Master of Business Administration Executive

Faculty / School

Faculty of Business Administration (FBA)

Year of Award


Project Type

MBA Executive Research Project

Access Type

Restricted Access

Executive Summary

Lotte Chemical Pakistan Limited (LCPL) is the only PTA producing plant in Pakistan with its production capacity of around 500,000 tonnes per annum. The business has been in severe financial dismay over last couple of years and the crises are as yet far from over.

During the last three years, approximately 23 million tonnes of PTA capacity has been added in Asia resulting in PTA oversupply, decline in PTA operating rates and a significant drop in PTA margins. Domestically, the downstream polyester industry has underperformed due to increased power tariff, energy crisis, imposition of new taxes and the inability of local players to compete with imported Polyester Staple Fiber from China. In such a crunch situation, the only lifeline that LCPL can avail is to cut down its variable cost. (Source: Lotte Annual report - 2014)

The company has always kept a keen focus on reduction of its variable cost through projects and new ventures. What was once 200 USD/tonne of PTA, now hovers around 95-96 USD/ton. This in itself is a remarkable achievement by LCPL team. But the Variable cost is still higher than most of its global competitors mainly due to latest technology, cheaper Utilities and economy of scale. In this situation, the prime focus of LCPL management team is to engage itself in such ventures which are not very capital intensive but have a good payback in terms of variable cost reduction.

One such project that the company can undeitake is the installation of pipeline from Engro Vopak Terminal Limited (EVTL) to its plant at Port Qasim for transportation of Para xylene, the main ingredient required to prepare PTA. The current mode of transportation is rental road tanker through which PX is transported to the plant on daily basis. The research work in this report will focus on evaluating feasibility of installing this pipeline and its implication on product variable cost.



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