Kia Motors, a Korean company, is one of the crown jewels of Andhra Pradesh. But not everything is rosy across the road in Penukonda whose fortunes swung wildly in the past few years.
The Hyderabad-Bangalore highway, NH 44, interspersed with gentle slopes, fields, and Krishna river in Telangana followed by hills on the other side of the border as one enters Andhra Pradesh, is a rider’s paradise. You can see the landscape change dramatically as you near the AP-Karnataka border which is lush green for most part of the year. If this change in scenery doesn’t take you by surprise, then the imposing structure of Kia Motors, a Korean automotive manufacturing company, certainly will. It’s become a landmark on NH 44, and it’s easy to see why. Five years ago, one would have been tempted to reach Bangalore as soon as possible, but today, our eyes are bound to drift to have a look at the gigantic sign of Kia Motors looming large in the vicinity. Today, it is one of the crown jewels of Andhra Pradesh, and for a while, it was deemed to be a clear indication of the state government’s vision to bring in multinational companies to set up their base in the state. The lure of creating jobs, ushering a new wave of prosperity in the local economy, and developing the Rayalaseema region had the state government move heaven and earth to ensure that Kia Motors chose to set up its manufacturing unit, near Penukonda.
A lot has changed in the recent few years in the vicinity. Multiple ancillary units have sprung up to supply spare parts, among other things, to Kia Motors. Korean restaurants and sign boards in Korean dot the landscape. It’s hard to miss all these changes in a region which has been a hotbed for intense rivalry between politicians and faction-leaders for decades altogether. Between 1970 and 2010, Penukonda and the surrounding areas witnessed a bloody feud between Paritala Ravi and Maddelachuruvu Suri’s families, and their rivalry is still the stuff of legends (RGV’s two-part series Rakta Charitra is inspired from Ravi and Suri’s feud). The Penukonda constituency continued to be the centrestage for this intense rivalry, which saw several politically-motivated killings over the years. But today, you are more likely to come across billboards advertising ‘rooms available for rent’ or ‘properties for sale’ near the highway. There are even Korean-themed restaurants and lodges nearby, which are a far cry from roadside eateries which have boards saying “Bhojanam tayyaru” (Meals Ready).
Following the bifurcation of Andhra Pradesh and Telangana in 2014, the newly formed government in AP, with Chandrababu Naidu as the Chief Minister, promised to turn the state’s fortunes in the near future. Its capital city, Amaravati was going to be an engineering marvel with several top architects from Singapore, UK working on the designs. At the same time, making Rayalaseema the manufacturing and electronics hub was on top of the state government’s agenda. Kia Motors India Pvt Limited, a subsidiary of Kia Motors, agreed to build a manufacturing facility in Andhra Pradesh, and the state government allotted 536 acres and spent crores of rupees to level the site, which was filled with rocks. The company invested $2 billion – its largest investment in India – and by the time it rolled out its first car, Kia Seltos in mid-2019, Kia Motors had become synonymous with the young state’s future plans and dreams.
It’s easy to be overwhelmed with all this. You can see what’s happening when you drive on the highway. Not too far from the Kia Motors site, the town of Penukonda has its own version of the story, which has to be seen and heard to be believed. Has the presence of a Korean MNC in its backyard helped the town and its people prosper? How does the local economy change in the backdrop of such seismic changes? Truth be told, the recent story of Penukonda is as dramatic as its glorious history, which, these days, can only be seen through the relics that are slowly fading away with time.
In its history, spanning nearly 1000 years, Penukonda was ruled by the Hoyasalas, Chalukyas, Vijayanagara empire, Nawabs, Maratha chieftains, Nizams, and the British. During the reign of the Vijayanagara empire, Penukonda was the second capital of the kingdom, and Gagan Mahal, a palace in Penukonda, was once home to royal dancers and courtesans during Sri Krishna Devaraya’s reign. Apart from the Penukonda fort, located on a hill nearby, its most prominent landmark is a jail where Krishna Devaraya’s Prime Minister Timmarasu was kept captive. The latter’s samadhi too is located in Penukonda, enroute to the fort; however, it’s in such bad shape today that its prominence is lost. The town at the bottom of the hill, part of which is still inside the historical fort, is a reminder of its once glorious years. There are some colonial structures too, which continue to be in use, such as the court built in the early part of the 20th century, and the sub-collector’s office.
By the time Kia Motors came to town, it seemed as if Penukonda had a genuine chance of regaining its glory, and the early signs were indeed astonishing. One of the first few indicators of this change was, perhaps, the real estate market. The boom that ensued following the announcement of Kia Motors’ unit in the area turned a lot of people rich overnight. Whosoever gave away their lands for the factory were well compensated. And the prices of lands on the highway shot up nearly 30-40 times in some cases! Suddenly, everyone wanted to buy a piece of land, at least as an investment. For instance, a piece of land which was pegged at Rs 10 lakhs just before Kia Motors was built, was sold for a jaw-dropping Rs 4 crores within a short time. But the real change in the local economy began to take shape when more than 5000 people from all over India came over to build the factory.
With Bangalore being the closest city to Penukonda, most of the youngsters from the town and surrounding areas work in the city. Their parents and relatives stay in Penukonda, which job opportunities are limited. If one doesn’t have farm land or run a business in the town, then there’s practically nothing much to do. Rental income wasn’t high either. The only time the entire town undergoes an extended period of rigorous activity is when Penukonda Babayya Swami (Baba Fakruddin) Dargah Urs takes place annually (these festivities have been going on for nearly 748 years now and the dargah is one of the oldest in South India). In recent times, the state government has been promoting Penukonda’s historical ties with Vijayanagara kingdom (there’s even a statue of Sri Krishna Devaraya at the entry to the town).
For a brief period of time, though, people in Penukonda witnessed a staggering rise in their local economy when Kia Motors was about to be built. Shakeel, who runs the Al Kebab Family restaurant in Penukonda, tells a fascinating story about what happened when Koreans and several contractors came to town a few years ago. “This is a town where a family can live happily in a 2BHK and pay not more than Rs 4000 as rent. But all that changed when Kia came to town. The contractors had to find housing for more than 5000 people, most of whom were construction labourers, engineers, mechanics, welders among others, who would work on the site. So, contractors would approach a house owner and tell them that they are ready to pay Rs 30,000 as rent for the same house which wouldn’t even fetch them Rs 5000 as rent. This began happening everywhere in Penukonda. And the town being the only one with some infrastructure in the near vicinity, everyone wanted to come here first. First, it began with small houses. And as more people began to trickle into the town, the contractors even went to the extent of renting out community marriage halls and paid Rs 4 lakhs as rent for months altogether. For almost two years, no one could find vacant community halls for their wedding, and they had no choice but to get married in temples!”
To make the foreigners feel welcome in their town, several stores and supermarkets began stocking Korean products. The menu in restaurants changed and there was kimchi, tofu, and other Korean delicacies. Even Korean restaurants sprang up all over the town. At one point of time, a Korean businessman approached a local, who was about to construct an individual house, and convinced him to rent the place to him instead. He was willing to pay nearly Rs 2.5 lakhs as rent, but instead of a duplex house, the Korean businessman wanted the plan to be modified so that he can lease individual rooms out to higher officials as service apartments. All of a sudden, several people began constructing more houses and even added more floors to their buildings because the demand was so high. In the meantime, thanks to the state government’s decision to provide them with all amenities, for the first time since Independence, Penukonda got safe fluoride-free drinking water. This was a result of Krishna water being diverted through Handri Neeva Sujala Shravanthi phase-II that filled Gollapalli reservoir in Penukonda mandal.
And then, there was a drastic fall and everything crashed. The construction of Kia Motors’ unit was completed, and almost all the workers had to leave the town.
In the past few months, the people in Penukonda and the many house owners who had been relying on the rental income had a rude wakeup call. The loans they had taken to construct their buildings became a burden, and there have been several cases where properties were seized. Several Korean restaurants have been shut down, and there’s nothing, except for sign boards, to indicate what happened in the past. The rise in house rents also sparked a mini-exodus with people leaving Penukonda and settling down in other areas like Hindupur where the rents hadn’t skyrocketed. Most of the Korean executives who work at the Kia Motors plant live in Bangalore, and other higher officials moved to a brand new township which sprang up in another village close to the plant. Suddenly, Penukonda wasn’t the most preferred place to stay anymore. Even the agreements with hotel owners, which contractors had signed, weren’t honoured for the full time period. In a small town, when more than 700 houses are lying empty, it’s a clear sign that the wind has changed direction.
Despite all this, house owners aren’t said to be ready to bring down the rents because their debts have piled up so much. When Kia Motors began operating, there was a hope that more than 15000 people from the region will find jobs in the plant. The company too has been fair in their regard and people were told that they will be given jobs if they pass an entrance test. Yet, it hasn’t been quite beneficial to the local people. Most of the jobs have gone to well-qualified engineers and others with prior experience in the automotive industry who came down from Tamil Nadu. Most of the local people have had to settle down for entry level jobs at the company.
The real estate market too has undergone a major correction, so to speak. When a property developer who had bought a piece of land for Rs 4 crore, put his land up for sale, no one was willing to buy it even for Rs 1 crores! Those who sold their lands when the real estate market was at its peak have left the town and settled down in other cities. And the farmers, who relied on their land, were shielded from these drastic fluctuations in the market.
Today, you can still see the extent to which the Korean company had left its imprints on the town and its economy. Penukonda, one would believe, has always been at the cusp of something truly great which will make people see its potential. At one point of time, ISCKON had expressed its willingness to develop the nearby hill area and the golden temple of Sri Lakshmi Narasimha Swamy with an estimated Rs 300 crores; however, the state government hadn’t made any efforts to build a road to the hill fort. It’s hardly 5 kms from the town centre, but the road to the hilltop gets destroyed every time it rains and there is every chance of getting stuck in the rain, when rivulets make it impossible to even go to the hill fort on a bike.
So, what’s the road ahead? And is there a chance of a change in fortunes once again? No one knows, at the moment. But the real estate market, which has been central to this boom, is betting big on further development in the area. Shakeel puts it in perspective saying, “There are rumours that another MNC might construct a huge plant in the area. Now, everyone’s hoping that things will change once that happens. But who knows, what or when that’s going to happen.”
Until that happens, Penukonda and its people will continue to bear the burden of debts and failed dreams. And the Korean company across the road will continue to inspire awe and a sense of pride for the state of Andhra Pradesh. For now, the company truly lived up to its slogan – “The Power To Surprise”.