Dwarakanath being who he was, the business that he started in 1834 was not like any other. Carr, Tagore & Co was not just the first Anglo-Indian firm of any size and prominence, but different from every other in many respects. Dwarakanath chose William Carr, an indigo merchant of not much means, to be his partner, for his connections with the British community.

The capital for this firm was raised by mortgaging Dwarakanath’s extensive landed properties, mainly his zamindaris. He lent the firm Rs 10 lacs from the funds he raised and charged interest at 8 percent, a canny move that ensured that the firm had liquidity to finance its operations, and he had a source of income. His zamindaris also served as the catchment areas for sugar production, silk cultivation from mulberry trees, and indigo grown on the estates. Moreover, Dwarakanath bought the East India Company’s indigo factories and the silk-reeling workshops at throwaway prices since his lands encircled those properties, leaving them vulnerable to Dwarakanath’s right to allow them free entry and exit. All these commodities were exported in large quantities by the firm to Europe. Effectively, what Dwarakanath was implementing is what would be called backward vertical integration in later economic parlance.

More than these striking aspects, Carr, Tagore & Co came to be what was effectively India’s first conglomerate that set up a string of businesses. The company entered the British-dominated opium business, the first fruits of his biracial partnership. The cash generated from the export businesses then led to Dwarakanath’s entry into one of the most significant sectors in India at that time—coal.

Blair Kling, the author of the most exhaustive biography of Dwarakanath, wrote:

“The heart of Dwarkanath Tagore’s business empire lay not in Calcutta but 130 miles to the northwest in the wilderness of Burdwan district. There, at Raniganj, was the coal mine, purchased by Tagore in 1836, that gave him virtual control over the supply of fuel in the Bengal presidency.”

However, Dwarakanath did not initially show any interest in coal, possibly because although coal deposits had been discovered in Ranigunj in Bengal in the eighteenth century, the business did not become profitable until much later. At any rate, after twice rejecting the offers of Alexander & Co, the British agency which owned and ran the coalfields but had become bankrupt, Dwarakanath bought the coalfields at a cost of Rs 70,000 on behalf of Carr, Tagore and Company.

Coal was to the nineteenth century what oil was to the twentieth: the fuel that powered everything else. By gaining control of the Ranigunj coalfields, Dwarakanath secured a strategic resource that gave him leverage over a wide range of industries. Whoever controlled coal supply controlled the cost of running steam engines, ships, and factories. This was the kind of structural advantage that competitors simply could not easily replicate, which is why the colonial government tried repeatedly, and somewhat desperately, to break his near-monopoly.

Tagore used British managers to operate his coal mines, who had to contend with a host of difficulties: “floods, fires, engine breakdowns, cash shortages, labour strikes, and desperate struggles in the fields and lawcourts against rival operators over mine labour, riverside wharves, and mining leases.”

Moreover, if the problems of mining were not severe enough, the transportation of coal from Ranigunj to Calcutta presented an even worse problem. Kling describes the journey in an evocative passage that sums up the process and the predicament:

“All shipping was done during a ten-day period in the rainy season when the Damodar was high enough to support the boats. Hundreds of boats were tied to the ghats of Carr, Tagore and Company; each was loaded with 200 to 600 maunds of coal and sent downstream to Amta in western Howrah District. The coal was piled at the Amta Depot, under the supervision of Mr. Martin, and in time trans-shipped to coal depots near Calcutta. Meanwhile, the boatmen returned to Raniganj for another load, the average boat carrying three to four loads per season. The boatmen, a temperamental lot who frequently went on strike, were paid by the load but were given advances to keep them available for the dash. If the river was too low, they would dump coal overboard along the way, and invariably less arrived at Amta than left Raniganj.”

Despite these harsh conditions, Carr, Tagore and Co’s coal business prospered, particularly after the steep increase in the demand for coal to fuel the warships that were being sent by the British Indian Government to China during the First Opium War of 1839–1842. Dwarakanath also profited from importing coal from England and selling it to the Government at this time. Moreover, Dwarakanath consolidated his coal holdings by merging the collieries of rival English owners of the Naraincoory mines with those of his own, giving birth to the Bengal Coal Company, then the largest coal company in India.

A notable aspect of the formation of Bengal Coal Company was that the right of management of the company was perpetually vested in Carr, Tagore & Co. This arrangement marked the beginning of a form of business organisation that would later come to be identified with British firms operating in India—the managing agency—but it was Dwarakanath who introduced it in India and used it to his advantage repeatedly.