Lehman Brothers collapse to hit stocks,

realty and outsourcing

September 15th, 2008 - 10:31 pm ICT by IANS -

New Delhi/Mumbai, Sep 15 (IANS) 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.