REFINING OF USED LUBRICATING OIL
Introduction
This business idea is for refining of used lubricating oil. Lubricating oil is
extracted from crude petroleum by a process of distillation. It falls under the
category of high value products and the demand for it keeps on growing. The
market size is big as it is used for any machine or instruments to increase
their efficiency and longevity; to reduce the wear and tear caused by friction.
It can be refined to make it very close to original lubricating oil. The
business idea is premised on production of 3,500 liters of refined lubricating
oil per month which translates into 42,000 liters per year. The revenue
potential is estimated at US$ 530 per month translating into US$ 126,360 per
year with a profit margin of 20%. Total investment requirement is US$123,175 for
the first year of the project.
Production Process
The used lubricating oil is collected in tanks. The oil is transferred to a
dehydration tank through a pump and subsequently heated to separate water from
oil. The moisture-free oil is transferred to a settling tank and is treated
with concentrated sulfuric acid for impurities to settle down. The mixture is
again heated under vacuum for 3-4 hours and the clear liquid is siphoned and
additives are mixed to give desired properties.
Market
Analysis
There is a high demand for lubricating oil compared to its supply both in urban
and rural areas and this is because about two thirds of the lube oil is used by
industry while the remaining one third goes for automobiles. And it is also
used for blending in various types of like spindle oil, transformer oil, axle
oil and hydraulic oil, etc.
Capital Investment Requirements in US$
|
Item |
Units |
Qty |
Unit Cost |
Amount |
|
Storage Tank |
No |
2 |
750 |
1,500 |
|
Settling Tank |
No |
1 |
2,500 |
2,500 |
|
Aid Treatment Tank |
No |
1 |
1,750 |
1,750 |
|
Vacuum Distillation |
No |
1 |
2,000 |
2,000 |
|
Receiver for fuel dilution |
No |
1 |
2,500 |
2,500 |
|
Gas Absorber |
No |
1 |
1,250 |
1,250 |
|
Horizontal plate |
No |
2 |
500 |
1,000 |
|
Condenser
made of M.S |
No |
1 |
1,500 |
1,500 |
|
Laboratory testing Equip |
Set |
1 |
1,000 |
1,000 |
|
Oil fired burner |
No |
1 |
1,500 |
1,500 |
|
Drums |
No |
20 |
10 |
200 |
|
Total |
16,700 |
Production and Operating Costs in US$
|
Cost Item |
Unit |
Unit |
Qty |
Prod |
Prod |
Prod cost/ |
|
Direct Cost |
||||||
|
Used lube oil |
Ltrs |
0.5 |
80 |
40 |
1,040 |
12,480 |
|
Concentrated |
Ltrs |
1.5 |
30 |
45 |
1,170 |
14,040 |
|
Fuller |
Ltrs |
1.5 |
20 |
30 |
780 |
9,360 |
|
Lime |
kgs |
1 |
15 |
15 |
390 |
4,680 |
|
Additives |
Ltrs |
0.5 |
15 |
7.5 |
195 |
2,340 |
|
Sub-total |
|
160 |
137.5 |
3,575 |
42,900 |
|
|
General Costs(Overheads) |
||||||
|
Labour |
|
4,000
|
48,000
|
|||
|
Rent |
|
250 |
3,000 |
|||
|
Utilities(water & power) |
|
200 |
2,400 |
|||
|
Other Costs(Miscellaneous) |
|
500 |
6,000 |
|||
|
Depreciation(Asset write off) Expences |
|
348 |
4,175 |
|||
|
Sub-total |
|
5,298 |
63,575 |
|||
|
Total Operating Costs |
|
8,873 |
106,475 |
|||
1. Production costs assumed are 312 days per
year with a daily capacity of 135 liters of Refined Lubricating Oil.
2. Depreciation (fixed asset write off) assumes 4 years life of assets written
off at 25% per year for all assets.
3. Direct Costs include materials, supplies and other costs that directly go
into production of the product.
4. A production month is assumed to have 26 days.
Project Product costs and Price Structure in US$
|
Item |
Qty/ |
Qty/Yr |
Unit |
Prod/Yr |
Unit |
Total/revenue |
|
Refined |
135 |
42,120 |
2.5 |
106,475 |
3.0 |
126,360 |
Profitability Analysis in US$
|
Item |
Per |
Per |
Per Yr |
|
Revenue |
405 |
10,530 |
126,360 |
|
Less: Production and Operating Costs |
341 |
8,873 |
106,475 |
|
Profit |
64 |
1,657 |
19,885 |