Degree

Master of Business Administration

Faculty / School

School of Business Studies (SBS)

Advisor

Mr. Faisal Jalal, Department of Management

Project Coordinator (Internal)

Muhammad Zahid - Manager (Graduate Programs)

Project Coordinator (External)

Mr. Jawad Ahmed, Assistant Manager (Accounts & Salaries)

Client

Lotte Chemical Pakistan Limited

Committee Member 1

Dr. Rameez Khalid, Department of Management, Institute of Business Administration (IBA), Karachi

Project Type

MBA Research Project

Keywords

Purified Terephthalic Acid (PTA); Capacity Expansion; Pre-Feasibility Study; Discounted Cash Flow (DCF) Analysis; PTA–PX Margin

Abstract / Summary

This study examines whether Lotte Chemical Pakistan Limited (LCPL), Pakistan's only domestic producer of Purified Terephthalic Acid (PTA), should expand its 500,000 tons per annum plant at Port Qasim, Karachi. PTA is the key raw material for polyester fibre, yarn and PET bottles. Expansion feasibility is assessed across market, technical and financial dimensions using company reports, industry and trade data, and stakeholder interviews across the PTA value chain.
The market need is clear. Based on the current estimate, Pakistan is consuming around 693,000 tons of PTA, of which nearly 40% is imported, and the demand is set to grow to around 816,000 tons by 2030. The resulting shortfall of 241,000 to 316,000 tons exceeds the 150,000-ton expansion criterion. The three options are considered: debottlenecking (approximately 75,000 tons), a new brownfield train (approximately 250,000 tons), and a combination option (total of approximately 825,000 tons). No disqualifying barriers in technology, feedstock, utilities, logistics, or environmental compliance were identified in the technical screening. However, the findings are only for pre-feasibility based on Class-5 cost estimates (±30-50% accuracy). Financially, none of the options is viable. A 25-year discounted cash flow analysis (FY2027–FY2051) at a 10.97% WACC yields negative NPVs of US$20.3 million for debottlenecking (IRR 5.46%, 22.2-year payback on US$27.7 million), US$268.6 million for the brownfield train, and US$288.0 million for the combined option. The combined option remains unattractive even in the most optimistic scenario (7% demand growth, 92.5% utilisation), with an NPV of about negative US$258 million.
The primary constraint is the PTA–PX spread at approximately US$84 per ton, which is much lower than the combined option's break-even price of US$310–320 per ton. LCPL meets the market and technical criteria but fails the financial one, so a Final Investment Decision is not recommended now. If the spread goes back to $140 per ton for 2-3 quarters, debottlenecking may be revisited, subject to an updated financial assessment.

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Available for download on Thursday, October 18, 2029

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