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Star CNG Station

EXECUTIVE SUMMARY
THE PROJECT:-

The proposed project contemplates to set up a new CNG

station 1 kilomiter ahead from khan pur ada rahim yar khan.

The project machinery is locally available.

LOCATION:

The proposed project contemplates to set up a new CNG

station 1 kilomiter ahead from khan pur ada rahim yar khan..

The proposed project site enjoys the benefits of 1) easy

availability of Natural gas which is main raw material for CNG

Stations , 2) quick access to main road, 3) Lcated at main

road and enjoys the excess of CNG fitted vehicles, 5)

availability of Skilled and Un-Skilled labor, and 5) free from

environmental hazards like water logging and salinity and

floods.

SPONSORS:

Sponsors of this project are highly qualified and have good

command over the project .

MARKET AND PLANT CAPACITY:

This project has good market and on its demand bases

this project will going to get the sales of 36288000 Rs

in 1st year and sales of 52416000 Rs in 2nd year and

sales of 76230 in 3rd year.

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PLANT CAPACITY:

The capacity of this project is too good due to its latest

filling machines and compressor its has a capacity of

filling the 864000 vehicles per year .

MATERIAL REQUIREMENT:

Basic requirement of this project is natural gas.

PROJECT ENGINEERING:

Machinery of this project would be purchased from the

Karachi from a local provider .

MANPOWER:

The project would create employment opportunities for


the following staff:
Detail Total Nos.
Skilled Labor 2
Semi-Skilled Labor 4
CNG Administrative Staff 7

IMPLIMENTATION STAGE:

This project will start its operation form the april2009

Project started and completed at jan2009 march2008.

COST OF THE PROJECT: Rs. “(000”)

Fixed Cost 32161

Net Working Capital 1437

Total 33598

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FINACIAL PLAN:

EQUITY 33598

Total 33598

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OPERATING RESULTS: (“000”)

ITEMS 2009 2010 2011


Sales 36288 52416 76230
Gross Profit 14462 21260 34082
Operating Profit 13731 20366 33072
Net Profit 7324 10994 17982

FINANCIAL POSITION OF THE COMPANY: (Rs. “000”)

ITEMS 2009 2010 2011

Current Assets 7335 14782 28217

Fixed Assets 29958 28882 27806

FINANCIAL INDICATORS:

Project Cost IRR %

33598 33

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TERMS AND CONDITIONS:

1. Proposed name of the project need to be mentioned.

2. Sponsors contribution is fully indulge in this project.

3. Land will be purchased in transfer to the sponsors names.

4. Any further financial assistance will be provided by its

sponsors.

5. Accessories and utilities will be arranged as per the

contract by the contract of civil work himself.

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INTRODUCTION
The proposed project contemplates to set up a new CNG station 1

kilomiter ahead from khan pur ada rahim yar khan. The project machinery

is locally available. The capacity of this project is too good due to its latest

filling machines and compressor its has a capacity of filling the 864000

vehicles per year. CNG pump will work 360 days of years there will not be

any stop.

The total Capital Cost of the project is estimated to be Rs. 33598000.

This total Cost of the project comprises of Fixed Assets Rs. 32161000

and Initial Net Working Capital of Rs.1437000

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Management

The overall management and control of the firm will be actively managed

by its partners who will actively participate in management decisions and

control the affairs of the firm.

Partners Name

1. Majid ali

2. Jam Imran Ahmad

3. Rehan Majeed

The partners will contribute equally in the equity of the project and will

equally participate in the profit and loss of the firm's business.

Sponsors

The sponsors of the project are professionally qualified and have valuable

and extensive experience. They have got good trading contacts and

market reputation in the industry. Moreover, they are professionally

qualified in the field of business Management from the Islamia University

of Bahawalpur under BBA Program. The sponsors experience would assist

the firm in its smooth and profitable operations.

The sponsors are financially sound and capable to contribute their part of

equity in the proposed project.

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The Sponsors detail is as under:-

1. Name : Majid ali

Age : 22 years

Address : Gulshan Usman Block u Street no 6

House no 10d

Rahim yar khan

Qualification : BBA(Finance)

Experience : In same industry of 2 years

2. Name : Jam Imran Ahmad

Age : 22 Years

Address : Rahim Yar Khan

Qualification : BBA (Finance)

Experience : 2 months internship at NRL.

3. Name : Rehan Majeed

Age : 23 Years

Address : Stellite Town 15-A, Rahim Yar Khan

Qualification : BBA (Finance)

Experience : 1 Years experience of Accountancy.

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Technical Analysis

Location of the Project


- The proposed project contemplates to set up a new CNG station
1 kilomiter ahead from khan pur ada rahim yar khan.
- Easy availability of raw material
- Access to the main road, Sources of Power, water, fuel etc.
- Availability of transport & communication like telephone, telex,
Internet etc.
- Availability of skilled and Un-Skilled manpower

Manufacturing Process
- Natural Gas is one of the most valuable natural resources
abundantly available in our country. 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 that’s why it is also called
as Green Fuel, because it possesses less carbon and led
contents than petrol.

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GROWTH
There has been a tremendous growth in the CNG sector over
the years. 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 vehicle and 220 stations respectively and by the
year 2005 they have tremendously grown up to 670 CNG
Stations and 600,000 CNG fitted vehicles. At present, there are
more than 2000 CNG stations &2 million CNG fitted vehicles. The
:growth in terms of percentage is given in the following table

:Growth Percentage of Vehicles

Year 2005 2008 increase %


No. Of Vehicles on CNG 600,000 2,000,000 67%
CNG Filling Stations 670 2,000 67%

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MARKET ANALYSIS
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

Total number of CNG stations in Pakistan is only 2000,


which is quite low for meeting the growing demand of
CNG. Apart from these 2000 CNG stations, many new CNG stations are
.being setup across the country

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Star CNG Station Annexure - I


Estimated Cost of Land

Sr. Area in Unit Rs ("000")


Description
No. Cost
Marlas Total Cost
1 Land 50 2,80000 14000
2 Registration & Legal Requirements 50 400 20
3 Stamp Duty 50 300 15
4 District Council 50 100 5
5 Development Charges 50 1300 65
Total Cost of Land 14105

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Annexure - II

Star CNG Station


Estimated Cost of Civil Works

Sr. Type of Unit of Covered Rate Per Rs ("000")


Description
No.
Building Construction area Unit Total Cost
1 Control room Rcc Square foot 160 710 113
Compressor and
Rcc Square foot 310 710 220
2 cylinder storage room
3 shed Kanopi Square foot 1650 450 724

4 office Rcc Square foot 550 710 119

5 Tuc Shop Rcc Square foot 224 710 159

6 Mosque Rcc Square foot 250 710 177


Car wash and Cng
Rcc Square foot 768 710 545
7 repair
8 flooring Running feet 7388 150 1108

9 Lawn Running feet 2500 50 125

10 Contingency 250

Total Cost 3542

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Annexure - III
Star CNG Station
Estimated Cost of Machinery
Rupees Rupees
("000") ("000")
Unit
Sr.No. Description Qty Total Cost
Cost
Gas compressor(8 to 15 PSIG) outlet pressure of
7500
1 3625 PSIG 50 vehicle per hour 1 7500

2 Electric Control Pannel 1 200 200

3 Storage Cascade 45 30 1350


Cng Dispenser UK model=h430h-wl Capacity
2 900 1800
4 400m3/hr

5 Electric cables with tape fitting panel 265

6 Cooling tower 1 150 150

7 Contingencies 550

Total Cost of Machinery 1,1815

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Annexure – IV

Star CNG Station


Estimated cost of the Project

Total cost
Sr.No. Description LCY FCY
("000")
1 Land 14105 - 14105

2 Building 3542 - 3542

3 Machinery 10715 - 11815

4 Installation & Erection of Machinery 370 370

5 Insurance 5% of Cost of Machinery 590 590

6 Transportation 2% of Machinery 12 12

7 Furniture and Fixture 250 250

8 Office Equipment 350 350

09 Pre-operating expenses 1127 1127

Estimated fixed cost - 32161

Add: Net Initial Net Working Capital 1437

Total Estimated Cost of Project 33598

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Annexure - V

Star CNG Station


Initial Net Working Capital Requirement

Rs. "000"

A. Current Assets:

Account
1 receieveable 6% of 2177
sales
2 Advances and Deposits, & Prepayments 210

Total Current Assets 2387

B. Possible Current Liabilities:

1 Accounts Payable for cost of gas 800

2 Accrued Power Expenses 150

Total current liabilities 950

Initial net working capital 1437

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Annexure - VI

Star CNG Station


Estimated Income Statement
Years ending September 30 : 2009 2010 2011
Sales 36288 52416 76230
Less: COST OF SALES
Raw Material 16800 24640 33878
Labor 528 618 723
Manufacturing Overheads 3422 4822 6471
Depreciation 1076 1076 1076
Total Cost of Goods Manufactured 21826 31156 42148
Gross Profit 14462 21260 34082
OPERATING EXPENSES:
Administrative Expenses 65 74 87
General Expenses 485 558 642
Selling Expenses 181 262 381
Total Operating Expenses 731 894 1010
Operating Profit 13731 20366 33072
OTHER EXPENSES:
Financial Charges on:
Long Term Loan - - -
Bank Borrowings - - -
Amortization of Pre-Production Expenses 376 376 376
Total Other Expenses 376 376 376
Profit Before Tax and Worker's Fund 13355 19990 32696
Worker's Fund - - -
Profit/(Loss) Before Tax 13355 19990 32696
Tax Provisions @ 45% 6009 8995 14713
Net Profit 7324 10994 17982

ASSUMPTION UNDERLYING EARNING


FORECAST
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Star CNG Station

PRODUCTION AND SALES

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 PSIG (pounds per square inch gauge pressure) 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

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 feasibility report, a British origin compressor (Ham
worthy Compressor, Bellies & Marcum, UK, Model: H430H-WL Capacity:
400 m3/hr) 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

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

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Currently, the CNG cylinders with two different capacities are installed in
the CNG fitted cars. One type of cylinder has a capacity of 6kg and the
other has a capacity of 8k.

Price are assumed to be according with the current market price that is
imposed by Govt.

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Based over these assumptions, following is the year-wise detail of


production, Sales and Sales Revenue of the proposed project:-

Annexure-VI-A
Production
Capacity of 400m3/hr/filling unit No. of units Filling/unit Annual filling
86400
Filling units 2 50 cars
0
Total 864000

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Annexure-VI-A

300/day 400/day 550/day


2009 2010 2011
Capacity Utilized vehicle vehicle vehicle
filled filled filled
a) Vehicles filled 108000 144000 198000
Total vehicle filled 108000 144000 198000

Sales Revenue:
Rupees ‘000’
Description Unit Price

a) Cylinder capacity 7kg/car 48 (2009) 36288


52(2010) 52416
55(2011) 76230

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Annexure-VI-A

Raw Material:
Rs ‘000’
2009 2010 2011

a) Natural gas 16800 24640 33878

Total 16800 24640 33878

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Annexure-VI-A
Labor Cost:
Direct Labor:
No. of Salary/Month Annual
Sr. Salary
Discription Employees /Worker
No. ("000")
1 Skilled 2 10000 240
2 Semi skilled 4 6000 288
Total 528
Assumptions:
1 Direct labor will increase every year @ 17%.

Year Wise Wages of Labor:


Years
Sr. No. Description
2009 2010 2011
Rs ("000")
1 Labor cost 528 618 723

Total Cost of Labor 528 618 723

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Annexure-VI-A

Manufacturing Overhead Cost:

Rs
Description ("000")
a) Fixed Cost:

Insurance: @ 1% of Fixed Assets Cost 321

Maintenance:

Maintenance of filler 15000/unit 30


Maintenance of Building @ 2% of Cost of Building 71

Total Fixed Cost 422


b) Variable Manufacturing Expenses:

Electricity charges 3000

Total Variable Cost 3000

Year ending Manufacturing Overheads as per Different Capacities:


Years
Description 2009 2010 2011
Rupees ("000")

Fixed Cost 422 422 422


Variable Cost 3000 4400 6049
Total Cost of Manufacturing Overheads 3422 4822 6471

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Annexure-VI-A
Administrative And General Expenses:
Rupees
("000")
Sr. No. of Salary/ Annual
Designation
No. Employees Month Salary
1 Manager 1 25000 25
2 Deputy manager 1 10000 10
3 Clerk 1 8000 8
4 Watchman 2 6000 12
5 Peon/Sweeper 2 5000 10

Total 65

General Expenses:
Year Exp.
Sr. No. Description ("000")
1 Traveling Expenses 75
2 Printing & Stationary 30
3 Telephone, Telex, Postage 80
4 Entertainment 200
6 Legal & Audit 20
7 Miscellaneous 80
Total 485

Assumptions:
1 Administrative Salaries will increase @ 15% every year.

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Year Wise Administrative Salaries:


No. of Rupees ("000")
Sr.
Designation
No. Employees 2009 2010 2011

1 Manager 1 25 29 33
2 Deputy manager 1 10 12 14
3 Clerk 1 8 9 10
4 Watchman 2 12 14 16
5 Peon/Sweeper 2 10 12 14

Total 65 74 87

General Expenses:
Sr.
No. Description Rupees ("000")
86 99
1 Traveling Expenses 75
35 40
2 Printing & Stationary 30
92 106
3 Telephone, Telex, Postage 80
230 265
4 Entertainment 200
23 26
6 Legal & Audit 20
92 106
7 Miscellaneous 80

Total 485 558 642

Selling Expenses:

Selling Expenses are assumed to be .5% of Sales

Sr.
Description Rupees ‘000’
No.
1 Selling Expenses .5% of Sales Revenue 181 262 381

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Star CNG Station

Annexure-VI-A

Depreciation Schedule of Fixed Assets:

Sr. No. Description Total Cost (Rs.) Rs. ("000")


1 Machinery 11687 15 779
2 Building 3542 20 177
3 Furniture & Fixture 250 5 50
4 Office Equipment 350 5 70
Total 1076

Note:- Depreciation will be constant over the life of assets.

Year Wise Depreciation:

Years
Description
2009 2010 2011

Rupees ("000")

Depreciation 1076 1076 1076

Pre-Production Expenses:
Rs.
Sr. No. Description
("000")
1 Registration Charges 350
2 NOCs 300
3 Sales Tax Registration Charges 12
4 Consultancy & Report Preparation Charges 250
5 Printing & Stationary 45
6 Conveyance Charges 35
7 Telephone & Postage 45
8 Salaries and Wages during Construction 90
Total Pre- Preproduction Expenses 1127

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Annexure-VII
Star CNG Station.
Cash Flow Statement
End of
Operating Years
Construction

2009 2010 2011

SOURCES OF FUNDS:
Operating Profits - 13731 20366 33072
Add: Depreciation - 1076 1076 1076
Total Funds from Operation - 14807 21442 34148
Other Sources:
Long Term Loan - - -
Bank Borrowings - - -
Paid-Up Capital 33598 - -
Total Sources of Funds 33598 14807 21442 34148
APPLICATION OF FUNDS:

Investment in Fixed Assets 29934 - - -


Financial Charges during
- - - -
Construction
Pre-Production Expenses 1127 - - -
Repayment of:
Long Term Loan - - - -
Bank Borrowings - - -
Financial Charges On:
Long Term Loan - - - -
Bank Borrowings - -
PAYMENT OF:
Taxes - 6009 8995 14713
Dividends - - - -
Worker's Fund - - -
Short Term Investment - 4000 5000 6000
Increase in Current Assets
210 2177 967 1429
(Other than Cash)
Total Application of Funds 31271 12186 14962 22142
Cash Surplus/(Deficit) 2327 2621 6480 12006
Cash at the Beginning of the
- 2327 4948 11,428
Year
Cash at the end of the year 2327 4948 11,428 23434

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Annexure-VIII

Star CNG Station


Balance Sheet
End of
Operating Years
Construction
2009 2010 2011
ASSETS: Rupees ("000")
CURRENT ASSETS:
Cash and Bank Balance 2327 4948 11428 23434
Short Term Investment - - - -
Accounts Receivable - 2177 3144 4573
Advances, Deposits and Prepayments 210 210 210 210
Total Current Assets 2537 7335 14782 28217
FIXED ASSETS:
Fixed Assets at Cost 31034 31034 31034 31034
Accumulated Depreciation on Fixed Assets - 1076 2152 3228
Fixed Assets Net 31034 29958 28882 27806
Intangibles 1127 751 376 -
Total Assets 33598 46931 53587 66293
LIABILITIES AND EQUITY:
CURRENT LIABILITIES:
Bank Borrowings - -
Taxes Payable - 6009 8995 14713
Dividend Payable - -
Worker's Fund Payable - - - - -
Current Maturity of Log Term Debt - - - -
Total Current Liabilities - 6009 8995 14713
LONG TERM DEBTS:
Long Term Debt - - - -
Total long Term Debt - - - -
EQUITY:
Paid-Up-capital 33598 33598 33598 33598
Retained Earnings - 7324 10994 17982
Total Equity 33598 40922 44592 51580
Total Liabilities and Equity 33598 46931 53587 66293

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Annexure-IX

BREAK-EVEN ANALYSIS

Commercial Break-even in the first operating year:

( Rs. In '000' )
Variable Fixed
Items Cost Cost Total Cost

168 168
Raw Material
00 - 00
52
Labor
528 8
Manufacturing 3 42 3
Overheads 000 2 422
10 1
Depreciation Expenses
- 76 076
Administrative & General 55 5
Expenses - 0 50
18 18
Selling Expenses
1 1
Interest / Mark-Up Expenses
- - -
Amortization of Pre-Production Expenses
376 376
199 29 229
Total:
81 52 33

362
Sales value of Production:
88

Break-Even Point 2952 X 100


362 19
88 - 981

18%

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BREAK-EVEN ANALYSIS

Cash Break-even in the third Operating Year:

( Rs. In '000' )
Fixed Total
Items Variable Cost Cost Cost

Raw Material 16800 - 16800


Labor 528 528
Manufacturing Overheads 3000 422 3422
Administrative & General Expenses 550 550
Selling Expenses 181 - 181
Interest / Mark-Up Expenses - - -
Worker's Participation Fund - - -
Debt Payment - - -
Tax - 6009 6009
Total: 19981 7509 27490
-

Sales from Operations: 36288

7509
Break-Even Point: X 100
36288 - 19981
46%

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Annexure-X

Weighted Average Cost of Capital


("000")
Interest Rate After Tax Total
Nature of Fund Amount % Rate % Interest

IN this project there is no long term debt so there would not be this annexure
participation.

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Annexure - XIII
FAT Oil Mills (Pvt) Limited.
Financial Plan

Rupees ("000")

Description LCY FCY Total cost

Total Fixed cost of the project 32161 - 32161

Initial Permanent working capital 1437 - 1437

Total cost of the project 33598 33598

Long Term Debt - - -

Equity Participation 33598 - 33598

Total Capital Required 33598 33598

Debt/Equity Ratio

KEY SUCCESS FACTORS

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:Few factors ensure the profitability of the project which is as follows


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

OPPORTUNITIES

:The project would have a number of opportunities


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
This project will reduce the import bill of petroleum products and promote the use of
gas fuel, as it is abundantly available in our country in this way it can save our foreign
.reserves
.Environment friendly / green fuel will protect the environment from deadly pollution

THREATS/CONSTRAINS

:The 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. The gap between
.the prices of Petrol and Gas is becoming narrower, since the last month
.Shortage of gas supply in winter season
.The under-table money for acquiring the NOCs is another threat for the project

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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APPENDICES

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A list of some of the available equipment and machinery provided by HDIP is as


:follows

Table: Suppliers

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 C40111S, C50214S


Switzerland
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, CNG90, CNG 125, CNG250
USA
Chengdu Jinxing Chemical ZW-3.45/250JX, ZW-5.0/1-23,
Machinery and Equiment Factory, -ZW
China 5.52/0.5-250JX
Chonqing Air Gas Compressor L-3.8/1-250, L-3/1-250, L-5/0.56-
Factory, China ,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 IFDE-23SE-650.250.20

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