Managing Agencies

Managing Agencies

The following is taken, with permission, from “Industrial Railways and Locomotives of India and South Asia” compiled by Simon Darvill. Published by ‘The Industrial Railway Society’ 2013 .

The Management Agency system became one of the main instruments for industrial development in India from the mid 1800’s. The Managing Agents were partnership of a few individuals using their own money and that from investors to establish limited liability companies. Each of these companies operated separately from each other so the risk involved affected only the individual company and not all of them. Additionally as the Managing Agents were partnerships, they were autonomous from the investors and so were free to make business decisions rapidly and flexibly. It was a clever business model that spread risk whilst maximising expertise and profit.

For example a colliery owned by one company which supplied coal to a tea garden owned by another company, which was delivered by ferry boat owned by a third company; all controlled by the same Management Agent.

Management Agencies owned collieries and other mines, tea gardens, jute mills, sugar plantations and factories, iron and steel works, engineering companies, civil engineering companies, electricity generators, mainline railway companies, insurance companies, banks and sundry other sorts of ventures

It was also normal for Managing Agents to act as conventional agents for UK and other foreign-based companies.

After independence in 1947, the role of the Managing Agency system declined until the Government of India abolished the system in the late 1960’s, when all the assets of the remaining Managing Agencies became Indian owned.