rs.15.56 million and the bank will
finance the remaining amount of Rs.15.56 million.

7.3 Project Details

7.3.1 Location
For setting up a CNG filling station, location is the prime factor. As per the requirements of
the Government of Pakistan, the filling station must be situated in a commercial area. CNG
filling stations are not allowed to be installed in the residential areas.

7. 3. 2 L and
A minimum of nine thousand (9000) square feet of land with at least 75 feet front opening
is required for installing CNG filling station. An amount of Rs.17 million has been
allocated for the acquisition of nine thousand square feet of commercial land in Lahore in
in the areas of Model Town Link Road or Multan Road. A comparison of costs of
commercial land in various other areas of Lahore is given below for reference purpose.




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Table 7-2 Approximate Cost of Land in the Proposed Areas
 Location                                          Price Range for 9,000 Sq.ft
 Gulberg, M. M. Alam Road.                                    Rs.16,000,000–18,000,000
 Main Boulevard                                             Rs. 30,000,000—32,000,000
 Main Ferozpur Raod                                           Rs.10,000,000–12,000,000
 Model Town Link Road                                           Rs.7,000,000–9,000,000
 Multan Road                                                   Rs.2,000,000–10,000,000
 Johar Town, PIA Colony                                       Rs.18,000,000–35,000,000
In this report, prices of commercial land for Lahore city has been considered, however,
prices may considerably vary in the other cities like Quetta, Karachi, Hyderabad, Multan,
Faisalabad, Islamabad, Peshawar etc.

7. 3. 3 B ui l di ng
There are certain civil works required to be carried out at the proposed location. The civil
works would be carried out on an area of 2250 square feet. The rest of the area will be
floored with tuff tiles. Civil work includes the following:
   Office
   Control Room
   Compressor and Cascade/Cylinder Storage Room
   Shed for Dispenser
   Toilet/washroom
   Underground Gas Piping and Power Cables
   Flooring
The total cost of construction is estimated at Rs.1.7 million. Details for the said cost are as
follows:

Table 7-3               Construction Cost (Amount in Rupees)
 Description                                            Cost per Sq. ft.   Cost
 Office, control room, compressor and cylinder storage        500        1,125,000
 room, shed and toilet/washroom (2,250 sq.ft)
 Underground gas piping                                         -          200,000
 Flooring (6,750sq.ft)                                         45          303,750
 Contingencies                                                  -           71,250
 Total Cost                                                     -        1,700,000
Explosives department has laid down certain specifications for the compressor and
cascade/cylinders storage room, which are as follows:
    1. Minimum one meter distance is required between walls and compressor.
    2. Minimum distance of one meter should be kept between compressor and
       cascade/cylinders.


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    3. Fire rated walls3 must be used in the compressor and cylinder storage room.
    4. Roof of the compressor and storage room should not be of permanent nature4.

7.3.4 Material Inputs
There are two main inputs required for the CNG filling station, one is the natural gas and
the other is electricity. The sponsor of the project is required to obtain both the connections
from the relevant authorities i.e. WAPDA and Sui Northern Gas Pipelines Limited
(SNGPL) or Sui Southern Gas Pipelines Limited (SSGPL). The cost associated with
obtaining the gas connection is Rs.75, 000/-. In addition to this, a minimum security
deposit of Rs.1.8million is also required to be deposited with the concerned authority.
Bank guarantee is also acceptable in case of gas security. An amount of Rs.0.35 million is
required for obtaining electricity connection. There is no security deposit required for the
electricity connection.

7.3.5 CNG Equipment
The following equipment is required for a CNG filling station:
 Gas Compressor
The purpose of compressor is to compress the gas enabling it to discharge the gas for
refueling. This compressor requires an input pressure of 8 or 15 PSIG5 from the main gas
supply with the outlet pressure of 3,625 PSIG. With this discharge pressure, the equipment
can refuel 50 vehicles per hour.
 Electric Control Panel
Electric control panel is required to operate the gas compressor. This panel will be mounted
in the control room.
 Storage Cascade
Storage cascades/cylinders are used to store the natural gas.
 Priority Panel for Vehicle Priority
During rush hours, the compressor is directly connected to the dispenser, bypassing the
storage cascades/cylinders with the help of priority panel, facilitating the refueling of
vehicles at a faster rate.
 CNG Dispenser high flow dual hose
Gas is filled into the vehicles with the help of dispenser. This dual hose dispenser is
capable of handling two vehicles at a time.
There are various foreign manufacturers providing the CNG filling station equipment. In
this pre-feasibility report, a British origin compressor6 has been selected. This equipment is
selected because of its low electricity consumption, higher outlet pressure, low
maintenance, durable working, longer periods between overhauls and good market repute
and presence.

3
  with RCC (Reinforced cement concrete) structure
4
  Corrugated asbestos might be used as the roof for the compressor and cylinder storage room to prevent the
compressor and cylinders from heat.
5
  pounds per square inch gauge pressure
6
  Ham worthy Compressor, Bellies & Marcum, UK, Model: H430H-WL Capacity: 400 m3/hr
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Different gas pressures are available in different areas of Pakistan from the main gas supply
line. The pressure of 15 PSIG is not easily available at every location. Where the gas
pressure of 15 PSIG is not available, in that situation, the model with inlet pressure of 8
PSIG is used, which has been manufactured to operate at a lower gas pressure. However,
the consumption of electricity increases.
The total capacity of the selected equipment is 400M3/Hr with a total power load of 93
KW.
All the CNG filling station equipment is foreign manufactured and imported on the specific
requirement of the sponsor by the authorized agent. Usually, the equipment is delivered
within 12 to 16 weeks from the receipt of purchase order and initial payment. The details of
this equipment and accessories are available in Annexure # 1.1.1.

7.3.6 Suppliers
The Central Board of Revenue (CBR) has specified the list of compressors, storage
cylinders, CNG vehicle cylinders, CNG machinery & equipment and conversion kits in
SRO 38(1)/98. For the convenience of investor, a list of some of the available equipment
and machinery is given below:

Table 7-4               Supplier’s Name
 Supplier’s Name                                              Available Models
 Rix Services, New Zealand                          2JJS3G-178, FX-150, 3KX3G-40,
                                                    6W5G-150
 Compare UK Ltd, UK                                 Gazpack 36, Gazpack37
 Norwalk Company Inc. USA                           C-75-3, C150-4, NQSV3
 Sulzer Burckhardt Engg. Works Switzerland          C40111S, C50214S
 Hamworthy, Bellis & Morcom UK                      H430H-WL, H280H-WL, V130H-WL
 Safe s.r.l Italy                                   SW75SE-F1-EM, SW110SE-F1-EM,
                                                    SW110-F1-EM, SW132-F1-EM,
                                                    SW90F0, 35-EM
 Hurricane, Grimmer Industries, USA                 CNG90, CNG 125, CNG250
 Chengdu Jinxing Chemical Machinery and             ZW-3.45/250JX, ZW-5.0/1-23, ZW-
 Equiment Factory, China                            5.52/0.5-250JX
 Chonqing Air Gas Compressor Factory, China         L-3.8/1-250, L-3/1-250, L-5/0.56-250,
                                                    L-2.9/0.56-250, L-4.65/0.56-250,
                                                    W3.8/0.56-250, W-3.8/1-250
 Intermech Ltd. NewZealand                          RHINO PAR-75VE 4-8
                                                    RHINO PAR-1-DE 4-82
                                                    RHINO-PAR 150DE4-10
 Unigas NewZealand                                  Apollo VR-550
 Compare Mahle GmbH, Germany                        5409.2NG.EU
 Sicom SRL , Italy                                  650.250.20-IFDE-23SE


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Pre-Feasibility Study                                                      CNG Filling Station



7.3.7 Stores & Spares
The whole equipment required for setting up a CNG filling station is imported. Therefore,
it is required to build an inventory of necessary spare parts to meet the unforeseen
circumstances such as breakdown or any other fault in any part or equipment. For this
purpose, a stock of necessary spare parts worth $8,000 will be imported along with other
equipment to maintain a minimum level of spare parts.

7.3.8 Furniture and Fixtures
Furniture and fixtures mainly include tables, chairs, sofas, fans & lights, carpet, curtains
and fire extinguishers. It is estimated that the furniture and fixtures of Rs.85,000 would be
purchased.

7.3.9 Office Equipment
Some office equipment is also required for the proposed project. A provision of Rs.100,000
ha been made for acquiring the required office equipment. The details of office equipment
are annexed in Annexure # 1.1.

7.4 Manpower Requirement
Manpower requirement for the CNG filling station includes manager, cashier, dispenser,
operators, accountant, watchman and sweeper. The total staff strength would be 13 persons
for the two shifts. The staff salaries for year one are as follows:

Table 7-5               Human Resource Requirement
         Designation              No. of            Salary per           Total salary
                               Employees for          month               per month
                                two shifts                                 (Rupees)
 Manager                            1                  20,000                    240,000
 Deputy Manager                     1                  10,000                    120,000
 Accountant                         1                  6,000                      72,000
 Cashier                            2                  4,500                     108,000
 Dispenser                          4                  3,500                     168,000
 Operator                           2                  5,500                     132,000
 Watchmen                           2                  3,500                      84,000
 Sweeper                            1                  2,500                      30,000
 Total                                                                           954,000




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8    BASIS FOR FINANCIAL PROJECTIONS

8.1 Inflation Rate
10% inflation rate has been considered while making the projections for cost of sales,
operational expenses and salaries. The prices for gas, electricity, operational expenses and
staff salaries are increased by 10% every year as a result of inflation.
The selling price of gas has been increased by 5% every year.

8.2 Revenue Assumptions

8.2.1 No. of Cars
Based on the survey of some CNG stations in Lahore, the number of cars assumed for
revenue projections is as follows:

Table 8-1               Detailed Projected Increase in Cars
                     Years                                      No. Of Cars
                        1                                           202
                        2                                           303
                        3                                           363
                        4                                           435
                        5                                           522
                        6                                           600
                        7                                           690
                        8                                           793
                        9                                           911
                       10                                          1,047
The average number of cars in the first years is estimated at 202 cars per day, starting from
120 cars per day in the first month and going up to 290 cars per day in the 12th month.. In
the second year, it has increased to 303 cars per day. After second year, number of cars is
increasing at a rate of 20% till fifth year because the project would be in its growth stage.
An increase of 15% has been considered from sixth year, because at that time, the project
would be at its maturity stage.

8.2.2 Gas per Vehicle
Currently, the CNG cylinders with two different capacities are installed in the CNG fitted
cars. One type of cylinder has a capacity of 40 kg and the other has a capacity of 50 kg.
Gas of 6.6 and 11.12 cubic meter can be filled in the cylinders of 40kg and 50kg
respectively. A weighted average of 9.31 cubic meters of gas per vehicle has been taken for
the revenue calculations.


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Pre-Feasibility Study                                                      CNG Filling Station



Table 8-2               Average Volume
           Cylinder Type                        Volume                  Percentage Use
                                             (cubic meters)
 40 kg                                             6.6                        40%
 50 kg                                           11.12                        60%
 Weighted Average Volume                                               9.31 cubic meters

8.3 Depreciation on Assets

8.3.1 Accounting Profit
Depreciation on the assets has been charged at the following rates for the calculation of
accounting profits:

Table 8-3               Depreciation Rates
 Building                                                                               5%
 CNG Plant & Equipment                                                                 10%
 Office Equipment                                                                      20%
 Furniture & Fixture                                                                   10%

8.3.2 Taxable Profit
For the purpose of calculating taxable profit, depreciation is calculated on the rates as per
the Income Tax Law, which is as follows:

Table 8-4               Tax Adjustments
 Land                                                                                     0%
 Building                                                                                 5%
 CNG Plant & Equipment                                                                   10%
 Office Equipment                                                                        10%
 Furniture & Fixture                                                                     10%

8.4 First Year Allowance
Other than the normal depreciation allowances, first year allowance is also provided on the
newly installed CNG plant and equipment for the purpose of providing benefit to the
entrepreneur. The first year allowance is calculated at 40% of written down value of CNG
plant and equipment.

8. 5   Multiple Shift Allowance
In addition to normal depreciation and first year allowances, multiple shift allowance is
also provided for the plant and machinery, which operates on double or triple shift basis. In
this proposed project, CNG plant will run on two-shift basis during the whole year. So
multiple shift allowance is calculated and added to the depreciation of CNG plant and
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PREF-34/May, 2005/Rev 2
Pre-Feasibility Study                                                      CNG Filling Station

equipment for all the ten years. Multiple shift allowance has been taken as 66.6% of the
normal depreciation allowance.

8. 6   Amortization of Preliminary Expenses
Preliminary expenses amounting to Rs.820, 000/- will be amortized at the rate of 20% per
annum.

8.7 Working Capital
Working capital is calculated on the basis of following assumptions:

8.7.1 Accounts Receivables
Mostly, the sale of CNG is on cash basis. However, some CNG stations do offer a credit
facility to reputable companies on agreed terms and conditions. Therefore, receivables are
estimated at 6% of the total sales amount.

8.7.2 Advances to Employees
Advances to employees are calculated on the basis of 30 days of both payroll and staff
benefits.
8.7.3 Accrued Utilities and Power Expenses
Normally, it would take 20 days to deposit the utilities (electricity, water and telephone)
bills. Therefore, utility expenses for 20 days have been taken as the basis for working
capital computation.

8.7.4 Accounts Payable
Cost of gas and electricity for 20 days has been considered in calculating accounts payable.

8.7.5 Sales Tax Payable
Every company is required to deposit the amount of sales tax collected from the consumers,
within 14 days. The same has been taken as the basis for calculating the amount of sales tax
payable.

8.8 Sales Tax
The sales tax levied by Government of Pakistan is charged to the customers at the rate of
15% on the sale of gas. These funds are deposited after every 14 days in favor of
Government of Pakistan.

8.9 Ratio/Financial Analysis
The figures for the rate of return on investment and return on equity are averaged for the
first five years to make it more reasonable.




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Pre-Feasibility Study                                                      CNG Filling Station

8.10 Alternative Investment Opportunity
The cost of land is the major portion of investment in this project. If any investor does not
have enough resources for the acquisition of land, he/she also has another alternative
course of action to setup the CNG station without acquiring the land.
The investor can make investments only in the purchase of CNG plant and equipment and
install this equipment with any existing petrol pump. In this case, the investment for
installing the CNG equipment will be made by the investor and the space will be provided
by the dealer/owner of the existing petrol pump. The investor will pay 15% commission on
the total revenue to the dealer/owner of the petrol pump. Moreover, the investor can also
avail lease facility from any leasing company on the purchase of CNG plant and
equipment.




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Pre-Feasibility Study                                                                                                                                              CNG Filling Station




9    FINANCIAL ANALYSIS

9.1 Project Costs
                   P ro je c t C o s t
                                                                                                                          R s.                         R s.
                   A s s e ts
                              Land                                                                                      1 7 ,0 0 0 , 0 0 0
                              B u ild in g - C iv il W o r k s                                                            1 ,7 0 0 ,0 0 0
                              C N G E q u ip m e n t                                            $       1 3 3 ,9 0 0      8 ,7 3 2 ,1 0 0
                              Sto re & Sp a re s                                                $           8 ,0 0 0         5 1 3 ,0 4 0
                              O ffic e E q u ip m e n t                                                                      1 0 0 ,0 0 0
                              F u r n itu r e & F ix t u r e                                                                   8 5 ,0 0 0             2 8 ,1 3 0 ,1 4 0
                   A d v a n c e s & S e c u r it ie s
                              G a s S e c u r it y ( D e p e n d s o n t h e S N G P L a s s e s s m e n t )                                            1 ,8 0 0 ,0 0 0
                   P r e l i m in a r y E x p e n s e s
                              G a s C o n n e c t io n s & I n s t a lla tio n C h a r g e s ( S N G P L )                     7 5 ,0 0 0
                              E le c t r ic it y C o n n e c t io n s C h a r g e s                                          3 5 0 ,0 0 0
                              Local E xpe nses                                                                               1 0 0 ,0 0 0
                              L ic e n s e fr o m M O P                                                                        2 5 ,0 0 0
                              R e g is tr a t io n o f C o m p a n y ( A u t h o r iz e d C a p ita l 1 0 m illio n )          8 5 ,0 0 0
                              I n s p e c t io n F e e ( H D I P )                                                             3 5 ,0 0 0
                              O th e r A p p r o v a ls ( N O C s )                                                          1 0 0 ,0 0 0
                              T r a v e llin g & C o n v e y a n c e                                                           2 0 ,0 0 0
                              O th e r E x p e n s e s                                                                         3 0 ,0 0 0                  8 2 0 ,0 0 0

                   W o r k in g C a p i t a l                                                                                                             3 7 7 ,3 9 0
                              T o ta l A s s e ts                                                                                            R s . 3 1 ,1 2 7 ,5 3 0
                   T o t a l C a p i t a l E m p lo y e d B y :
                             Bank Loan                                                                                              50%               1 5 ,5 6 3 ,7 6 5
                             E q u ity                                                                                              50%               1 5 ,5 6 3 ,7 6 5
                              T o t a l C a p it a l                                                                                         R s . 3 1 ,1 2 7 ,5 3 0

                                                                             1 US$ =           Rs.      6 0 .5 0
                   P ro je c t R e tu rn s
                            IR R                                                                                                      %                        2 3 .1 %
                            NPV @ 20%                                                                                                R s.               3 ,4 0 1 ,2 4 6
                            P a y B a c k P e r io d                                                                                Y rs.                             4


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Pre-Feasibility Study                                                                                                                            CNG Filling Station



9.2 Projected Income Statement
Statement Summaries
 Income Statement
                                        Year 1       Year 2       Year 3       Year 4       Year 5       Year 6       Year 7       Year 8       Year 9       Year 10

                                       202 Cars     303 Cars     363 Cars     435 Cars     522 Cars     600 Cars     690 Cars     793 Cars     911 Cars     1047 Cars

 Gross Sales                           13,139,090   20,375,524   25,673,161   32,303,626   40,702,568   49,123,789   59,316,976   71,580,116   86,342,950   104,194,426
 Less: Sales Tax                        1,714,651    2,659,006    3,350,347    4,215,623    5,311,685    6,410,655    7,740,865    9,341,205   11,267,755    13,597,373
 Net Sales                             11,424,439   17,716,518   22,322,813   28,088,003   35,390,883   42,713,135   51,576,110   62,238,911   75,075,195    90,597,054

 Cost of Sales                          5,516,754    8,937,181   11,766,663   15,474,153   20,382,143   25,720,252   32,478,303   40,992,720   51,725,438    65,304,354
 Gross Profit                           5,907,685    8,779,338   10,556,150   12,613,850   15,008,740   16,992,883   19,097,807   21,246,191   23,349,757    25,292,699

 Operating Expenses:
    Operating Expenses                  2,032,005    2,147,885    2,284,084    2,441,762    2,622,282    2,896,712    3,120,922    3,374,100    3,658,487     3,976,614
    Depreciation                          986,710      890,289      803,698      725,883      810,345      731,953      661,391      597,852      540,615       489,037
    Amortization of Preliminary Exp.      164,000      164,000      164,000      164,000      164,000          -            -            -            -             -
                                        3,182,715    3,202,174    3,251,782    3,331,646    3,596,627    3,628,665    3,782,313    3,971,951    4,199,101     4,465,652
 Operating Profit                       2,724,970    5,577,164    7,304,369    9,282,204   11,412,113   13,364,218   15,315,494   17,274,240   19,150,656    20,827,048

    Interest on Loan                    1,089,464    1,852,088    1,416,303      980,517      544,732      108,946          -            -            -             -
    Interest on Lease                         -            -            -            -            -            -            -            -            -             -
                                        1,089,464    1,852,088    1,416,303      980,517      544,732      108,946          -            -            -             -
Profit before Tax                       1,635,507    3,725,076    5,888,066    8,301,687   10,867,382   13,255,272   15,315,494   17,274,240   19,150,656    20,827,048
Taxation (See working)                     57,122      487,101    2,126,398    2,976,423    3,841,159    4,687,398    5,415,542    6,105,492    6,764,544     7,351,985
Profit after Tax                        1,578,384    3,237,975    3,761,668    5,325,264    7,026,222    8,567,874    9,899,952   11,168,748   12,386,112    13,475,063
Balance B/F                                   -      1,578,384    4,816,359    8,578,027   13,903,291   20,929,514   29,497,388   39,397,339   50,566,087    62,952,199
Retained Earnings                       1,578,384    4,816,359    8,578,027   13,903,291   20,929,514   29,497,388   39,397,339   50,566,087   62,952,199    76,427,262
                                              -            -            -            -            -            -            -            -            -             -
Balance C/F                             1,578,384    4,816,359    8,578,027   13,903,291   20,929,514   29,497,388   39,397,339   50,566,087   62,952,199    76,427,262




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9.3 Projected Balance Sheet
 Statement Summaries
 Balance Sheet
               YEAR                    Start up         1            2            3               4             5            6            7            8            9           10

FIXED ASSETS                           27,617,100   26,630,390   25,740,101   24,936,403    24,210,520      24,944,476   24,212,523   23,551,132   22,953,280   22,412,665   21,923,628
                                       27,617,100   26,630,390   25,740,101   24,936,403    24,210,520      24,944,476   24,212,523   23,551,132   22,953,280   22,412,665   21,923,628

 Preliminary Expenses                     820,000      656,000      492,000      328,000       164,000             -            -            -            -            -            -
                                       28,437,100   27,286,390   26,232,101   25,264,403    24,374,520      24,944,476   24,212,523   23,551,132   22,953,280   22,412,665   21,923,628
OTHER ASSETS
 Security                               1,800,000    1,800,000    1,800,000    1,800,000        1,800,000    1,800,000    1,800,000    1,800,000    1,800,000    1,800,000    1,800,000
                                              -            -            -            -                -            -            -            -            -            -            -
                                        1,800,000    1,800,000    1,800,000    1,800,000        1,800,000    1,800,000    1,800,000    1,800,000    1,800,000    1,800,000    1,800,000
CURRENT ASSETS
 Accounts Receivables              -                   793,364    1,230,314    1,550,195     1,950,556       2,457,700    2,966,190    3,581,674    4,322,147    5,213,555    6,291,462
 Advances to Employees             -                    87,450       96,195      105,815       116,396         128,036      140,839      154,923      170,415      187,457      206,203
 Stores & Spares               513,040                 513,040      513,040      513,040       513,040         513,040      513,040      513,040      513,040      513,040      513,040
 Cash & Bank Balances          377,390               1,042,927    1,999,944    3,469,418     6,398,351       9,535,653   17,094,942   27,451,315   38,994,185   51,680,102   65,388,343
                               890,430               2,436,781    3,839,493    5,638,468     8,978,343      12,634,428   20,715,011   31,700,953   43,999,787   57,594,154   72,399,047
TOTAL ASSETS                31,127,530              31,523,171   31,871,594   32,702,872    35,152,863      39,378,904   46,727,534   57,052,084   68,753,067   81,806,819   96,122,675
                                   -                       -            -            -             -               -            -            -            -            -            -
CAPITAL EMPLOYED REPRESENTED BY:

SHARE CAPITAL
     1,556,377 Shares @ Rs.10/- each   15,563,765   15,563,765   15,563,765   15,563,765    15,563,765      15,563,765   15,563,765   15,563,765   15,563,765   15,563,765   15,563,765
 UNAPP. PROFIT/(LOSS)                         -      1,578,384    4,816,359    8,578,027    13,903,291      20,929,514   29,497,388   39,397,339   50,566,087   62,952,199   76,427,262
                                       15,563,765   17,142,149   20,380,124   24,141,792    29,467,056      36,493,279   45,061,153   54,961,104   66,129,852   78,515,964   91,991,027
LONG TERM LIABILITIES
 Finance Lease                                -            -            -            -                -            -             -            -            -            -            -
 Long Term Loan                        15,563,765   14,007,389   10,894,636    7,781,883        4,669,130    1,556,377           -            -            -            -            -
                                       15,563,765   14,007,389   10,894,636    7,781,883        4,669,130    1,556,377           -            -            -            -            -
CURRENT LIABILITIES
 Creditors                                    -        296,952      482,429      636,806       839,426       1,108,042    1,400,973    1,772,231    2,240,459    2,831,228    3,579,282
 Utility Bills Payable                        -         10,000       11,000       12,100        13,310          14,641       16,105       17,716       19,487       21,436       23,579
 Sales Tax Payable                            -         66,681      103,406      130,291       163,941         206,566      249,303      301,034      363,269      438,190      528,787
                                              -        373,633      596,834      779,197     1,016,677       1,329,249    1,666,381    2,090,980    2,623,215    3,290,855    4,131,648
TOTAL                                  31,127,530   31,523,171   31,871,594   32,702,872    35,152,863      39,378,904   46,727,534   57,052,084   68,753,067   81,806,819   96,122,675




                                                                                           20

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Pre-Feasibility Study                                                                                                                         CNG Filling Station



9.4 Projected Cash Flow Statement
Statement Summaries
Cash Flow Statement
             YEAR                           1           2           3           4            5            6            7            8            9           10
SOURCES
FROM OPERATION
 Profit Before Tax                       1,635,507   3,725,076   5,888,066   8,301,687   10,867,382   13,255,272   15,315,494   17,274,240   19,150,656   20,827,048
 Add: Depreciation                         986,710     890,289     803,698     725,883      810,345      731,953      661,391      597,852      540,615      489,037
        Amortization                       164,000     164,000     164,000     164,000      164,000          -            -            -            -            -

                                         1,150,710   1,054,289     967,698     889,883      974,345      731,953      661,391      597,852      540,615      489,037
                                         2,786,217   4,779,365   6,855,764   9,191,570   11,841,727   13,987,225   15,976,885   17,872,091   19,691,271   21,316,085
OTHER SOURCES
                                               -           -           -           -            -            -            -            -            -            -
                                         2,786,217   4,779,365   6,855,764   9,191,570   11,841,727   13,987,225   15,976,885   17,872,091   19,691,271   21,316,085

APPLICATION
Repayments of Loan                       1,556,377   3,112,753   3,112,753   3,112,753    3,112,753    1,556,377          -            -            -            -
Tax Payment                                 57,122     487,101   2,126,398   2,976,423    3,841,159    4,687,398    5,415,542    6,105,492    6,764,544    7,351,985
Dividend Paid
                - Cash                         -           -           -           -            -            -            -            -            -            -
                                         1,613,499   3,599,854   5,239,151   6,089,176    8,498,213    6,243,774    5,415,542    6,105,492    6,764,544    7,351,985
SURPLUS / (DEFICIT)                      1,172,718   1,179,511   1,616,612   3,102,395    3,343,514    7,743,450   10,561,343   11,766,599   12,926,727   13,964,100

INCREASE/(DECREASE) IN WORKING CAPITAL    507,181      222,493     147,138     173,462      206,212      184,161      204,970      223,729      240,811      255,859
NET INCREASE/(DECREASE)                   665,537      957,017   1,469,474   2,928,933    3,137,302    7,559,290   10,356,373   11,542,870   12,685,916   13,708,241
OPENING BANK BALANCES                     377,390    1,042,927   1,999,944   3,469,418    6,398,351    9,535,653   17,094,942   27,451,315   38,994,185   51,680,102

CLOSING CASH BALANCE                     1,042,927   1,999,944   3,469,418   6,398,351    9,535,653   17,094,942   27,451,315   38,994,185   51,680,102   65,388,343

WORKING CAPITAL                           507,181     729,674     876,813    1,050,275    1,256,487    1,440,648    1,645,617    1,869,346    2,110,157    2,366,017

 Increase                                 507,181     222,493     147,138     173,462      206,212      184,161      204,970      223,729      240,811      255,859




                                                                               21

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Pre-Feasibility Study                                                                                                                                                                           CNG Filling Station




9.5 Revenues
Revenues

Quantity of Gas Sale per Vehicle                                    9.31 Cubic Meter
Annual Increase in the Sale Price of Gas                             5%

                                          Year 1                Year 2            Year 3            Year 4            Year 5            Year 6            Year 7            Year 8            Year 9            Year 10

                           255
No. of Cars / day                        202 Cars          303 Cars          363 Cars          435 Cars          522 Cars          600 Cars          690 Cars          793 Cars           911 Cars         1047 Cars



Sale of Gas / day (in M3)                          1878              2816              3380              4050              4860              5586              6424              7383              8481               9748
                               3
Sale of Gas / month (in M )                    57206                84488            101386            121496            145795            167580            192717            221485            254442             292427
                               3
Sale of Gas / anum (in M )                    686473              1013859           1216631           1457946           1749535           2010960           2312604           2657819           3053308            3509125
                           3
Selling Price of Gas / M           Rs.         19.14      Rs.      20.10    Rs.       21.10   Rs.      22.16    Rs.       23.26   Rs.       24.43   Rs.       25.65   Rs.       26.93   Rs.       28.28   Rs.       29.69

Total Revenue                            13,139,090       20,375,524        25,673,161        32,303,626        40,702,568        49,123,789        59,316,976        71,580,116         86,342,950       104,194,426

Sales Tax @ 15%                    Rs.             2.50   Rs.       2.62    Rs.        2.75   Rs.       2.89    Rs.        3.04   Rs.        3.19   Rs.        3.35   Rs.        3.51   Rs.        3.69   Rs.        3.87

Sales Tax Amount                   Rs.     1,714,651      Rs. 2,659,006     Rs. 3,350,347     Rs. 4,215,623     Rs. 5,311,685     Rs. 6,410,655     Rs. 7,740,865     Rs. 9,341,205     Rs. 11,267,755    Rs. 13,597,373




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9.6 Cost of Sales

 Cost of Sales

    Rate of Gas                  Rs.    6.50   /Cubic Meter
    Consumption of Electricity     0.186 KW    /Cubic Meter
    Rate of Electricity          Rs.    6.92   /KWHr
    Maintenance                  Rs.    0.25   /Cubic Meter
    Annual Increase                      10%
                                    Year 1         Year 2         Year 3          Year 4          Year 5            Year6           Year 7          Year 8          Year 9         Year 10
 No. of Cars / day                202 Cars       303 Cars      363 Cars        435 Cars        522 Cars          600 Cars        690 Cars        793 Cars         911 Cars       1047 Cars
     Annual Gas Sold (in M3)         686,473      1,013,859       1,216,631       1,457,946       1,749,535         2,010,960       2,312,604       2,657,819       3,053,308       3,509,125
     Electricity Consumed in KWH     127,684        188,578         226,293         271,178         325,414           374,039         430,144         494,354         567,915         652,697
     Rate of Gas                 Rs.    6.50    Rs.    7.15   Rs.      7.87   Rs.      8.65   Rs.      9.52     Rs.     10.47   Rs.     11.52   Rs.     12.67   Rs.     13.93   Rs.     15.33
     Rate of Electricity         Rs.    6.92    Rs.    7.61   Rs.      8.37   Rs.      9.21   Rs.     10.13     Rs.     11.14   Rs.     12.25   Rs.     13.48   Rs.     14.83   Rs.     16.31
     Cost of Sales
     Cost of Gas Sold              4,462,074     7,249,092       9,568,801      12,613,420         16,649,714     21,051,363      26,629,974      33,665,690       42,542,734     53,783,169
     Cost of Electricity             883,062     1,434,624       1,893,704       2,496,246          3,295,045      4,166,149       5,270,178       6,662,575        8,419,377     10,643,904
     Maintenance                     171,618       253,465         304,158         364,487            437,384        502,740         578,151         664,455          763,327        877,281

    Cost of Sales                5,516,754      8,937,181     11,766,663      15,474,153       20,382,143       25,720,252      32,478,303      40,992,720       51,725,438     65,304,354




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9.7 Working Capital

Working Capital
                                                              1           2           3              4           5           6           7           8            9          10
Total No. of Days         360                         Days
Current Assets            Basis
Receivables               Sales                         25   793,364   1,230,314   1,550,195    1,950,556     2,457,700   2,966,190   3,581,674   4,322,147    5,213,555   6,291,462

Advances to Employees     Payroll+Benefits              30    87,450     96,195     105,815         116,396    128,036     140,839     154,923     170,415      187,457     206,203
Stores & Spares Stock                                  -          -           -           -              -           -           -           -           -            -           -
TOTAL CURRENT ASSETS                                         880,814   1,326,509   1,656,010    2,066,952     2,585,736   3,107,029   3,736,597   4,492,562    5,401,012   6,497,665
Current Liabilities
Accrued Utilities & Power
Expenses                  Utilities Expenses            20    10,000     11,000      12,100          13,310     14,641      16,105      17,716      19,487       21,436      23,579
Accounts Payable          Cost of Gas & Electricity     20   296,952    482,429     636,806         839,426   1,108,042   1,400,973   1,772,231   2,240,459    2,831,228   3,579,282
Sales Tax Payable         Sales Tax                     14    66,681    103,406     130,291         163,941    206,566     249,303     301,034     363,269      438,190     528,787

TOTAL CURRENT LIABILITIES                                    373,633    596,834     779,197     1,016,677     1,329,249   1,666,381   2,090,980   2,623,215    3,290,855   4,131,648


NET WORKING CAPITAL                                          507,181    729,674     876,813     1,050,275     1,256,487   1,440,648   1,645,617   1,869,346    2,110,157   2,366,017




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9.8 Ratio Analysis
Ratio Analysis

                                  Year 1      Year 2      Year 3         Year 4             Year 5         Year 6         Year 7          Year 8      Year 9      Year 10
Profitability Ratios
   Gross Profit                     51.71%      49.55%          47.29%         44.91%             42.41%         39.78%         37.03%      34.14%      31.10%       27.92%
   Operating Profit                 23.85%      31.48%          32.72%         33.05%             32.25%         31.29%         29.69%      27.75%      25.51%       22.99%
   Net Profit before tax            14.32%      21.03%          26.38%         29.56%             30.71%         31.03%         29.69%      27.75%      25.51%       22.99%
   Profit after Tax                 13.82%      18.28%          16.85%         18.96%             19.85%         20.06%         19.19%      17.94%      16.50%       14.87%
   Return on Investment (ROI)        5.01%      10.16%          11.50%         15.15%             17.84%         18.34%         17.35%      16.24%      15.14%       14.02%
   Return on Equity (ROE)            9.21%      15.89%          15.58%         18.07%             19.25%         19.01%         18.01%      16.89%      15.78%       14.65%
   Earning per Share (EPS)        Rs. 1.05    Rs. 2.39    Rs.     3.78   Rs.     5.33       Rs.    6.98    Rs.     8.52   Rs.     9.84    Rs. 11.10   Rs. 12.30   Rs. 13.38
   Dividend per Share               Rs. -       Rs. -           Rs. -          Rs. -              Rs. -          Rs. -          Rs. -        Rs. -       Rs. -       Rs. -
Liquidity Ratios
   Current Ratio                      6.52        6.43            7.24           8.83              9.50           12.43          15.16        16.77       17.50       17.52
Debt Ratios
   Debt Ratio (of total assets)     44.44%      34.18%          23.80%         13.28%             3.95%          0.00%           0.00%        0.00%       0.00%       0.00%
   Debt Equity                       81.7%       53.5%          32.2%          15.8%               4.3%            0.0%           0.0%         0.0%        0.0%        0.0%
   Interest Coverage Ratio             2.50        3.01           5.16           9.47              20.95         122.67            0.00        0.00        0.00         0.00




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10 REQUIREMENT FOR THE LICENSE




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Annexure 10             Requirement for the License




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