Laid back and rich

Still cushioned in old-fashioned business, the Marwari community in West Bengal is gradually coming of age

Rajat Roy Kolkata

Historically, economic activities in modern India were driven forward by certain communities that showed special expertise in trade and commerce. If the Tamils in South India made their presence felt in banking and related financial sectors, the Gujratis and Parsis in the western region consolidated their achievements in maritime trade and gradually shifted to manufacturing. In eastern India, the Marwaris came to play the leading role in trade and commerce. This community, which had settled in Calcutta at the advent of the East India Company, is the most prosperous business community in the region now.

Marwaris, who came from Rajasthan, initially made their forays into Calcutta after the battle of Plassey, when the victorious East India Company started expanding its trade. Around 1840, they started coming en masse. While import and export was in the hands of the British, the Marwaris took upon themselves the role of distributors. One senior executive of a big Marwari concern puts it in this way: “In today's business vocabulary the Marwaris looked after the supply line management of the British agency houses.” Speculation in the market is another part of trading, and Marwaris showed special acumen. Slowly, they were drawn into jute trade, especially trading in raw jute.

On the western coast, the Gujarati and Parsee communities were engaged in maritime trade before Europeans came to India. Around the time of World War I, the British decided to go for large-scale industrialisation in India, and the Parsis and Gujaratis switched to industry along with them. Textile mills were established in Ahmedabad and Bombay. Marwaris in Bengal, however, did not show much interest in industry, choosing to remain in the world of stock speculation and trading. The destiny of the two regions was determined from that time.

One senior executive (a Maharastrian) of a Marwari industry house once remarked on this saying: “The Bengalees and the Marathas have many a things in common. Both these communities produce skilled workers and professionals. They are interested in poetry, music, fine arts, drama and other art forms, but abhor the culture of money-making. But, while the Marathas are blessed with the presence of Parsis and Gujaratis, the Bengalees got the more conservative Marwaris.”

Sarcasm apart, historically, the Marwaris took to industry at a much later stage. One professional manager with a Marwari concern points out that around 1946, with the imminence of Independence, the British started selling off their industries. Overnight, a number of tea gardens, jute mills and engineering concerns changed hands and Marwaris became owner of a large number of British companies. One financial analyst explained that the Marwaris could buy those concerns because they could arrange for the payment or part of the payment was made overseas. With their long experience in trading and under-invoicing, they could easily mobilise the required surplus for making the payment in pound sterling.

Looking back, one may infer that perhaps their entry into industry was a reluctant affair. The first 50 years of Independence saw stagnation in those traditional and ageing industries and Marwari owners did nothing to change the course. Barring one car manufacturing unit in Hindmotor (of the Birlas), no major initiative was witnessed in the industrial sector. Even Hindmotor was constricted by old technology and at the first push from competition in the era of a liberalised economy, the company went sick.

Indeed, no fresh investment was injected into the old industry to upgrade technology, allowing industrial units to go sick. Jute is a case in point. Even after financial assistance given by the union government to modernise and diversify products of the jute industry, the jute barons did not come forward. They showed more interest in cashing in on the sickness of the industry by extracting more financial concessions from the government. “It seems they are more comfortable with their traditional enterprise in trade and stock market speculation, which gives them easy and quick returns. Industry does not give you that kind margin and for that you have to wait,” quips a financial expert in a Marwari concern.

While chronicling the business ventures of Marwaris in Bengal, a brief observation on Bengali entrepreneurs won't be out of place. Historically, their ventures into industry and commerce were caused more by the growing nationalism of pre-independence days, than from a genuine entrepreneurial culture. So, although in the early days of industry, Bengali entrepreneurs delved into banking, mining, pharmaceuticals and shipping, they could not last long. Marwaris continue to control the economy of the eastern region.

Even while the Ambanis and Tatas grew into major global players, the Marwaris remained stuck in their old-fashioned business concerns. The Birla family, which showed great advancement during the licence-permit raj, had invested and set up textile, cement and other factories in other parts of the country, but once their family empire got divided among their progenies, they started lagging behind.

The RPG Group of Ramprasad Goenka is perhaps the most visible Marwari enterprise in Bengal today. They have acquired the age old Calcutta Electric Supply Corporation (CESC) and added some more new power generating units (Titagarh and Budge Budge). Under Vice Chairman Sanjiv Goenka, the RPG has made major forays into the entertainment industry, and with the Spencer Group, it has entered into retail in a big way.

It is ironical that the Marwari community, known for its acumen for business opportunism, did not show much enthusiasm when the Indian economy started opening up. After the abolition of the licence-permit raj in the 1990s, when entrepreneurs from other regions came to invest in sunrise industries, the Marwaris were conspicuous by their absence. In the Haldia industrial region in West Bengal (next to Nandigram) there are only two or three enterprises owned by the Marwaris - Dhanuka's petrochemical unit and Shroff's ventures into truck and bio-diesel. They are more visible in the flourishing real estate sector.

The Bengal chapter of Confederation of Real Estate Developers Association of India (CREDAI), an association of big realtors and developers, has 90 odd members, of which almost 80 per cent are Marwari businessmen. Pradip Sureka, the president of CREDAI, feels the Marwaris of Bengal could not go for big ventures owing to the paucity of capital. He says that due to the same reason the South City project, one of the bigger real estate projects in Kolkata, had to be developed jointly by a group of developers of which he himself was a member.

Like the Birlas and Goenkas, Sureka's family came to the city almost 150 years ago. On a lighter vein, Sureka explains why the Marwaris are lagging behind in entrepreneurship compared with the Gujaratis and Parsis. Most old Marwari business houses have struck root in West Bengal, and in the process absorbed much of the Bengali characteristics and traits. And that might explain their shortcomings and lack of enthusiasm for entrepreneurship. On a serious note, Sureka reminds that the present industrial climate is only four or five-years old. Prior to that, not much has happened in the state in the last 30 odd years. So it will take time for local players to come up.

Some initiatives have been made by a new generation of Marwaris who have entered the stage much later. Starting with the family enterprise of a cement company, Harshvardhan Neotia has gradually expanded his business into real estate, hotel and hospitality industries. His dream project, City Centre, a commercial plaza in Salt Lake, is a success. Now he is busy setting up a speciality hospital in Kolkata in collaboration with Israel's Elibit group.

More spectacular is the case of Pawan Ruia. When Ruia bought the sick engineering concern Jessop, eyebrows were raised. Because of its huge pre-takeover liabilities and strong unionised labour, no major engineering concern came forward to buy the 220 year-old Jessop. Going against the track record of the industrial enterprises taken over by other Marwari establishments, Ruia not only turned it around in a short time, he took over Dunlop, another sick concern. Dunlop has gone into production and it is to be seen whether Ruia can do an encore here.

If he does, then he could genuinely be considered a pioneer of a new trend. And then, it could be confidently said that the Marwari entrepreneurs of this region have come of age.