Merchant sahibs of Calcutta

In the second half of the 19th century, when scores of British merchant-adventurers voyaged via the Cape of Good Hope to the “wild East”, a Scottish family — known then as “the warehouse men of Manchester” — anchored in Calcutta and established Andrew Yule & Company, a managing agency, in 1863.

It first acquired tea gardens. Today, at 150, this listed State-owned enterprise still treasures its first possession — the Hoolungooree tea estate. While its industrial engineering wing remains functional, tea is its main business.

Much of the company’s early business and ownership legacies have been wiped out by the intervening centuries. Even the records of 1919, when American banker JP Morgan became its principal shareholder, are hard to come by.

Such was the influence exerted by the company on the imperial powers that in 1922, King George V bestowed on David Yule, Andrew’s nephew, the Baronetcy of Hooghly river. As late as in 1954-55, it managed 39 companies, more than Birla Brothers (27) and Tata Industries (12).

From strength to strength

The Yule brothers Andrew and George had started off with commodities such as tea, jute and cotton.

In 1883, to meet its logistics needs, the company floated Inland Flotilla to connect Calcutta industries with hinterlands in Assam and East Bengal (now Bangladesh). The Bengal Assam Steamship followed in 1895, while the Port Shipping Co, established in 1906, made it the largest bulk commodity lighterage on the Hooghly.

With eight jute mills and an indigo plantation company, it generated revenue from forest, agriculture and fisheries.

In one of the earliest instances of a hostile takeover in the subcontinent, in 1843 the company grabbed Bengal Coal, the joint stock coal company co-promoted by Rabindranath Tagore’s grandfather Dwarkanath.

Three years before the outbreak of World War I, David bought up Britain’s lone jute mill in Dundee and shipped it to Calcutta. The war fetched the company the entire order and David, a Knighthood.

As Calcutta’s largest managing agency overseeing 37 companies, it employed nearly 2 lakh people.

While Port Engineering Works catered to its mills and vessels, the Dishergarh Power Supply Co and Associated Power Co catered to the collieries.

Interestingly, the India Paper Pulp Co, which in 1919 pioneered the manufacture of paper from indigenous bamboo, supplied the parchment on which independent India’s Constitution was printed three decades later.

But long before that, George Yule broke away from the colonial mores of the merchants of Calcutta and, as the fourth President of the Indian National Congress, demanded the participation of Indians in business and society.

David too, in his will, described himself as “domiciled in Calcutta” and, in his last major deal, bought the entire stake in The Statesman ; he later disbursed the holding among seven business houses, including the Tatas. Ahead of Independence, Andrew Yule went public in 1946. But Companies Act, 1956, hemmed in the managing agency system, diluting its power and remuneration.

Until 1966, 17 non-resident shareholders held 70.2 per cent stake in the company. But by 1968, Indians held the majority stake through dilution of British interests, and the company got its first Indian Chairman.

Seeking to reorient itself as an engineering company, it took on turnkey projects for setting up sugar plants, mineral treatment plants, mechanical loading systems and bulk material-handling systems. The move, however, backfired in a recession-hit economy. Battling successive droughts in 1965 and 1966, industrial growth slumped to 1.4 per cent in 1967. After three sugar mills reneged on contracts, the company incurred losses during 1970-72.

After the managing agency system was finally abolished in April 1970, Andrew Yule became a public sector company in April 1974, with the Government buying out the entire British interest at Rs 4 a share.

A return to dividend list in 1984 was however followed by tough times in the 1990s. The post-liberalisation economy exposed its vulnerabilities — the company proved uncompetitive in terms of technology, quality, price and delivery.

As late as 2007, it turned around again… this time as a restructured, lean and efficient entity. The tea division’s replanting exercise has begun to bear fruit this year. The engineering and electrical divisions too are moving towards rejuvenation.

The era of managing agents

The managing agent performed the role of entrepreneur, financier and manager largely through absentee partners and shareholders. Towards the 20th century, it no longer financed the companies under it and instead extracted money by way of commission, share of profit and compensation for various expenses. In colonial India, the managing agency system evolved to serve British interests. Over the centuries, it gained a stranglehold on the managed enterprises, owned by both Indians and Britons.

Companies Act, 1956 limited the number of managed public companies to 10. As many as 17 managing agencies in 1951, and 22 in 1958 were subsidiaries or joint subsidiaries (more than 50 per cent of their share capital was owned by one or more companies).

Born-again business

The Rs 1,418-crore Andrew Yule & Co is a born-again entity at 150. The State-owned company has nursed itself back to profitability, paid back government loans and preserved its legacy assets. Chairman and Managing Director Kallol Datta says the sesquicentennial celebration will be at its 15 tea gardens producing 10 million kg of premium quality tea in Darjeeling, Dooars and Assam.

What’s your plan for the 150th year?

For the past six to seven years, we have been involved in an elaborate replanting exercise in most of our gardens. This year we are beginning to get the results. This is indeed celebration of sorts.

We will also celebrate the formalisation of a tech collaboration with a Russian partner for the power transformer segment.

What does it take to breathe new life into an old organisation?

It’s a sustained effort in improving efficiency, quality and delivery. Professional culture comes in trickles, but goes off in a wave. We have brought back some of the good things. In some areas we need new design engineering and fresh talent. In others, we have to improve customer orientation.

Have you planned any event to mark the special occasion?

A book tracing the history of the company has been commissioned. We plan to release it during the year.