Industrial gases · Chemicals and specialty chemicals
Every cylinder accounted for, and every one earning
An industrial gas business owns thousands of cylinders it cannot see. We reconcile each one to a location, a deposit and a rental charge. Each mode of supply — cylinder, bulk liquid and on-site — is costed separately. The assets then earn what they should, and power cost is visible by product.
In one paragraph
An industrial gas company manages a fleet of returnable assets as much as it sells gas, and power is the largest single cost of making that gas. Our clients are gas producers, air-separation plant operators, cylinder fillers and distributors, usually with ₹10–300 crore turnover. Their customers range from fabricators and hospitals to steel and chemical plants. We usually work with the owner or finance head.
Managing director or owner, often with the operations head
The economics
How the money moves in this trade
Gas sold in cylinders carries a hidden balance sheet. Each cylinder is a capital asset that travels to a customer, is held for days or months, and may come back, be lost or be swapped for another company's cylinder. Deposits, rental and holding charges are supposed to compensate for that, but they only work if every cylinder can be traced to whoever holds it. Bulk liquid deliveries and on-site supply contracts have different economics again, often with minimum-offtake terms.
Air separation is power-intensive, so the cost of oxygen, nitrogen and argon depends heavily on the tariff paid and how fully the plant runs. Co-products come out of the same process in fixed proportions, which makes allocating cost between them a choice that has to be made deliberately. Storage, filling and transport of compressed gases also require licences and periodic cylinder testing, which carry their own cost.
The problem
Where the numbers usually break down
Cylinder holdings are known only by count
The total number of cylinders is roughly known, but not which customer holds which cylinder or for how long, so rental and losses cannot be charged.
Deposits are not matched to cylinders held
Security deposits taken years ago stay on the books while the cylinders they covered have been returned, lost or replaced.
Rental and holding charges are waived by habit
Holding charges exist in the price list but are dropped at invoicing for regular customers, with no record of who approved it.
Power cost is not split by product
Electricity is booked as one plant cost, so the separate margins on oxygen, nitrogen and argon are never known.
Minimum-offtake terms are not billed
Bulk and on-site contracts with take-or-pay clauses are invoiced on actual offtake, and shortfall charges are not raised.
What we do
The work, and the result each part produces
Cylinder register and reconciliation
Each cylinder recorded by serial number, owner, test due date and current holder, and reconciled periodically to delivery and return documents.
Every cylinder can be located, charged or written off.
Deposit and rental accounting
Deposits matched to cylinders held by each customer, with rental and holding charges computed from days held.
Deposits reflect current exposure and rental is billed rather than forgotten.
Power and joint-cost allocation
Power and other plant costs allocated between co-products on a stated basis, with cost per cubic metre reported by product.
Each gas has a margin rather than a share of an average.
Contract profitability by supply mode
Margins for cylinder, bulk liquid and on-site supply measured separately, including transport, asset cost and minimum-offtake terms.
Pricing for each supply mode reflects its own cost.
Approval controls on waivers and discounts
Rental waivers, holding-charge exemptions and special prices recorded with an approver and reviewed monthly.
Revenue given away is visible and owned.
Asset and testing schedule
Cylinder and vessel testing due dates linked to the fixed-asset register, with cost of testing and condemned cylinders recorded.
Testing cost and asset losses are planned, not discovered.
Where we start
The first steps of an engagement
Cylinder, deposit and delivery records
We ask for the cylinder list or asset register, customer deposit ledgers, delivery and return challans, the rental price list and the plant's power bills.
Opening cylinder count
Cylinders in your yard and at the largest customers are counted and matched to open delivery documents and deposits held. That gives an opening position by holder.
Live register and waiver approvals
A register keyed to serial number starts being updated from every delivery and return. Rental and holding-charge waivers need a named approver from then on.
First cylinder and deposit report
Cylinders by holder and days held, deposits held against cylinders outstanding, and the rental that could have been billed but was not.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Cylinders reconciled to holder, by customer
- Average days held and rental billed per cylinder
- Deposits held against cylinders outstanding
- Power cost per cubic metre, by product
- Contribution by supply mode and by customer
- Minimum-offtake shortfall billed against contract terms
Who it suits
Written for, and not the right fit for
- You need licences, cylinder certification or safety approvals obtained — those are your own responsibility with the relevant authority.
- You trade only small volumes through a single supplier's cylinders and own no fleet of your own.
- Air-separation and gas-production companies selling in cylinders, bulk liquid or on-site.
- Cylinder fillers and distributors with a large rotating cylinder fleet.
- Firms where cylinder losses or uncollected rental are known problems but not yet quantified.
Cities where this trade concentrates
Services
Services this work draws on
Internal controls and risk
Controls sized to your business, documented and actually tested.
Explore service ↗Costing and profitability
What each product, line and customer really contributes.
Explore service ↗Outsourced accounting
Your books kept current and reconciled, closed to a published calendar.
Explore service ↗MIS and financial planning
Reporting built around the questions you actually need answered.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
Our cylinder records are years out of date. Where do you start?
With a physical count at customer sites and your own yard, matched against open delivery documents. That gives an opening position. From there the register is kept current from every delivery and return, rather than rebuilt again.
Customers object to rental charges. Is it worth billing them?
That's a commercial call, but it should be made knowingly. Once you can see how long each customer holds cylinders and what that costs you, waiving the charge becomes a priced decision rather than a habit.
Who handles PESO licences and cylinder testing approvals?
You do. Licences for filling, storing and moving compressed gas, and cylinder testing approvals, are your own responsibility. We link testing schedules to the asset register and support the records those approvals depend on.
Licences for the storage, filling and transport of compressed gases, and cylinder and pressure-vessel testing approvals, are the client's own responsibility. 5th Quadrant maintains the asset records and reconciliations that support them. Full detail is on our Professional Scope page.
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