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Lehman Brothers collapse to hit stocks, realty and outsourcing

Even as global markets tottered under the impact of the buyout of Merrill Lynch and collapse of
Lehman Brothers, the world's third and fourth largest investment banks, the India impact will be
limited, experts said Monday.

New Delhi/Mumbai, India, 2008-09-15 21:45:04 (IndiaPRwire.com)

Even as global markets tottered under the impact of the buyout of Merrill Lynch and collapse of
Lehman Brothers, the world's third and fourth largest investment banks, the India impact will be
limited, experts said Monday.

'The impact will be limited and restricted to three areas mainly - stock markets, realty and
outsourcing,' a person familiar with Lehman and Merrill's operations in India said on condition of
anonymity.

'A large part of the impact on equity markets has already been discounted by today's slide in Indian
markets,' said Naresh Pachisia, managing director of leading merchant banker and securities
brokerage house, the Kolkata-based SKP Securities Ltd.

'I do not expect any more bad news at least in the next few months,' he said, adding that markets
may fall a little more but should begin to recover once the Indian festive season kicks in.

'This is certainly not good news. It will certainly have a negative impact on those areas in India where
these two companies have operations, specifically in the realty sector," said Anuj Puri, country head,
Jones Lang Lasele Meghraj, a global real estate consultancy firm.

'The sector is already facing a fund crunch. Even if the immediate implication on India cannot be
assessed it will certainly shake the confidence of the industry in general which was banking too much
on foreign institutional investors,' Puri said.

An analyst from a leading Mumbai-based brokerage firm, who wished not to be identified, however,
said most realty and infrastructure projects where Lehman or Merrill had invested such as in Unitech,
DLF or Ansals have already received their funds.

'But as these are development projects, these companies may be affected in the long term,' he said.

'This will put a question mark on the dependence on FIIs (foreign institutional investors) for business
in India,' said a senior economist of premier credit rating agency Crisil, adding: "It will also mean job
loss for many people as these companies were outsourcing their business operations to India.'
Earlier during the day, however, many Indian information technology companies such as software and
outsourcing giants Wipro and TCS issued statements that they may not see much impact.

Lehman has investments in Indian companies such as Spice Communications, Spice Mobile, Edelweiss
Cap, IVRCL Infra, Development Credit Bank, Champagne Indage, Golden Tobacco and Emkay Global.

'We will analyse tomorrow what stocks Lehman and Merrill were owning in India and are now likely to
be sold before we can say more,' Pachisia said.

'Many Indian companies draw liquidity from these investment firms and may be impacted," said
Religare Securities President Amitabh Chakraborty.

'I believe the US Federal Reserve Bank chairman Ben S. Bernanke will come out with a statement any
time to help stop this financial tsunami,' said Jagannadham Thunuguntla, equity head of NEXGEN
Capitals Ltd.

NEXGEN is an arm of India's fourth largest securities brokerage firm SMC Group.

Krishnan and Pachisia agreed.

With regard to Merrill's acquisition by Bank of America, experts said the impact is likely to be limited
as Merrill Lynch was already in the process of offloading its India assets.

BlackRock Inc, one of the largest quoted asset management companies in the world, is currently in
the process of acquiring Merrill Lynch's 40 percent stake in its joint venture with noted Indian investor
Hemendra Kothari's DSP group.

DSP Merrill Lynch, had announced a few months ago that once BlackRock picks up Merrill's stake, the
two joint venture entities in India - the investment banking arm and a mutual fund - will be renamed
DSP BlackRock Investment Managers and DSP BlackRock Mutual Fund.

While BlackRock currently manages assets worth $1.3 trillion, DSP Merrill Lynch has some $9 billion
worth of assets under its management.

- Arjun Sen