From Rs 3.50 a day to a Rs 1,036-crore empire
A labourer at 20, a big businessman and Lok Sabha MP at 57, that’s Nageshwar Rao. Rao, whose father was an impoverished farmer who could not read or write, presides over the Rs 1,036-crore Madhucon Group, a big player in the construction, granite, power and sugar industries, which employs about 10,000 people across in 18 locations across the country and in one location abroad, reports Ashok Das.india Updated: Jun 08, 2009 01:19 IST
The year: 1977. Nama Nageswara Rao, then a 20-year-old college dropout (he is 52 now), joined the Kothagudem Thermal Power Station in the eponymous town 220 km north-east of Hyderabad as a casual labourer.
His job: I had to load and unload coal and other goods on to and from trucks. His wage: Rs 3.50 per day.
Today, 32 years later, Rao, whose father was an impoverished farmer who could not read or write, presides over the Rs 1,036-crore Madhucon Group, a big player in the construction, granite, power and sugar industries, which employs about 10,000 people across in 18 locations across the country and in one location abroad.
The icing on the cake came last month when he was elected to Parliament from Khamman, 190 km north of Hyderabad, on a Telugu Desam Party (TDP) ticket defeating Congress leader Renuka Chowdary and was subsequently elected leader of the TDP in the Lok Sabha.
Along the way, he has had several brushes with controversy and allegations of corruption.
The income tax department and the Central Bureau of Investigation (CBI) have raided his offices; and he has been accused of leveraging his proximity to TDP chief N Chandrababu Naidu to win business deals.
"He hasn't paid sugarcane farmers their dues; yet, he drives around in a Mercedes Benz," alleged Chowdary.
But none of the charges have been proved.
Sitting in his plush office in Hyderabad's posh Jubilee Hills area, Rao reminisced: "I always wanted to be in business. So, I quit shortly after getting my first job, and started out on my own with just a few hundred rupees in my pocket."
The early years were really difficult. “I had no money, but I was determined to succeed,” he said. His ends often did not meet as he won and executed small projects in Andhra Pradesh and wherever else in the country he could land a contract.
In 1983, he registered his company, Madhu Constructions, which he later renamed Madhucon. That same year, rivals in Uttar Pradesh, where he was executing a project in Mirzapur - his first "big" order, of Rs 2 lakh - burnt his camp office and equipment.
"I almost threw in the towel, but the thought of my father (who had wanted him to become a farmer like himself) calling me a failure prompted me to soldier on," Rao told HT.
Very little is known about his company's performance till 1996, when Madhucon went public. His annual turnover had risen to Rs 30 crore by then.
Since 1996, however, Rao’s rise has been meteoric. “He's hardworking and shrewd, but he owes his success to (Chandrababu) Naidu," said a business rival who requested anonymity.
Madhucon, then a new kid on the block, won several contracts including one to build four flyovers in Hyderabad during Naidu's 1995-2004 chief ministerial tenure. The group also acquired the Palair Co-operative Sugar Mills, a state undertaking that was disinvested for Rs 9.59 crore — considered by many to be measly — in 2002.
Allegations flew thick and fast but died down soon as the charge of favouritism could not be proved.
But Rao was by this time firmly a part of the establishment. But that didn't stop the income-tax department from raiding the Madhucon group`s offices all over the country in 2005.
There were whispers that the timing of the raids, soon after Congress governments had come to power in the state and at the Centre in 2004, was no coincidence.
Income tax authorities, however, were reluctant to reveal details of what was uncovered in these raids or of any follow-up action. Then, in January this year, the CBI raided his offices for alleged irregularities in provident fund payments. Here, too, officials were not forthcoming with details.
But Rao’s business rivals said his political connections are not limited to the TDP. “Several top Congress leaders, including a powerful MP from coastal Andhra (whose relative Rao later married) helped him secure projects from the National Highway Authority of India, the Railways and other central agencies,” said the managing director of a large rival construction company.
He may be controversial, but for now, Rao, whose group earned a profit after tax of Rs 49 crore in 2008-09 and has pending orders worth Rs 5,000 crore, is on a roll.
First Published: Jun 08, 2009 01:04 IST