Pre-feasibility Study

LPG STORAGE
AND FILLING
STATION
September 2023

The figures and financial projections are approximate due to fluctuations in exchange
rates, energy costs, and fuel prices etc. Users are advised to focus on understanding
essential elements such as production processes and capacities, space, machinery, human
resources, and raw material etc. requirements. Project investment, operating costs, and
revenues can change daily. For accurate financial calculations, utilize financial calculators on
SMEDA’s website and consult financial experts to stay current with market conditions

Small and Medium Enterprises Development Authority

Ministry of Industries and Production
Government of Pakistan
Pre-Feasibility Study LPG Storage and Filling Station

Table of Contents
1 DISCLAIMER .................................................................................................... 3
2 EXECUTIVE SUMMARY ................................................................................... 4
3 INTRODUCTION TO SMEDA ........................................................................... 4
4 PURPOSE OF THE DOCUMENT ..................................................................... 5
5 BRIEF DESCRIPTION OF PROJECT & PRODUCT ........................................ 5
5.1 LPG Distribution Process (Supply Chain) ................................................. 6
5.2 Installed And Operational Capacities ........................................................ 7
6 CRITICAL SUCCESS FACTORS ..................................................................... 7
7 GEOGRAPHICAL POTENTIAL FOR INVESTMENT ....................................... 8
8 POTENTIAL TARGET CUSTOMERS / MARKETS .......................................... 8
9 PROJECT COST SUMMARY ........................................................................... 8
9.1 Project Economics .................................................................................... 8
9.2 Project Cost ............................................................................................ 10
9.3 Space Requirement ................................................................................ 10
9.4 Machinery & Equipment Requirement .................................................... 11
9.5 Furniture & Fixtures Requirement ........................................................... 12
9.6 Office and Other Equipment Requirement .............................................. 12
9.7 Human Resource Requirement .............................................................. 13
9.8 Licensing and Legal Requirements ........................................................ 14
9.9 Utilities and other costs........................................................................... 14
9.10 Revenue Generation............................................................................... 14
10 CONTACT DETAILS....................................................................................... 14
11 USEFUL WEB LINK ....................................................................................... 15
12 ANNEXURES .................................................................................................. 17
12.1 Income Statement................................................................................... 17
12.2 Balance Sheet ........................................................................................ 18
12.3 Cash Flow Statement ............................................................................. 19
13 KEY ASSUMPTIONS ...................................................................................... 20
13.1 Operating Cost Assumptions .................................................................. 20
13.2 Production Cost Assumptions ................................................................. 20
13.3 Revenue Assumptions ............................................................................ 21

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1 DISCLAIMER

This information memorandum is to introduce the subject matter and provide a

general idea and information on the said matter. Although, the material included in
this document is based on data/information gathered from various reliable
sources; however, it is based upon certain assumptions, which may differ from
case to case. The information has been provided on as is where is basis without
any warranties or assertions as to the correctness or soundness thereof. 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, its
employees or agents do not assume any liability for any financial or other loss
resulting from this memorandum in consequence of undertaking this activity. The
contained information does not preclude any further professional advice. The
prospective user of this memorandum is encouraged to carry out additional
diligence and gather any information which is necessary for making an informed
decision, including taking professional advice from a qualified consultant/technical
expert before taking any decision to act upon the information.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
Document Control
Document No. PREF-NO 25
Revision No. 3
Prepared by SMEDA Punjab
Revision Date September, 2023

For information [email protected]

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2 EXECUTIVE SUMMARY

LPG (Liquefied Petroleum Gas) is the generic name for commercial propane and
commercial butane. These are hydrocarbon products produced by the oil and gas
industries. LPG is used as fuel for cooking and heating in the rural and northern
areas of Pakistan. It is also used as fuel in vehicles particularly taxi and rickshaws.
The demand of LPG in major cities is consistent throughout the year and
increases during winters in Punjab and Northern Pakistan.
LPG production is a capital intensive business and requires huge investment.
However, LPG Storage and Filling Stations comparatively requires low investment
and can be executed on small levels. This particular pre-feasibility study provides
basic information for setting up ‘LPG Storage and Filling Station, in any major city
of Pakistan. The proposed LPG Storage and Filling Station will setup a bottling
plant with storage tanks and filling dispensers.
The proposed LPG Storage and Filling Station will have a capacity of filling and
distributing around 5,400 tons of LPG annually. The starting operational capacity is
assumed at 60% (i.e. 3,240 tons) with a gradual increase of 10% in subsequent
years. This production capacity is estimated to be economically viable and justifies
the project costs. However, entrepreneur’s knowledge of industry, timely allocation
of LPG quota, and strong linkage with sub-distributors and retailers network are
key factors for the success of this business.
The proposed LPG plant entails a total investment of Rs. 119.98 million. This
includes capital investment of Rs. 106.34 million and Rs. 13.64 million as initial
working capital. The project assumed to be financed through 100% equity. The
Net Present Value (NPV) of the project is Rs. 10.66 million with an Internal Rate of
Return (IRR) of 32% and a Payback Period of 3.93 years. The project will provide
employment opportunities to 28 individuals including owner / manager. The legal
business status of this project is proposed as ‘Sole Proprietorship’.
3 INTRODUCTION TO SMEDA

The Small and Medium Enterprises Development Authority (SMEDA) was

established in October 1998 with an objective to provide fresh impetus to the
economy through development of Small and Medium Enterprises (SMEs).
With a mission "to assist in employment generation and value addition to the
national income, through development of the SME sector, by helping increase the
number, scale and competitiveness of SMEs", SMEDA has carried out ‘sectoral
research’ to identify policy, access to finance, business development services,
strategic initiatives and institutional collaboration and networking initiatives.

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Preparation and dissemination of prefeasibility studies in key areas of investment

has been a successful hallmark of SME facilitation by SMEDA.
Concurrent to the prefeasibility studies, a broad spectrum of business
development services is also offered to the SMEs by SMEDA. These services
include identification of experts and consultants and delivery of need based
capacity building programs of different types in addition to business guidance
through help desk services.
4 PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential

entrepreneurs in project identification for investment. The project pre-feasibility
may form the basis of an important investment decision and in order to serve this
objective, the document/study covers various aspects of project concept
development, start-up, and production, marketing, finance and business
management.
The purpose of this document is to facilitate potential investors in LPG Storage
and Filling Station by providing them with a general understanding of the
business with the intention of supporting potential investors in crucial investment
decisions.
The need to come up with pre-feasibility reports for undocumented or minimally
documented sectors attains greater imminence as the research that precedes
such reports reveal certain thumb rules; best practices developed by existing
enterprises by trial and error, and certain industrial norms that become a guiding
source regarding various aspects of business set-up and it’s successful
management.
Apart from carefully studying the whole document one must consider critical
aspects provided later on, which form basis of any Investment Decision.
5 BRIEF DESCRIPTION OF PROJECT & PRODUCT

LPG (Liquefied Petroleum Gas) is the generic name for commercial propane and
commercial butane. These are hydrocarbon products produced by the oil and gas
industries. Commercial Propane predominantly consists of hydrocarbons
containing three carbon atoms, mainly propane (C3H8). LPG is used as fuel for
cooking and heating as a replacement of conventional fuels like coal, firewood,
kerosene, dung cake etc, in rural, peri-urban and the northern areas of Pakistan. It
is also used as fuel in vehicles particularly taxi and Rickshaws.

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LPG production is a capital intensive business and requires huge investment

depending upon the technology and methodology employed for the extraction and
processing of LPG. However, LPG Storage and Filling Station needs
comparatively less investment and can be considered by the Small and Medium
scale investors. The proposed project envisages setting up of a LPG Storage and
Filling Station which is generally known as LPG bottling plant business.
LPG Storage and Filling Stations will setup a bottling plant with 2 storage tanks (60
tonnes of storage capacity each) and filling dispensers. The business facility will
hold a certain quantity of LPG quota, allocated by one of the LPG producer and
this allocated LPG will be supplied to the proposed marketing and Distribution
Company through Bowser (gas supplying trucks). The company will store this LPG
in its storage facility from where, supply to the sub-distributors will be made. Sub-
distributors will bring their cylinders and get them filled against payment.
The legal status of the business in this document has been kept as ‘Sole
Proprietorship.

5.1 LPG Distribution Process (Supply Chain)

Typical distribution process and supply chain of LPG has been illustrated in the
following diagram:

Figure 1: LPG Distribution Process Flow

LPG LPG Marketing LPG LPG Retail

Production & Distribution Distributors / Agents
Company Company Sub-distributors

LPG Retail
Sales Shops

Marketing and distribution companies uplift LPG from the production site using
own/rented bowzers and store it at their storage site. In Karachi such sites are
located at Port Qasim, Hub, Super Highway etc. Marketing/distribution companies
which are also known as bottling companies fill gas cylinders with LPG and store
them for distribution.

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Appointed Distributors/Sub-distributors bring their gas cylinders on their own

vehicles on the marketing company site, get them filled (or exchange them with
the filled cylinders), make payment and carry their cylinders on the distribution
point.
From distribution points cylinders are supplied to the retailers or agents from
where it is provided to the end user. In case of household or commercial use small
capacity cylinders (normally 6 kg to 11.8 kg) are further filled and supplied to the
users directly by the sub-distributor. This filling process also be carried out at
Filling station site and sub-distributors uplift cylinders from the site and store them
at their location, from where they are distributed among households and
commercial users i.e., hotels etc.

5.2 Installed And Operational Capacities

For this project it is assumed that total capacity of LPG Storage and Filling Station
is 5,400 tonnes per year, where initial capacity utilization will be 60% with an
annual growth of 10%. Maximum capacity utilization of the project is assumed at
100%.

Table 1 Installed and Operational Capacity

Operational
Production Installed
Description Capacity
Percentage Capacity
(Year 1)
LPG (Tons) 5,400 3,240
No. of Cylinder Refilling
Domestic Cylinder (11.8 Kg) 60% 274,576 164,746
Commercial Cylinder (45.4) 40% 47,577 28,546

6 CRITICAL SUCCESS FACTORS

 LPG quota allocation: Most of the existing plants with fully operational
facilities are out of work because of delays in their quota allocation by the
LPG producers.
 Dealing with the sub-distributors: Sub-distributors play important role in the
successful operations of a LPG Marketing company because they distribute
gas among agency holders who further sale it to the retailers.
 Survival during the critical period when cheap Irani LPG is available in the
market: In such circumstances when cheap Iranian gas is available, a LPG
marketing and distribution company may face a situation where it would be
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forced to lift its quota as per agreement from the producer at a higher cost
and sell it at lower price.
 High service quality of Bowzer operators will ensure efficient operations.

7 GEOGRAPHICAL POTENTIAL FOR INVESTMENT

Location for setting up a LPG distribution plant has imperial implications on fixed
costs, operational costs and procedures. The proposed LPG plant can be
established at Port Qasim, Karachi in Sindh, and Multan Road in Punjab. These
locations have basic infrastructure and facilities required for LPG bottling and
distribution plant, however for the purpose of this pre-feasibility study Multan Road
Lahore has been assumed.

8 POTENTIAL TARGET CUSTOMERS / MARKETS

The potential target customers for the unit are general household consumers and
hospitality sector as commercial users, e.g. Local Restaurants, Hotels, Food
Points etc, across Pakistan. The demand of LPG in the major cities is consistent
throughout the year and increases during winters in Punjab and Northern
Pakistan.
Accordingly, areas having presence of middle-income groups in the urban cities
and commercial centers will be an ideal location for the distribution of LPG.
Subsequently, LPG has a huge demand in the Northren Areas, especially from the
Hospitality Sector.

9 PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability
of LPG Storage and Filling station business. Various cost and revenue related
assumptions along with results of the analysis are outlined in this section.
The projected Income Statement, Cash Flow Statement and Balance Sheet are
attached as annexures.
9.1 Project Economics
All the figures in this financial model have been calculated for estimated sales
revenue of Rs. 755 million in the year one. The capacity utilization during year one
is worked out at 60% with 10% increase in subsequent years up to the maximum
capacity utilization of 100%.

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The following table shows Internal Rate of Return, Payback Period and Net
Present Value of the proposed venture.

Table 2: Project Economics (100% Equity Based)

Description Details

Internal Rate of Return (IRR) 32%

Payback Period (Yrs.) 3.93

Net Present Value (Rs.) 10,656,269

Calculation of break-even analysis is as follows:

Table 3: Breakeven (100% Equity Based)
BREAKEVEN ANALYSIS Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Break-Even Revenue 471,788,741 505,640,740 542,784,686 583,835,047 628,506,045 670,205,575 724,382,934 783,397,713 848,209,257 919,715,023

Break-Even (Sale of LPG in Tons) 2,024 1,972 1,925 1,882 1,842 1,786 1,755 1,725 1,698 1,674

Margin of Safety 38% 48% 55% 61% 66% 67% 68% 68% 69% 69%

However, for the purposes of further explanation the Project Economics based on
Debt:Equity (i.e. 50:50) Model has also been computed. On the basis of
Debt:Equity model the Internal Rate of Return, Payback Period and Net Present
Value of the proposed project are provide in the table below:

Table 4: Project Economics Based on Debt (50%) : Equity (50%)

Description Details

Internal Rate of Return (IRR) 33%

Payback Period (Yrs.) 3.78

Net Present Value (Rs.) 18,069,739

The financial assumptions for Debt:Equity are as follows:

Table 5: Financial Assumptions for Debt:Equity Model

Description Details
Debt 50%
Equity 50%
Interest Rate on Debt 28.16%
Debt Tenure 5 Years
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Debt Payment / Year 12

The projected Income Statement, Cash Flow Statement and Balance Sheet
enclosed as annexures are based on 100% Equity Based Business Model.
9.2 Project Cost
Following fixed and working capital requirements have been identified for
operations of the proposed business.
Table 6: Project Cost
Description Amount
Capital Cost
Land 12,000,000
Building/Infrastructure 25,615,200
Machinery & equipment 58,000,000
Furniture & fixtures 1,415,000
Office equipment 1,152,000
Computer equipment 325,000
Pre-operating costs 2,520,000
Licensing & Legal fee 5,310,000
Total Capital Costs 106,337,200
Working Capital
Equipment spare part inventory 24,167
Raw material inventory 11,708,604
Cash 1,910,240
Total Working Capital 13,643,011
Total Investment 119,980,211

9.3 Space Requirement

The space requirement for the proposed LPG Storage and Filling Station is
estimated considering various facilities including filling platform, labour room,
bowser platform etc. An estimated land of around 12 Kanals will be required for
the proposed venture. The land is proposed to be purchased at Rs. 12 million.
Details of the space requirement and cost related to construction of building is
given below.

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Table 7: Space Requirment

Estimated Area Unit Cost Total Cost
Description
(Sq. ft.) (Rs.) (Rs.)
CEO Office 224 4,500 1,008,000

Plant In-charge - Engineer Office 120 4,500 540,000

Accounts Office 168 4,500 756,000

Filling Platform 3,200 2,500 8,000,000
Bowser Platform 960 2,500 2,400,000
Water Tank Firefighting 200 6,800 1,360,000
Water Tank Office 100 4,500 450,000
Labor Rooms 504 4,200 2,116,800
Retiring Room 120 4,200 504,000
Gate Room 64 3,600 230,400
Store 64 3,600 230,400
Kitchen 36 3,600 129,600
Wash Room 216 3,600 777,600
Parking Area 576 1,500 864,000
Boundry Wall 1,020 3,800 3,876,000
Open Space 47,448 50 2,372,400
Total Infrastructure 49,136 25,615,200

9.4 Machinery & Equipment Requirement

Plant, machinery and equipment for the proposed project are stated below.

Table 8: Machinery & Equipment

Unit Cost Total Cost
Description Quantity
(Rs.) (Rs.)
Storage Tank - 60 tonne 2 12,000,000 24,000,000
Dispenser 4 600,000 2,400,000
Pumps 2 1,600,000 3,200,000
Cylinders (11.8 KG) 500 10,000 5,000,000
Cylinders (45.4 KG) 500 23,500 11,750,000
Support Structure - Piping &
1 6,500,000 6,500,000
Valves
Fire Fighting Equipment 1 5,000,000 5,000,000
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Security Equipment 1 150,000 150,000

Total 58,000,000

9.5 Furniture & Fixtures Requirement

Details of the furniture and fixture required for the project are given below

Table 9: Furniture & Fixture

Description Quantity Unit Cost Total Cost
(Rs.) (Rs.)
CEO Office
Table & Chairs 1 50,000 50,000
Visitor Chairs 2 8,000 16,000
Sofa Set 1 50,000 50,000
Plant In-charge - Engineer
Table & Chairs 1 45,000 45,000
Visitor Chairs 2 8,000 16,000
Cupboard 1 25,000 25,000
Accounts Office
Table & Chairs 1 40,000 40,000
Visitor Chairs 2 8,000 16,000
Cupboard 1 25,000 25,000
Miscellaneous Furniture 1 250,000 250,000
Bracket Fans 9 7,500 67,500
Exhaust Fans 4 5,000 20,000
LED Bulbs (18 Watts) 29 500 14,500
Security Lights 8 10,000 80,000
Air conditioners (1.5 ton Split) 4 175,000 700,000
Total Furniture & Fixtures 1,415,000

9.6 Office and Other Equipment Requirement

Following office and other equipment will be required for the project are given
below.

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Table 10: Office Equipment

Description Quantity Unit Cost Total Cost
(Rs.) (Rs.)
Laptops 1 120,000 120,000
Fridge 1 125,000 125,000
Desktop Computer 2 60,000 120,000
Computer printer 2 30,000 60,000
Water Dispenser 1 40,000 40,000
Scanner 1 25,000 25,000
Telephone 2 3,500 7,000
Generator 1 980,000 980,000
Total 1,477,000

9.7 Human Resource Requirement

In order to run operations of LPG Storage and Filling station smoothly, details of
human resources required along with number of employees and monthly salary
are recommended as under;
Table 11: Human Resource Requirment

Monthly Salary
Description No. of Employees
per person (Rs.)
Chief Executive Officer 1 200,000
Plant In charge – Engineer 1 150,000
Business Development Executive 1 140,000
Accountant 1 65,000
Technical Staff 2 70,000
Operators - Dispenser 4 50,000
Guard 2 35,000
Gate Keeper 1 35,000
Office Assistant 2 50,000
Helpers 12 35,000
Office Boys 1 35,000
Total 28
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9.8 Licensing and Legal Requirements

Licensing and registration from various government authorities / departments will
be required before starting operations of the proposed project. An estimated total
cost of Rs. 5.31 million will be incurred on obtaining these licenses from the
following Government authorities;
 Oil and Gas Regularity Authority (OGRA), Pakistan
Any company willing to distribute and market Oil and Gas needs to obtain a
license from OGRA. OGRA issues provisional licenses to technically and
financially sound applicants/ parties for construction of works
commensurate with their work program, for a period of one year. OGRA
inducts reputable third party inspectors to check / monitor compliance with
the terms and conditions of licenses. The licenses can be cancelled in
case of non-compliance with licensing terms and conditions.
 License and clearance certification from Explosive Control Department
 Environmental Department, etc.

9.9 Utilities and other costs

An essential cost to be borne by the project is the cost of electricity. The electricity
expenses are estimated to be around Rs. 144,448 per month.
9.10 Revenue Generation
Based on the capacity utilization of 60%, sales revenue during the first year of
operations is provided in the table below.
Table 12: Revenue Generation – Year 1
No. of
cylinder Sale Price / Sales Revenue
Description
available for unit (Rs.) (Rs.)
Sale
Domestic Cylinder (11.8 Kg) 164,746 2,750 453,049,200
Commercial Cylinder (45.4) 28,546 10,580 302,032,800
Total 193,292 755,082,000

10 CONTACT DETAILS

In order to facilitate potential investors, contact details of private sector Service

Providers relevant to the proposed project are given below.

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Table 13: Names of Suppliers

Name of Supplier Address Phone

206-C Behind Zohaib

Al-Awan Gas Traders Petroleum, Amir Town, East
Pakistan Canal Road, Faisalabad, 0313 7128811
Pakistan
House # 1, Service Lane,
Hi-Tek Manufacturing (Pvt) Quaid-e-Azam Interchange, 0423-6556686
Limited Ring Road, Lahore. 53704, 0423-6550053
Pakistan.
8th Floor, Mega Tower, Main
Haier Pakistan – Lahore 042-111142437
Boulevard Gulberg II
0331-8999222,
Woodpecker
0331-7151566
042-34004994
Craft Vision
0324-4790092

11 USEFUL WEB LINK

Small & Medium Enterprises Development

www.smeda.org.pk
Authority (SMEDA)
Government of Pakistan www.pakistan.gov.pk
Ministry of Industries & Production www.moip.gov.pk

Government of Punjab www.punjab.gov.pk

Government of Sindh www.sindh.gov.pk

Government of Khyber Pakhtunkhwa www.khyberpakhtunkhwa.gov.pk

Government of Balochistan www.balochistan.gov.pk

Government of Gilgit Baltistan www.gilgitbaltistan.gov.pk

Government of Azad Jamu Kashmir www.ajk.gov.pk

Trade Development Authority of Pakistan
www.tdap.gov.pk
(TDAP)
Security and Exchange Commission of
www.secp.gov.pk
Pakistan (SECP)

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Federation of Pakistan Chambers of

www.fpcci.com.pk
Commerce and Industry (FPCCI)

State Bank of Pakistan (SBP) www.sbp.org.pk

Punjab Vocational Training Council (PVTC) www.pvtc.gop.pk

Oil and Gas Regulatory Authority www.ogra.org.pk

Ministry of Industries and Production www.moip.gov.pk

Ministry of Energy www.mpnr.gov.pk

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12 ANNEXURES

12.1 Income Statement

Calculations SMEDA
Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 755,082,000 969,021,900 1,218,198,960 1,507,521,213 1,842,525,927 2,026,778,520 2,229,456,372 2,452,402,009 2,697,642,210 2,967,406,431

Cost of sales
Cost of goods sold 644,196,240 826,718,508 1,039,303,267 1,286,137,793 1,571,946,192 1,729,140,811 1,902,054,892 2,092,260,381 2,301,486,419 2,531,635,061
Direct labor 11,340,000 12,474,000 13,721,400 15,093,540 16,602,894 18,263,183 20,089,502 22,098,452 24,308,297 26,739,127
Bowser rent 58,320,000 74,844,000 94,089,600 116,435,880 142,310,520 156,541,572 172,195,729 189,415,302 208,356,832 229,192,516
Machinery maintenance 580,000 574,200 561,440 540,386 509,507 467,048 411,002 339,077 248,656 136,761
Direct electricity 1,040,022 1,144,025 1,258,427 1,384,270 1,522,697 1,674,967 1,842,463 2,026,709 2,229,380 2,452,318
Total cost of sales 715,476,262 915,754,733 1,148,934,134 1,419,591,869 1,732,891,809 1,906,087,581 2,096,593,588 2,306,139,921 2,536,629,585 2,790,155,783
Gross Profit 39,605,738 53,267,167 69,264,826 87,929,344 109,634,118 120,690,939 132,862,784 146,262,087 161,012,624 177,250,648

General administration & selling expenses

Administration expense 7,320,000 8,052,000 8,857,200 9,742,920 10,717,212 11,788,933 12,967,827 14,264,609 15,691,070 17,260,177
Electricity expense 693,348 762,683 838,951 922,847 1,015,131 1,116,644 1,228,309 1,351,140 1,486,254 1,634,879
Water expense 340,200 374,220 411,642 452,806 498,087 547,896 602,685 662,954 729,249 802,174
Travelling expense 732,000 805,200 885,720 974,292 1,071,721 1,178,893 1,296,783 1,426,461 1,569,107 1,726,018
Communications expense (phone, fax, mail, internet, etc.) 567,000 623,700 686,070 754,677 830,145 913,159 1,004,475 1,104,923 1,215,415 1,336,956
Office expenses (stationary, entertainment, janitorial services, etc.) 453,600 498,960 548,856 603,742 664,116 730,527 803,580 883,938 972,332 1,069,565
Professional fees (legal, audit, consultants, etc.) 755,082 969,022 1,218,199 1,507,521 1,842,526 2,026,779 2,229,456 2,452,402 2,697,642 2,967,406
Depreciation expense 7,444,710 7,444,710 7,444,710 7,464,865 7,461,615 7,461,615 7,484,948 7,481,185 7,481,185 7,508,195
Amortization of pre-operating costs 504,000 504,000 504,000 504,000 504,000 - - - - -
Amortization of legal, licensing, and training costs 531,000 531,000 531,000 531,000 531,000 531,000 531,000 531,000 531,000 531,000
Bad debt expense 151,016 193,804 243,640 301,504 368,505 405,356 445,891 490,480 539,528 593,481
Miscellaneous expense 1 732,000 805,200 885,720 974,292 1,071,721 1,178,893 1,296,783 1,426,461 1,569,107 1,726,018
Subtotal 20,223,957 21,564,499 23,055,708 24,734,466 26,575,779 27,879,696 29,891,736 32,075,553 34,481,889 37,155,870
Operating Income 19,381,781 31,702,668 46,209,117 63,194,878 83,058,338 92,811,243 102,971,048 114,186,535 126,530,735 140,094,778

Gain / (loss) on sale of computer equipment - - 81,250 - - 175,307 - - 284,190 226,882

Earnings Before Interest & Taxes 19,381,781 31,702,668 46,290,367 63,194,878 83,058,338 92,986,550 102,971,048 114,186,535 126,814,925 140,321,660

Earnings Before Tax 19,381,781 31,702,668 46,290,367 63,194,878 83,058,338 92,986,550 102,971,048 114,186,535 126,814,925 140,321,660

Tax 6,148,623 10,460,933 15,566,628 21,483,207 28,435,418 31,910,292 35,404,866 39,330,287 43,750,223 48,477,580
NET PROFIT/(LOSS) AFTER TAX 13,233,158 21,241,735 30,723,740 41,711,671 54,622,921 61,076,258 67,566,182 74,856,248 83,064,702 91,844,080

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Pre-Feasibility Study LPG Storage and Filling Station

12.2 Balance Sheet

Calculations SMEDA
Balance Sheet

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Assets
Current assets
Cash & Bank 2,882,240 8,594,552 27,502,729 38,841,914 51,011,078 66,448,948 72,050,533 83,405,980 94,126,635 104,226,419 157,396,727
Accounts receivable 62,061,534 70,853,585 89,885,789 112,015,898 137,673,170 159,012,512 174,913,763 192,405,139 211,645,653 232,810,218
Equipment spare part inventory 24,167 25,121 25,791 26,065 25,805 24,837 22,949 19,880 15,307 8,840 -
Raw material inventory 10,736,604 13,778,642 17,321,721 21,435,630 26,199,103 28,819,014 31,700,915 34,871,006 38,358,107 42,193,918 -
Pre-paid annual land lease - - - - - - - - - - -
Total Current Assets 13,643,011 84,459,849 115,703,826 150,189,398 189,251,884 232,965,968 262,786,908 293,210,629 324,905,188 358,074,829 390,206,945

Fixed assets
Building/Infrastructure 25,615,200 24,334,440 23,053,680 21,772,920 20,492,160 19,211,400 17,930,640 16,649,880 15,369,120 14,088,360 12,807,600
Machinery & equipment 58,000,000 52,200,000 46,400,000 40,600,000 34,800,000 29,000,000 23,200,000 17,400,000 11,600,000 5,800,000 -
Furniture & fixtures 1,415,000 1,273,500 1,132,000 990,500 849,000 707,500 566,000 424,500 283,000 141,500 -
Computer equipment 325,000 217,750 110,500 379,478 252,073 127,918 439,293 291,806 148,081 508,537 337,802
Office equipment 1,152,000 1,036,800 921,600 806,400 691,200 576,000 460,800 345,600 230,400 115,200 -
Total Fixed Assets 98,507,200 91,062,490 83,617,780 76,549,298 69,084,433 61,622,818 54,596,733 47,111,786 39,630,601 32,653,597 25,145,402

Intangible assets
Pre-operation costs 2,520,000 2,016,000 1,512,000 1,008,000 504,000 - - - - - -
Legal, licensing, & training costs 5,310,000 4,779,000 4,248,000 3,717,000 3,186,000 2,655,000 2,124,000 1,593,000 1,062,000 531,000 -
Total Intangible Assets 7,830,000 6,795,000 5,760,000 4,725,000 3,690,000 2,655,000 2,124,000 1,593,000 1,062,000 531,000 -
TOTAL ASSETS 119,980,211 182,317,339 205,081,606 231,463,696 262,026,316 297,243,786 319,507,642 341,915,415 365,597,789 391,259,426 415,352,347

Liabilities & Shareholders' Equity

Current liabilities
Accounts payable 55,720,549 71,172,239 89,157,037 110,027,046 133,942,585 147,328,807 162,052,801 178,248,253 196,062,202 211,841,589
Total Current Liabilities - 55,720,549 71,172,239 89,157,037 110,027,046 133,942,585 147,328,807 162,052,801 178,248,253 196,062,202 211,841,589

Other liabilities
Total Long Term Liabilities - - - - - - - - - - -

Shareholders' equity
Paid-up capital 119,980,211 119,980,211 119,980,211 119,980,211 119,980,211 119,980,211 119,980,211 119,980,211 119,980,211 119,980,211 119,980,211
Retained earnings 6,616,579 13,929,157 22,326,448 32,019,060 43,320,990 52,198,624 59,882,403 67,369,326 75,217,014 83,530,547
Total Equity 119,980,211 126,596,790 133,909,368 142,306,659 151,999,270 163,301,201 172,178,835 179,862,614 187,349,536 195,197,224 203,510,757
TOTAL CAPITAL AND LIABILITIES 119,980,211 182,317,339 205,081,606 231,463,696 262,026,316 297,243,786 319,507,642 341,915,415 365,597,789 391,259,426 415,352,347

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Pre-Feasibility Study LPG Storage and Filling Station

12.3 Cash Flow Statement

Calculations SMEDA
Cash Flow Statement

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Operating activities
Net profit 13,233,158 21,241,735 30,723,740 41,711,671 54,622,921 61,076,258 67,566,182 74,856,248 83,064,702 91,844,080
Add: depreciation expense 7,444,710 7,444,710 7,444,710 7,464,865 7,461,615 7,461,615 7,484,948 7,481,185 7,481,185 7,508,195
amortization of pre-operating costs 504,000 504,000 504,000 504,000 504,000 - - - - -
amortization of training costs 531,000 531,000 531,000 531,000 531,000 531,000 531,000 531,000 531,000 531,000
Accounts receivable (62,061,534) (8,792,051) (19,032,204) (22,130,109) (25,657,273) (21,339,341) (15,901,251) (17,491,376) (19,240,514) (21,164,565)
Equipment inventory (24,167) (955) (670) (274) 261 968 1,888 3,069 4,572 6,467 8,840
Raw material inventory (10,736,604) (3,042,038) (3,543,079) (4,113,909) (4,763,473) (2,619,910) (2,881,901) (3,170,091) (3,487,101) (3,835,811) 42,193,918
Accounts payable 55,720,549 15,451,689 17,984,799 20,870,009 23,915,539 13,386,222 14,723,995 16,195,451 17,813,949 15,779,388
Cash provided by operations (10,760,771) 12,328,891 32,837,334 34,041,862 44,188,224 58,758,860 58,235,740 71,237,850 78,089,980 85,820,979 136,700,855

Financing activities
Add: land lease expense - - - - - - - - - -
Land lease payment - - - - - - - - - - -
Issuance of shares 119,980,211 - - - - - - - - - -
Purchase of (treasury) shares
Cash provided by / (used for) financing activities 119,980,211 - - - - - - - - - -

Investing activities
Capital expenditure (106,337,200) - - (376,228) - - (435,531) - - (504,182) -
Acquisitions
Cash (used for) / provided by investing activities (106,337,200) - - (376,228) - - (435,531) - - (504,182) -

NET CASH 2,882,240 12,328,891 32,837,334 33,665,633 44,188,224 58,758,860 57,800,209 71,237,850 78,089,980 85,316,797 136,700,855

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Pre-Feasibility Study LPG Storage and Filling Station

13 KEY ASSUMPTIONS

13.1 Operating Cost Assumptions

Description Details
Water expense 3% of Direct staff salaries
10% of administration
Travelling expense
expense
Communication expense 5% of Direct staff salaries
Office expenses (stationary, entertainment,
4%of Direct staff salaries
janitorial services, etc.)
Professional fees (legal, audit, consultants, etc.) 0.1%of revenue
Bad debt expense 0.02%of revenue
10%of administration
Miscellaneous expense
expense
Depreciation Method Accelerated depreciation
10% on Machinery
10% on Office Equipment
Depreciation Rate
10% on Furniture & Fixture
33% Computer Equipment
Inflation Growth Rate 10%
Electricity Price Growth Rate 10%
Wage Growth Rate 5%

13.2 Production Cost Assumptions

Description Details
Maximum Storage Capacity 120 Tons
Production Capacity in First Year 60%
Percentage Increase in Production Capacity every
10%
Year
Maximum Production Capacity 100%

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Pre-Feasibility Study LPG Storage and Filling Station

13.3 Revenue Assumptions

Description Details
Growth in Sales Price 10%
LPG Processing Per Day (Tons / Day) 18
Days Operational / Year 300
Maximum Operational Capacity 5,400 Tons

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Pre-Feasibility Study LPG Storage and Filling Station

Small and Medium Enterprises Development Authority

HEAD OFFICE
4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road, Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
www.smeda.org.pk, [email protected]

REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

PUNJAB SINDH KPK BALOCHISTAN

3rd Floor, Building No. 3, 5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Aiwan-e-Iqbal Complex, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Egerton Road Lahore, Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (042) 36304926-7 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
[email protected] [email protected] [email protected] [email protected]

September 2023 22
 Small and Medium Enterprises Development Authority
HEAD OFFICE
4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road, Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
www.smeda.org.pk, [email protected]

REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

PUNJAB SINDH KPK BALOCHISTAN

3rd Floor, Building No. 3, 5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Aiwan-e-Iqbal Complex, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Egerton Road Lahore, Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (042) 36304926-7 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
[email protected] [email protected] [email protected] [email protected]