ANNUAL NUMBER FEBRUARY 1962
THE ECONOMIC WEEKLY
Ownership of Calcutta Managing Agency Houses
A K Sur
To what extent have the old managing agency firms, the historic and unique form of organisation
through which British capital used to be channelled in to Indian trade, industry and plantations, changed hands
in the post-war period ?
What
cy
firms,
structural changes
in organisation
The following analysis
cy houses by Shri A K Sur,
the answers.
really succeeded to any significant extent in dissociating control from ownerretaining the one while parting with the other ?
of the past and present position of ten of the blading Calcutta managing agenthe Economic Adviser to the Calcutta Stock Exchange, suggests some of
THERE
has been a f u n d a m e n t a l
change in the composition of
ownership o f B r i t i s h m a n a g i n g agency house in this c o u n t r y in the postw a r p e r i o d . At leas' this is the case
w i t h the Calcutta m a n a g i n g agencyhouses. P r i o r to 1947, these managi n g agency houses were p r e d o m i n a n t l y B r i t i s h , in the sense that they
were b o t h under B r i t i s h control and
ownership. B u t since then, the cont r o l a n d ownership of m a n y of the
houses have passed on to I n d i a n
hands. The present analysis is intended to show how f a r this has happened in the case of some ten
Calcutta m a n a g i n g agency houses.
These ten houses are :
Rainier L a w r i e & Co L t d
D u n c a n Brothers & Co L t d
3
J a r d i n e Henderson L t d
4
5
Martin Burn Ltd
Macneill & Barry L t d
6
7
8
9
10
the process of transference of ownership?
The question has also been raised, to what extent have changes in shareholding of the managing agenwhich were mostly converted into public companies after the war, led to transfer of control ?
Have the agency firms
ship, as is sometimes suspected,
1
2
accompained
newly f o r m e d corporate concerns
were handed over mostly to the
partners of the o l d firms in lieu of
vendors' share of interest in the o l d
undertakings.
Thereafter
the old
partners or the
directors of the
newly
formed
companies offered
t h e i r holdings of the shares, in
p a r t or in whole, to the public at
considerable p r e m i u m . As a matter
of fact, they thereby pocketed large
amounts of money. Some of the
shares thus sold in the late forties
are shown in T a b l e I.
really went i n t o I n d i a n hands and
how many continued t o r e m a i n i n
the hands of non-Indians, we cannot
say, f o r data relating to t h a t p e r i o d
are now not available. However, we
have precise data r e l a t i n g to the
present structure of shareholding in
these companies. Let us start w i t h
a b r i e f summary of i t . Table II
gives (as in 1961) the total number
of shareholders, the total a m o u n t of
paid-up c a p i t a l , and the amount of
paid-up capital held by the ten largest shareholders.
It is evident that when the shares
were offered to the public, they were
taken over by all classes of investors, both I n d i a n and n o n - I n d i a n .
T h a t was the b e g i n n i n g of percolat i o n of I n d i a n interest in the ownership
of these
managing
agency
houses. But. how many of these
shares then offered to the p u b l i c
Even a cursory look at Table II
w i l l show that the bulk of the equity capital of these m a n a g i n g agency
houses is held by the ten largest
shareholders. So it is obvious that
it is these ten largest shareholders
who actually wield control over
these concerns. An analysis of the
composition of nationalities of these
Kettlewell Sullen & Co L t d
McLeod&CoLtd
Shaw W a l l a c e Co L t d
Hoare M i l l e r & Co L t d
Gillanders
A r b u t h n o t & Co
Ltd
These are all old m a n a g i n g agency houses. Some of them are indeed
more t h a n a h u n d r e d years o l d .
But
their
corporate
existence
is of very recent o r i g i n , mostly
dating
from
the
post-1945
period.
I n d e e d , w i t h the except i o n of one or t w o , they were partnership concerns, the partners bei n g all Europeans. T h i s i n other
w o r d s i m p l i e s that p r i o r to their
t r a n s f o r m a t i o n i n t o corporate entities, there was seldom any I n d i a n
interest in t h e m . W h e n the changeover took place, the shares in the
281
THE ECONOMIC WEEKLY
A N N U A L NUMBER FEBRUARY 1962
ten largest shareholders w i l l , therefare, give us a clue to how far these
concerns have been Indianised of
late. T h e result of such an analysis
i s presented i n Table I I I .
I t w i l l be seen f r o m Table 111 t h a t
in the m a j o r i t y of eases, the K i n o pcan interest in these concerns is
'no longer of c r u c i a l importance. I n deed, in some of them it has completely disappeared. A m o n g them
are M a c n e i l l & Barry. Kettlewell
B u l l e n , M c l e o d , and Hoare M i l l e r .
In other cases where European interest s t i l l remains, the percentage of
holdings varies between 26 and 70.
N o w the question that m a y pertinently be asked i s : what is the s t a t u '
of those who hold interest in these
managing agency houses? In the
m a j o r i t y of cases, it is either Joint
stock companies or institutional i n vestors w h o hold the predominant
interest: in them. I n d i v i d u a l s are
smaller in number. Thus against
j o i n t stork companies and i n s t i t u tional investors n u m b e r i n g 63. we
have i n d i v i d u a l s n u m b e r i n g only 37.
T h e corporate holdings in the
shares of the companies are shown
i n Table I V .
Of the p u b l i c companies included
in the category of j o i n t stock companies i n T a b l e I V , the m a j o r i t y
are non-listed companies; only t w o
or three are listed ones. A m o n g the
j o i n t stock companies, nine are
private l i m i t e d companies. Among;
insurance
companies,
excepting
L I C., all are general insurers. T h e
L I C has holdings in Balmer Lawrie, M a r t i n B u r n Jardine Henderson. Macneill & B a r r y . Shaw Wallace
and Houre M i l l e r . The L I C's interests in these companies are as
follows:
Preference Share
and
Debenture'
So far we have given an analysis
of the equitv holding.' of the ten
largest
shareholders.
L e t us now
make a reference to the other k i n d s
of securities of these concerns. F i g h t
of them have other kinds of securities. Duncan Brothers, M a r t i n B u r n ,
Jardine Henderson, M a c n e i l l & Bar282
ANNUAL NUMBER FEBRUARY 1962
THE ECONOMIC WEEKLY
ry, M c L e o d & Co, Ketllewell Bullen,
Shaw Wallace and, Gillanders have
only one series of preference s l u m s
each. M c L e o d and Kettlewell B u l Icn have two series each. M a c n e i l l &
B a r r y has, in a d d i t i o n to preference
shares, also debentures. The. foreigners' h o l d i n g of preference shares is
q u i t e insignificant. The shares are
generally held by i n s t i t u t i o n a l investors, among w h o m the L i f e I n s u r a n c e
c o r p o r a t i o n holds securities in a l l .
T a b l e V gives particulars relaling
to these shares at a glance.
As control over the companies is
generally exercised by the Board of
Directors, it w o u l d also be relevant
to give the breakdown by nationalities and the holdings of the members of the boards of the different
companies (see Table V I ) .
On the Board of Directors
These date are to be closely f o l lowed. In five out of ten cases, nonI n d i a n directors are i n m a j o r i t y .
N a t u r a l l y i n board meetings, their
views w o u l d p r e v a i l . In some of
them again the casting vote of the
c h a i r m a n would also matter' But
how f a r this theoretical dominance
is actually carried i n t o practice in
the day -to-day business of the com'
panics remains uncertain. B u t the
fact that these. directors are in some
eases more or less show-pieces and
h o l d very little v o t i n g interest, by
v i r t u e of their shareholding i n . the
concern, makes it q u i t e clear that
in the event of any large difference
of o p i n i o n , it would be difficult for
them to get elected in general meetings. Thus the ultimate c o n t r o l rests
w i t h the I n d i a n elements.
283
However, it is to be noted that
the state of things described in the
foregoing paragraph does not hold
good in the cases of Gillanders and
Shaw
Wallace,
where European
interests still predominate. Other
managing agency houses of Calcutta
where a state of things analogous
to that of Gillanders and, Shaw W a l lace s t i l l obtains are B i r d Heilgers,
A n d r e w Y u l e , W i l l i a m s o n Magor,
Octavius Steel, and T u r n e r M o r r i son. B u t as the office of the managi n g agent itself is determined by
the shareholders of the managed
companies, it w o u l d be interesting
to study the composition of shareh o l d i n g of the managed companies.
T h i s aspect of the question I propose to examine on a later occasion.