India’s Financial Capital Mumbai Shut After Terrorist Attacks

By Saikat Chatterjee

Nov. 27 (Bloomberg) -- Hindustan Unilever Ltd. and Indian units of financial companies such as Merrill Lynch & Co. shut their Mumbai offices today after terrorists killed 101 people in the financial hub of the world's second-fastest growing economy.

India shut stock, bonds, currency and commodity exchanges, forcing brokerages and fund-management companies to close offices today. The Oberoi and Taj hotels that were attacked by the terrorists are close to the financial district, which houses the offices of Merrill Lynch, Morgan Stanley and HSBC Holdings Plc.

Terrorists armed with grenades and rifles stormed into the Taj Mahal Palace and Tower hotel and the Trident Oberoi complex late yesterday, saying they were targeting Americans and Britons, according to eyewitness reports. The attacks, the worst in the city since train blasts in July 2006, have focused on foreigners in India for the first time.

"This targeted attack on foreigners will have an incalculable impact on the investment climate and the tourism and hospitality industry," said Apurva Shah, head of research at Mumbai-based Prabhudas Lilladher Ltd. The brokerage shut its Mumbai office today.

The attacks come as India tries to boost its economy battered by the global financial crisis. Finance Minister Palaniappan Chidambaram has said economic growth this year will slow to 7.5 percent before rebounding to 9 percent next year.

Investors Exit

Overseas investors have pulled out a record $13.5 billion from Indian stocks in 2008 as of Nov. 25, causing the benchmark Bombay Stock Exchange Sensitive Index, or Sensex, to slump 56 percent. Foreign investors bought a record $17.2 billion of local equities in 2007.

The Mumbai police cordoned off the area near the Taj and Oberoi hotels and commandos are in position. The attacks began at about 10 p.m. local time yesterday with explosions and gunfire ringing out across the city.

Unilever's top management including Chief Executive Officer Patrick Cescau are "absolutely safe," said R. Rammohan, a spokesman of the Indian unit of the company. Cescau and other top officials of the company were evacuated from the hotel last night, he said. They were in Mumbai for a business meeting.

Daiichi Sankyo Co., Japan's third-largest drugmaker, suspended travel to India. The company, which purchased a controlling stake in India's Ranbaxy Laboratories Ltd., said it will stop all travel to India until "safety is assured."

Dell Inc. and Hewlett-Packard Co., the world's two largest computer suppliers, limited their staff movement in India. Dell canceled all travel by employees into India for the next 48 hours. Hewlett-Packard closed its Mumbai office and prohibited staff from traveling to the city.

Foreigners Targeted

The terrorists targeted foreign nationals and landmark hotels, adding a new dimension to a wave of bombings in India this year that has killed more than 300 people. Multiple attacks have rocked India's cities with bombs planted in markets, theaters and near mosques.

A little-known Islamist group called the Deccan Mujahedeen claimed responsibility for the Mumbai attacks, the Press Trust of India reported. The attackers may have come from Pakistan, the Times Now television channel reported, citing an unidentified intelligence official.

Pakistan's Foreign Minister Shah Mahmood Qureshi condemned the terrorist attacks in Mumbai.

"Terrorism is a menace threatening humanity and humanity should join hands in fighting this scourge," according to a foreign ministry release citing the minister. "Pakistan condemns terrorism in all its forms and manifestations."

Office Closures

Reliance Industries, India's most valuable company, which has its main office in a building near the Oberoi hotel, may also shut some offices in Mumbai as the areas have been cordoned off, Paresh Chaudhry, spokesman of the company, said today.

Hotels across the nation have stepped up security with armed guards checking cars and setting up metal detectors.

The Imperial Hotel, a favorite destination for foreign tourists in New Delhi, wasn't allowing visitors without verifying credentials. The hotel is coordinating with police and residents.

Indian Hotels Co., which owns the Taj hotel in Mumbai, said it was cooperating with the police and the government authorities to ensure the safety and security of guests and employees.

Schools and colleges in Mumbai are closed today, the Press Trust of India reported.

To contact the reporter on this story: Saikat Chatterjee in New Delhi at schatterjee4@bloomberg.net.

Last Updated: November 27, 2008 02:36 EST