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FEATURES/On Assignment | Oct 1, 2010 | 17649 views

The Bellary Minefield

Miners in the area have one by one capitulated to the might of Janardhan Reddy. But Rahul Baldota is putting up a stiff resistance
The Bellary Minefield
Image: Gireesh G V for Forbes India

R

ahul Baldota grew up in a dusty old mining town, but in privilege. He is the elder son of Narendrakumar Baldota, the Marwari owner of MSPL, Karnataka’s Bellary district’s largest iron ore mining company. After completing his schooling, Baldota got an engineering degree. He later moved to the US and studied at the University of Illinois, Chicago, to get a management degree. By the time the 28-year-old Baldota returned home in 1993, MSPL was getting ready for the biggest boom in the global iron ore industry.

While Baldota was busy cramming engineering formulae, a young man two years older than him was learning the tough ways of a mining town. The locals knew him as Janardhan, son of a local CRPF constable. He wasn’t very good at studies. Soon he started a hotel, which did not work. He started a tabloid and that didn’t work either. He then started Ennoble India Savings and Investment Company, a chit fund. It too went bust and left his family with debts that ran in crores. It seemed Janardhan would remain just another man in a dusty town.

In 1999, he took a punt on politics. He went campaigning around the streets of Bellary on a scooter for Bharatiya Janata Party’s Sushma Swaraj in the 1999 Parliamentary elections. That changed his luck.

A couple of years later, he entered the iron ore industry and found a way to make money; enough to buy helicopters and to maintain a private army. The world now knows him as Gali Janardhan Reddy, a mining magnate in Bellary. And he doesn’t care for old money.

Reddy now holds sway over mining in the district. And that has brought about a face off between Baldota and him, with accusations and counter-accusations of attempts to forcefully gain control over the district’s mining sector.

Baldota insists that Janardhan Reddy, the man he never heard of while growing up, now has him in his cross-hairs. “Reddy already has almost all the miners in Bellary paying a ‘tax’ to him through something called as a raising contract,” he says. A raising contract is an illegal agreement through which a mine owner gives permission to a third party to run his business and take a share of the profits, or “lift” a certain amount of iron ore from his mines. According to Tapal Ganesh, another iron ore miner in the region, Reddy’s share of profit can range from 15 percent to over 50 percent.

Now Reddy wants a similar contract with MSPL, the erstwhile king of trade in that area. Baldota says he has managed to resist the overtures but has suffered financially in doing that. As of now, he is the last man standing against the might of Reddy.

The first move from Reddy came in 2008. Only a few months earlier, he had led BJP to an almost clean sweep in the district for elections to the state assembly. “Reddy sent a message that he wanted to meet Rahul,” says a senior official at MSPL. Baldota instead sent two of his senior executives. Reddy was not amused. He asked again for the Baldota scion. He was turned down again.

According to Baldota, the meeting was to decide the terms of the raising contract.

“We are among the oldest miners of Bellary. For 50 years, we have worked hard and are passionate about mining. How can I give it off just like that? If I had given in to the pressure once, he would keep coming back for more,” says Baldota.

It has not been easy to resist Reddy in Bellary, even for someone like Baldota. Reddy has built his clout over time. In the early part of this decade, Reddy got his foot into the mining business by buying a mine in Obulapuram village in Andhra Pradesh. The village lay on the border of Karnataka and Reddy’s mine bordered that of others, including that of Tapal Ganesh. Some of the miners admit the move was a “brilliant case of foresight and understanding”.

“With the mines in Andhra Pradesh, Reddy readily enjoyed [Congress leader and two-time Andhra Pradesh chief minister] Y.S.R. Reddy’s patronage,” says Ganesh. Perhaps giving an insight into Reddy’s working style, the 2009 report by the Supreme Court’s Central Empowered Committee noted that the boundaries of the mining leases owned by Reddy’s Obulapuram Mining Company (OMC) are “inconsistent”. Moreover, the location of the leases have been fixed in such a way that “unallotted forest areas lying between the above three mining leases as well as part of the approved mining lease of M/s BIOP [owned by another miner S.K. Modi] is included and shown to fall within the approved mining lease of M/s OMC”. Janardhan Reddy, alleges Ganesh, used the location to trespass across the border too, where there were 11 mining leases, including that of Ganesh’s Tumti Mines.


This article appeared in the Forbes India magazine issue of 08 October, 2010
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Comments (1)
mohan Oct 6, 2010
A biased report! When two elephants fight the grass gets trampled! Am also owning quarries and know how the system works! An honest miner has as much chance to survive as a snowflake in hell!
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