Wednesday, July 4, 2018

Detailed report on Kamma Entrepreneurs of South India

In the South, the first to get off the bloc were the rich Kammavar Naidu landlords of
Coimbatore, who prospered by cultivating high-yielding long-staple ‘Cambodia’ cotton from the early years of the 20th century. As writers like Christopher Baker112 have pointed out, the
Coimbatore or Kongunad region of Tamil Nadu was generally dry and marked by poor rainfall, even while having an abundance of heavy black soils suitable for growing cotton, groundnut and other cash crops. The heavy soil texture demanded a style of capital-intensive farming centered around well-irrigation that was – in contrast to the lush alluvial paddy lands of the Cauvery delta – not conducive to absentee landlordism. Even the big mirasidar, therefore, tended to be a hands-on manager who took a close interest in his tenanted holdings. Operating at higher levels of capitalization also made him more involved in the marketing of his crop, so as to fetch returns commensurate with the investments made in wells or oil engines to draw water (in place of the conventional bullock-powered lifts). The more enterprising mirasidars began selling their raw kapas (cotton) directly to the ginners, realizing more than what they would otherwise have by marketing to local cotton merchants. Soon, a section became commission agents, handling the produce of not only their own but even their neighbors’ fields. From there, they went on be traders, then ginners and finally mill-owners. The first Kammavar Naidu magnates --- belonging to three prominent mirasidar families, namely PSG, Lakshmi and Rangaswamy Naidu – had established mills by the mid- and late-’20s.

The other industry that the Naidus took to – light engineering – was also linked to agriculture. Narayanaswamy Naidu, who set up Coimbatore’s first foundry, started with a workshop for repairing cotton gins and sugarcane crushers. Procuring castings at the time wasn’t easy, so he is said to have gone all the way to Kochi (Kerala) to study the operations of the crucible furnace at the shipyard there. In 1924, the Dhandayuthapani Foundry (DPF) was born and, four years later, it had produced Coimbatore’s first belt-driven pump. The city has since come to be known as the Manchester of the South and the Light Engineering Capital of India, with more than 600 foundries. Its Rs 15 billion ($357 million) pump-sets industry is dominated by Naidu-owned firms like CRI Pumps, Fisher Pumps, Mahendra Pumps, Suguna Industries, Ellen Industries and Perfect Engineers. Some groups have stakes in both textiles and engineering. The Lakshmi Mills family controls LMW (Lakshmi Machine Works), India’s top textile machinery company. The Elgi group, started in the thirties by L. R. G. Naidu as a bus transport operator, is a leading engineering combine manufacturing auto and industrial chains (through LG Balakrishnan &Brothers), dashboard instruments and accessories (Pricol Ltd), compressors and garage servicestation equipment (Elgi Equipments), tyre re-treading machinery (Elgitread) and wet grinders(Elgi Ultra). The group has also promoted a number of spinning mills (Super Spinning andPrecot Meridian). Likewise, we have the KG group – named after K. G. Naidu --- whose textileoperations straddle the entire operations spectrum from ginning, milling, weaving and knitting to production of terry towels, denim fabric and jeans-wear (‘Trigger’ jeans). The group also owns CPC Ltd, an exporter of gray iron castings and machined components. 

The founders of AravindEye Care System (world leaders in cataract eye surgeries and manufacture of intraocular lens)and Suguna Poultry Farm (the country’s second largest poultry enterprise) are also Naidus. The significant point to note is that the majority of Naidu industrialists following the pioneering three mirasidar families have been from ordinary middle-level peasant backgrounds.

Even within the Kammas of coastal Andhra Pradesh, the first lot of entrepreneurs belonged to the landed gentry: Velagapudi Ramakrishna (a retired civil servant who, in 1941, acquired a sick cooperative sugar mill started earlier by a few wealthy Kamma zamindars and laid the
foundations of the diversified KCP group), Mullapudi Harischandra Prasad (in whose Andhra Sugars initial investment came from Ramakrishna) and Yarlagadda Sivaramaprasad (the socalled Raja of Challapalli). The last-mentioned, apart from providing the seed money for Andhra Bank and the Andhra Scientific Company manufacturing precision measurement instruments, promoted Sarathi Films in 1938. From then on, the Telugu film industry has been a Kamma preserve, with producers like L. V. Prasad, Daggubati Rama Naidu (who holds the Guinness Book record for making 125-odd movies) and Atluri Purnachandra Rao, and superstars from Nandamuri Taraka Rama Rao (NTR), Akkineni Nageswara Rao, Ghattamaneni Krishna and Mohan Babu. All these matinee idols also have their own production houses. Another industry that the Kammas embraced early on was tobacco. It started with the British American Tobacco (BAT) introducing contract farming of cigarette-grade flue cured Virginia (FCV) tobacco in Guntur during the twenties. Over the next couple of decades, its Kamma farmers had fully mastered the technique of growing and curing the tobacco. Some had erected sizeable barn capacity to cure the green leaf of other growers as well, paving the way for their becoming commission agents to BAT and other exporters. In a few cases, the rural ‘curer capitalists’ would not simply cure, but fine grade the leaf and have it further processed, packed and baled ready for exports. Till Independence, the FCV export business was practically a BAT monopoly, which changed as new markets in the Soviet Union and Eastern Europe were developed through government-assisted bilateral trading arrangements. In 1982, out of the Guntur region’s 92 registered exporters, over 60 per cent were Kammas, with half of them established since the late ’50s. 14 A prominent name here was the Congress politician, Rayapati Sambasiva Rao. Prior to the Soviet Union’s disintegration, his Jayalakshmi group had a 35 per cent share of India’s tobacco exports to Russia and a quarter of its tea market. By the early eighties, the Kammas had penetrated a range of businesses from sugar, tobacco and rice milling to government contracts, transport, films and even textiles (Andhra Sugars, Jayalakshmi, etc) and ferroalloys (KCP and Nava Bharat Ferro Alloys, whose promoter, Devineni Subba Rao, was instrumental in setting up KCP’s ferromanganese division).

The community’s real industrial surge, however, took place in the post-Telugu Desam Party (TDP) phase and its most obvious symbol being Cherukuri Ramoji Rao, the ‘Rupert Murdoch of the South.’ His fledgling daily, Eenadu, became the main propaganda vehicle for the TDP and its charismatic actor-turned-politician, NTR. Ramoji Rao was representative of a new Kamma entrepreneurial breed that was not from the old gentry (the Challapalli Rajas, KCPs and Andhra Sugars), but from the middle peasantry or rural middle class. We can identify a number of Kamma businessmen who are products of this phenomenon and whose rising fortunes coincided with the TDP’s rise in the ’80s. They are mainly in sectors such as construction and infrastructure (Lagadapati Rajagopal of Lanco group, Kavuru Sambasiva Rao of Progressive construction, Nama Nageswara Rao of Madhucon, Vallurupalli Nageswara Rao of Southern Engineering Works); pharma (Nimmagadda Prasad of Matrix Laboratories, Murali Divi of Divi’s Laboratories, Venkaiah Chowdary Nannapaneni of Natco Pharma, Ravindranath Tagore Ravi of Krebs Biochemicals, Krishna M. Ella of Bharat Biotech, Venkat Jasti of Suven Life Sciences and S.P. Vasireddy of Vimta Labs) and agri-business (Bhuvaneshwari Devi of Heritage Foods and Mandava Venkat Ramaiah of Nuziveedu Seeds). Most of these men have impeccable educational qualifications. Krishna Ella is a doctorate in molecular biology from the University of Wisconsin-Madison. Murali Divi and Nannapaneni are both trained pharmacists who previously worked with drug firms in the United States, while Rajagopal and Sambasiva Rao have engineering backgrounds. Ramachandra Naidu Galla of Amara Raja Batteries, India’s No. 2 automotive battery maker (‘Amaron’ brand’), is an electrical and applied electronics engineer. After a master at Michigan State University and 15 years with US Steel, Galla returned to his home town to float Amara Raja in 1985.

Till about the ’60s, there were no Reddys on par with a Velagapudi Ramakrishna or Harischandra Prasad. The Reddys, unlike the Kammas or Naidus, were never entrepreneurial farmers; for all their command over men and land, the fabled Reddy landlords of Telangana and Rayalaseema were ultimately bosses in their backyards. Their initial diversification ventures were scant in industries like agro processing and more in mining and public works contracts, both businesses built more on muscle power than enterprise. Mining in Nellore and the Rayalaseema region was virtually a Reddy landlord bastion.

The Gounders of Kongunad, like their Kammavar Naidu counterparts, were drawn quite early into marketing their own crop. But unlike the Naidus, this numerically larger farming community did not venture as aggressively into industrial production.

Ref: “India's New Capitalists: Caste, Business, and Industry in a Modern Nation”
written by Harish Damodaran
Center for the Advanced Study of India
University of Pennsylvania, Philadelphia
Senior Assistant Editor, The Hindu Businesslinearan
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