A Winter Chill

For several corporate honchos holed up in the terrorist-targeted hotels, it was a close encounter. Those who escaped during the night- and day-long siege include ICICI Bank ED Madhabi Puri Buch, Unilever group CEO Patrick Cescau and CEO-elect Paul Polman, Hindustan Unilever chairman Harish Manwani and CEO Nitin Paranjpe.

As the state and security machinery strived to come to grips with the situation, an anxious India Inc is banking on the ‘incident’ not making more than a short-term impact on business sentiments. "Obviously, we will see a negative response in the short to medium term. But we must remember that finally business will come where business is and there is business in India," states Chandrajit Banerjee, DG, CII.

Anand Mahindra, head of m&m, strikes a resolute note: "Mumbai and its citizens will demonstrate yet again that we refuse to allow our spirit to be subdued by the forces of terror."

Unlike in 1993, when the exchanges opened on the Monday after the blasts to send out a positive signal, this time authorities had no choice but to shut the bourses to ensure traders’ safety. As per some estimates, both the NSE and BSE see a daily turnover of over Rs 50,000 crore, so brokerage houses could have lost anywhere between Rs 100-200 crore on this forced holiday. "Clearly, FIIs have a very important role to play and hopefully they’ll see this as a one-off event and not a major scar," said Raamdeo Agarwal of Motilal Oswal Securities. Most traders are expecting a reprise of post-1993 blasts when both the city and market bounced back.

"There will be a low to medium impact. But as markets are generally forward looking, this can’t have a large economic cost. There will, however, be a huge emotional and psychological cost," felt Edelweiss Capital’s Rashesh Shah.

Standard & Poor’s south and south-east Asia region head R. Ravimohan anticipates a near-term nervousness though structurally he didn’t see any issues with investment and business in India. Given that foreigners are among casualties, analysts are sure to examine the long-term and structural impact before giving out their verdict.

Ratan Tata, chairman of Tata Sons and Indian Hotels, which owns the landmark 125-year-old Taj Hotel, sent the right message with an assurance to restore the property to its original state. "We must show that we cannot be disabled or destroyed, but that such a heinous act will only make us stronger. It is important that we do not allow divisive forces to weaken us," he stated. There’s no clear estimate of the hotel’s damage, but sources estimate it would take at least a year to be restored.

Considering that the attack came during the peak tourist season, most fear an impact on the hotel and tourism industry. While domestic carriers carried on pretty much on schedule, a few international airlines cancelled flights to Mumbai on Thursday. Vijay Thakur, president, Indian Association of Tour Operators, told Outlook that since the hotels attacked by terrorists were known worldwide there was bound to be some impact. "Normally Americans and Europeans make their bookings in advance. These people were close to making their full payments. Any cancellations at this stage will hit us," he said. Some tour operators have already received cancellations of bookings. This setback comes on the heels of about 10-15 per cent drop in business due to the global economic crisis. Said hotelier Priya Paul: "We are resilient and we are sure to bounce back. We will not let this bring us down."

A. Mitchell, a buyer of Indian merchandise, is among those who have cancelled plans to visit India in December. Revealing that even his Indian-Australian friends have dropped their India holiday plans, Mitchell stated from Australia, "If they don’t feel safe travelling back to their own country, I don’t think business is so important for me that I would take that risk." Hopefully others will not share Mitchell’s sentiment.