Compressed air supply being one of the crucial parameters for analysis of the industrial operation, moisture and lubricant have to be removed from it before supplying to sensitive instruments and controlling actuators. The compressed air supply plant consists of two sections, viz. air compressors and air dryers. The compressed air sucked from the environment is passed through the oil separator to supply it to the plant air receiver. Air dryers remove moisture/water concentrated from the compressed air using various mechanical/chemical processes. Since the dew point may be used to measure the dryness of the air, the lowest dew point is achieved by operating air dryers at their optimum efficiency and removing the maximum possible moisture from the system. A survey and experimentation are carried out on the air dryer system to increase the system’s effectiveness at a reduced cost of compressed air. This research aims to improve the performance of a refrigeration air dryer by utilizing the outlet air heat to maintain inlet temperature for compressed air. The pinch analysis is used to find out the energy conservation opportunities, make the system more efficient, and reduce the operation cost simultaneously. The results show that installing the plate-type heat exchangers (PHE) between the refrigeration and desiccant air dryer saves 14.35% of the total heat interactions of the systems. This recovered heat (11.34 kW) resulted in the reduction of 15.26% of the operation cost (₹2,60,665 per annum). A negligible pressure drop of 0.05 kg/cm2 is also observed in the system.