Di Maria could cost Manchester United €188m

The Old Trafford club have made a breakthrough in their pursuit of the Real Madrid winger, with negotiations set to continue on Sunday

By Paul Clennam

Manchester United may have to spend a staggering €188 million to wrap up a deal for Real Madrid forwardAngel Di Maria.

Madrid coach Carlo Ancelotti has confirmed the player will leave the club this summer and it is understood United have edged closer to the signing of the Argentina international, who is keen to link up with Louis van Gaal.

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And the Old Trafford club are facing a significant outlay if they are to secure the signature of the 26-year-old winger.

Madrid are aiming to receive somewhere in the region of €80m and €90m for Di Maria, though the initial fee paid by United could be lower with bonuses and add-ons supplementing the deal.

Di Maria, meanwhile, could pocket a €6m signing-on fee and sign a five-year contract worth close to the €375,000-a-week wage earned by Wayne Rooney.

United have secured just three signings this summer, bringing in Ander Herrera from Athletic Bilbao for around €35m, left-back Luke Shaw in a deal which could rise to €38m, and €20m for Argentina defender Marcos Rojo.

After a disappointing transfer window so far, the pressure is on Old Trafford executive vice-chairman Ed Woodward to complete a move for Di Maria.

Indeed, Woodward is understood to be desperate to seal the signing of the winger, who has been a target for United over several weeks.

Di Maria has moved ever closer to a Madrid exit as the start of the new season in Spain has approached.

The winger was not in the squad for the second leg of the Spanish Super Cup defeat to rivals Atletico, and Madrid boss Carlo Ancelotti has confirmed the player has said his goodbyes ahead of his departure.

"Di Maria has not come here to train, just to say goodbye," he told reporters. "It's not official yet, but everything is being sorted. We thanked him for what he has given the club and we wished him good luck.

"I have had a very good relationship with Di Maria. He has done a fantastic job at Real Madrid. We are able to replace him very well.

"It was his decision, because the club did everything possible to keep him, offering everything we could to have him here. He decided otherwise, so good luck to him."

Negotiations to complete the deal are set to continue on Sunday

Apple iPhone6: Redesign gives rise to supply hiccup

TOKYO: 

Suppliers to Apple Inc are scrambling to get enough screens ready for the new iPhone 6 smartphone as the need to redesign a key component disrupted panel production ahead of next month’s expected launch, supply chain sources said.

It’s unclear whether the hiccup could delay the launch or limit the number of phones initially available to consumers, sources said, as Apple readies larger-screen iPhones for the year-end shopping season amid market share loss to cheaper rivals.

But the issue highlights the risks and challenges that suppliers face to meet Apple’s tough specifications, and comes on the heels of a separate screen technology problem, since resolved, in making thinner screens for the larger iPhone 6 model.

Cupertino, California-based Apple has scheduled a media event for Sept. 9, and many expect it to unveil the new iPhone 6 with both 4.7 inch and 5.5 inch screens – bigger than the 4-inch screen on the iPhone 5s and 5c.

Two supply chain sources said display panel production suffered a setback after the backlight that helps illuminate the screen had to be revised, putting screen assembly on hold for part of June and July. One said Apple, aiming for the thinnest phone possible, initially wanted to cut back to a single layer of backlight film, instead of the standard two layers, for the 4.7-inch screen, which went into mass production ahead of the 5.5-inch version.

But the new configuration was not bright enough and the backlight was sent back to the drawing board to fit in the extra layer, costing precious time and temporarily idling some screen assembly operations, the source said.

Output is now back on track and suppliers are working flat-out to make up for lost time, the supply chain sources added. Japan Display Inc, Sharp Corp and South Korea’s LG Display Co Liminted have been selected to make the iPhone 6 screens, the sources said.

Representatives for those three suppliers, and for Apple, declined to comment.

Wider impact

Apple is known to make tough demands on its parts suppliers for new iPhones and iPads as it competes to create designs, shapes, sizes and features to set it apart and command a premium price in a fiercely competitive gadget market.

This can cause glitches and delays, including screen problems that crimped supplies at last year’s launch of a high-resolution version of Apple’s iPad Mini.

It also highlights the danger for suppliers of depending too heavily on Apple for revenues, creating earnings volatility.

Earlier this month, Japan Display, said to be the lead supplier for the new iPhone panel, said orders for “a large customer” – which analysts said was Apple – arrived as expected, but shipments may be delayed in the July-September quarter.

Supply chain sources had previously said challenges with the new iPhone’s screen in-cell technology, which eliminates one of the layers in the LCD screen to make it thinner, caused a delay in the production of the larger 5.5-inch version. One display industry source said the in-cell issues had now been resolved.

Samples sent: US to assess potential of Pakistan’s shale gas reserves

ISLAMABAD: 

Pakistan has sent samples of shale gas to the United States to determine the prospects of reserves of this untapped energy source following encouraging estimates given by the US Energy Information Administration (EIA), officials say.

According to the EIA assessment, Pakistan holds massive shale gas reserves estimated at 51 trillion cubic feet (tcf), close to the conventional gas reserves of 58 tcf.

At present, the government is conducting a study with the technical assistance of US Agency for International Development to prove the presence of huge shale gas deposits in the country.

Sources disclose that USAID has provided $1.8 million in technical assistance for undertaking the study. “Some samples have been sent to the US and research work will be completed in one year,” an official said, adding they were also looking for adopting US technology.

Washington is also imparting technical training to Pakistani officials and employees and engineers of public sector oil and gas companies.

The Ministry of Petroleum and Natural Resources has sent a summary to the Economic Coordination Committee (ECC) of the cabinet, seeking the go-ahead for initiating a pilot project to search and consume the shale gas potential. The move is aimed at gradually bridging the yawning gap between demand and supply of energy.

Shale gas is natural gas that is found trapped within shale formations. It has low permeability compared to conventional reserves, that’s why it does not come out easily and a specific amount of investment and pricing are required to encourage its exploitation.

At present, Pakistan is not producing shale gas and needs to undertake significant initial work to tap this energy resource.

The US, after the discovery of massive shale gas deposits there in recent years, has become a gas-exporting country. In future, reports say, it will experience a boom in shale oil production as well and will become the largest oil producer.

Officials point out that Pakistan will offer $12 per million British thermal units (mmbtu) to gas exploration and production companies under the pilot programme, a price that is close to the cost of gas to be imported from Iran under the Iran-Pakistan pipeline project.

“A policy framework has been prepared and its approval will be sought from the ECC in its upcoming meeting,” an official of the petroleum ministry told The Express Tribune.

According to the official, exploration companies have already found some traces of shale gas during the search for conventional gas as 10% to 12% of shale gas appears on upper faces of conventional gas.

Experts suggest that Pakistan has consumed around 40% of conventional gas reserves and shale gas is the most viable option to meet growing energy needs.

A study conducted by a group of exploration and production companies says the production of shale gas will be economical at about 80% of the price of Brent crude, but this will have to be brought down to 70%.

Apart from shale gas, the government is also planning to drill 400 wells in the next four years in an effort to enhance the country’s oil and gas production.

Though in the past one year new gas deposits had been found, total production of the country stood at almost the same level at four billion cubic feet per day because of depletion of reserves in old fields.

According to officials, the country has added 500 million cubic feet of gas per day (mmcfd) from new finds, but a quantity more than that has been depleted. Therefore, the impact of additional 500 mmcfd is not reflected in overall production.

However, oil output has risen to near 100,000 barrels per day compared to 74,000 barrels per day earlier.

Rupee-dollar parity:‘Policymakers comfortable with correction’

KARACHI: 

The value of the rupee against the dollar decreased 60 paisa in the interbank market on Thursday to close at Rs100.30, with the rupee-dollar parity crossing Rs100 in both open and interbank markets.

After undergoing an unprecedented appreciation of 8.8% between December and July in interbank, the rupee has lost 1.93% value since the beginning of the current month alone.

“The current movement in the exchange rate is due to heightened (political) uncertainty. Hopefully, things will go back to being relatively normal once it goes away,” State Bank of Pakistan (SBP) Director Monetary Policy and acting chief spokesman Dr Hamza Malik said while speaking to journalists at the SBP head office on Thursday.

Referring to the on-going sit-in by an opposition party in front of parliament, Malik expressed hope that the political turmoil in Islamabad would be a ‘short-term blip’.

“Underlying fundamentals of the economy are strong,” he added.

He said the central bank typically has estimates of the expected inflows and outflows of dollars for the next few weeks. Any sudden movement in the exchange rate, while data about the expected flows point to the opposite direction, alerts the SBP immediately, Malik noted. He said the SBP intervenes in such situations by “talking to the market” in order to quell the panic.

SBP holding itself back

However, the continuous slide of the rupee against the dollar suggests that the SBP is holding back this time around. SBP-held foreign exchange reserves were only $5.3 billion in March when it reportedly injected liquidity into the market to strengthen the rupee.

In contrast, SBP-held reserves currently stand at $8.9 billion as per the data released on Thursday. Yet analysts believe there has been no such intervention.

Speaking to The Express Tribune, Standard Chartered Bank Senior Economist Sayem Ali said the SBP has not intervened in the foreign exchange market despite possessing higher foreign reserves.

“(It) indicates that the policy makers are comfortable with the correction in the foreign exchange market,” he said.

Ali also disagreed with the assessment of the SBP director that fundamentals of the economy were strong. Noting that the recent dollar rate movement is driven primarily by sentiments, he said the fundamentals of the economy were already indicating that a correction was due in the foreign exchange market.

“In the monetary policy statement, the SBP clearly highlighted the sharp appreciation of the rupee’s value (against the dollar) and the overvaluation of the real effective exchange rate (REER) index as a concern, leading to a widening trade deficit,” he noted.

Given the government’s estimate of inflows of nearly $9 billion in the financial/capital account and foreign debt repayments of $6 billion in 2014-15, Standard Chartered Bank estimates the exchange rate will be Rs104 to a dollar by December.

Speaking on condition of anonymity, a commercial banker said banks were buying the greenbacks from the interbank market at any given rate in order to sell them on to their clients.

“Liquidity is tight, but the SBP isn’t providing us with any cushion.  I suspect the finance ministry wants the SBP to stay away and let the dollar slide to Rs101. It’s playing politics,” he said.

The value of the dollar will come down by Rs2-3 within a week of the resolution of the political conflict, he added.

Published in The Express Tribune, August 22^nd, 2014.

Innovative concepts: Setting up Pakistan’s first rice bran oil plant

KARACHI: 

When thinking of a business venture, some like to do it the old-fashioned way and invest in a tried and tested sector. But, there are those who like stepping into unexplored territory in hopes of becoming trend-setters.

With this in mind, e2e Supply Chain Management Chief Executive Abid Butt belongs to the latter category. He has entered into a new joint venture to establish Pakistan’s first rice bran oil plant, which is going to start operating from November this year.

He set up e2e Supply Chain Management in 2006, making it one of the top logistics companies in Pakistan, Bangladesh and Afghanistan. The company launched with only $20,000 of seed capital and eventually generated revenues of around $75 million in 2011. It was ranked number one in ‘All World’ fastest growing companies of  Pakistan and number three in ‘Arabia 500’ survey (including North Africa and Turkey).

The company has recently entered into the rice bran oil business, popular for its high spoke point of 232 °C (450 °F). It is extracted from the hard outer brown layer of rice after chaff (rice husk), is less sticky and due to its mild flavor, is used for high-temperature cooking methods like deep-frying.

“It all began when I saw a rice field video, in which a powdery substance was being separated from the rice,” said Butt. “I was amazed to see the process, which I later learned produced very healthy cooking oil.”

“The plant machinery cost me a little over Rs1 billion and has been imported from India — a leading country in rice bran oil technology. The production capacity of the plant is 10,000 tons.”

Butt, who has majority stake in the project, intends selling the oil to edible oil companies which will blend it with their products.

Rice bran oil is blended in many countries including India. According to American Heart Association, rice bran oil is the healthiest edible oil in the world. Its per litre cost is close to sunflower oil but it is comparatively healthier.

“Pakistan can gradually improve the efficiency of rice bran oil technology. We would like to get the support of Pakistani universities to improve the efficiency of this technology,” Butt said.

“Rice bran oil production is commercially viable. Even if we face problems in selling rice bran oil to edible oil companies, we have an alternative to brand the oil ourselves and sell it at premium. This way we will recover our investment in four to five years, which is viable by any world standard,” he stressed.

Speaking on the advantages of rice bran oil production in Pakistan, he said Pakistan is a country that produces millions of tons of rice annually. Since the raw material is produced in the country in abundance, the government can easily reduce its edible oil import bills by millions of dollars, he said.

Despite all the problems like energy crisis and security issues, Butt believes that Pakistan has huge potential to grow and improve its economy. “Pakistan can grow faster in coming years. But for that its business people have to continuously looking for new business ideas to diversify the country economy.

Business ambience: ‘No investment allowed to fail in Pakistan’

KARACHI: 

As chairman of the Board of Investment (BOI), Miftah Ismail spends most of his time dealing with large corporations, which are often backed by foreign sponsors. But, he says, the real focus of the government should be on small businesses, accounting for most of the investment.

“Foreign investment is just $1 billion. The rest of the $33 billion invested annually is by local businessmen, some of whom might be the owners of lathe machines,” he said. “They are the ones being ignored.”

To address their issues, which normally involve other government departments, BOI has started to depute its officers to guide the businessmen through the process of getting permits and understanding regulatory requirements.

“Pakistan is ranked 110 on the international index of ease of doing business. We are trying to improve that ranking,” he says, adding that there is no realistic way to introduce the so-called one-window operation for investors.

Yet even in areas where government has directed most of its focus, the projects are moving ahead at a snail’s pace. Beset by a crippling power crisis, Pakistan is offering some of the world’s highest return on investment in power plants. The rate of return could go as high as 30%.

Ismail, who is also the Chief Operating Officer of Ismail Industries, a dynamic confectionary firm that has popular brands like Candyland, says the government is trying its best.

“No investment has been allowed to fail in Pakistan. On the contrary, we have actually bailed out businesses from taxpayers’ money,” he said in an interview with The Express Tribune. “So it’s wrong to assume that absence of protection undermines investment.”

The government-guaranteed return for Independent Power Producers (IPPs) is in the range of 17% to 18%. Depending on efficiency of power plants and the cost they cut on fuel, this could go up to 30%.

But when it comes to Islamabad’s initiative to promote private investment in coal-fired power plants in Tharparkhar district of Sindh or on the outskirts of Karachi in Gadani, infrastructural and security concerns crop up.

“No one wants to get involved in the hassle especially when there are other investment avenues like the stock exchange that offer better return without any inconvenience.”

The BOI also has to deal with salvaging projects like Tuwairqi Steel and Byco’s refinery, which have been facing problems because of indecision of various government functionaries.

Tuwairqi, a project of Saudi Arabia’s Al-Tuwairqi Holdings, has faced commissioning delays for months over a dispute related to price of gas, which is key raw material for it to make steel.

“They want gas for Rs123 per million British thermal units (mmbtu). That is even less than the cost at which gas is being produced in the country. The 35 million cubic feet per day (MMCFD) gas they want also means we have to curtail supply to someone else.”

He disagrees that government had guaranteed gas supply at a fixed price when work on the project started eight years back.

The only way Ismail sees out of the situation is for the company to give at least 5% shareholding to government and commit investment of at least $900 million.

“The BOI can sell this idea to other government functionaries. At Rs123 per mmbtu we will be giving them a subsidy of Rs25 billion over the next four years. That’s the arrangement we have worked out.”

Ismail insists that the present government has not gone back on any of the economic policy initiatives of the previous administration. “We are ensuring continuation of policies.”

Economic chaos: Businessmen oppose calls for civil disobedience

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Zakaria Usman has said the country is at a critical economic and political juncture and cannot afford uncertainty at this point.

With Imran Khan-led PTI and Tahirul Qadri’s PAT staging protests and sit-ins in Islamabad, the investment climate has remained uncertain.

“The current political uncertainty has hampered the process of economic and commercial development in the country,” he said in a statement on Monday.

Usman also said that the recent call of the protesting political parties for civil disobedience is not understandable and the business community cannot support it.

He said this movement may provoke the public for non-payment of taxes and utility bills that can have an adverse effect on Pakistan.

“The business community, which is the real political stakeholder, is against any upheaval, including the call of civil disobedience,” said Usman. “The community does not want to close businesses and industries as it cannot afford defaults to the banks and other organisations.”

He suggested protestors to avoid converting their democratic right of peaceful protest into illegal and undemocratic violence-prone activities.

He said that the political scenario should not affect the economic and trade activities. The strikes, mob harassments and destruction of public and private properties are the national losses that this country cannot afford.

He requested both the ruling and opposition parties to keep the economy separate from politics. During the last two weeks, the country has suffered loss of billions of dollars due to political unrest, he added.   The president questioned the compensation of the losses, adding that ultimately, these political parties will revert to the business community for tax collection.

Usman concluded by urging all political forces to settle the current political crisis through dialogue and all political parties should come forward for this important cause.