MARWARIS

On the western border of India lies the state of Rajasthan, which includes the
great Thar Desert. In the center of this state lies a region called Shekhawati. An
arid area dotted with thorny bushes and stunted trees, Shekhawati is the
ancestral homeland of a community that dominates private trade and industry in
India—the Marwaris. The Mittals belong to this community. The ancestors of M.L.
and L.N. Mittal hail from the village of Rajgarh in Rajasthan.

Like the European Jews of yesteryear, the traditional occupation of the Marwaris
in their villages was retail trade and moneylending. And, like the Jews, the
Marwaris were not always popular with the other communities, who sometimes
accused them of charging interest rates that were too high. Although the harsh
and unproductive desert environment of their homeland did not see the general
run of them becoming wealthy, some Marwaris who lent to the nobles and kings
of Rajasthan did strike it rich.

The first wave of Marwari emigrants left Rajasthan in the early 18th century to
seek their fortunes in Calcutta and Bombay, where the British had established
mercantile houses. Initially, they were traders but later started dabbling in
commodity futures, where some struck it rich.

Very soon the Marwari diaspora spread to every nook and corner of India,
wherever there was a possibility of making money from trading. In India’s hilly
and forested northeastern region, the only outsiders the tribes encountered were
European Presbyterian evangelists and Marwari traders.

By the turn of the twentieth century, the Marwari business houses had become a
substantial presence in the bourses of Bombay and Calcutta as well as in the
country’s wholesale trade in commodities. A few Marwari families had also
ventured into manufacturing, mainly textiles.

When the British left India following independence, many of their industrial firms
were up for grabs—and many Marwari business houses made the most of the
opportunity. A large number of the banking, insurance, engineering, textile, and
tea businesses in India passed into Marwari hands.

In the last 50 years, the Marwaris have multiplied these legacies from the British
and expanded into other businesses, including chemicals, primary metals,
pharmaceuticals, road transport, shipping, and jewelry. They also have spread
their industrial empires to southern India, where they were a marginal presence
earlier. A few families have made forays abroad in Southeast Asia and West
Africa.
The older generation of Marwari businessmen adopted simple, puritanical
lifestyles and were essentially self-taught; they generally were teetotalers and
vegetarians. Their management style was highly personalized; they liked to keep
tight control over their enterprises. The current generation of Marwari
businessmen, however, are college graduates, many with management degrees
from the U.S. These Marwaris have a more easygoing lifestyle than their fathers;
they might have an alcoholic drink occasionally and even eat meat.

Even today, most Marwaris use a traditional method of financial control over their
businesses called the "Parta" system. This system involves receiving a daily
report from their managers outlining, in monetary terms, the actual daily
production and costs incurred plus the deviation from the target set. The Parta
report enables the businessmen to get a feel of the financial health of the
enterprise on a day-to-day basis without getting bogged down in too many
statistics.

Marwari businesses in the past did not always enjoy a high reputation among the
lay public. There was a general impression that they cut corners on product
quality since they were dealing with a closed sellers’ market. For the same
reason they were notorious for sticking to dated technologies and not investing in
r&d. During India’s many years of a tightly controlled economy, the Marwaris
were considered masters in cornering the meager ration of industrial licenses.
Professional managers were wary of Marwari bosses because of their tendency
to install relatives and close friends in the organization as informers and extra-
constitutional centers of power.

However, these impressions are changing—as is the approach of the younger

generation of Marwari businessmen, who are more inclined to adopt international
methods of management in line with the opening up of the Indian economy.