The Europeans called the Coromondal Coast, the east coast of South India, the Carnatic. Carnatic was situated in the south of the Northern Sarkar. The Carnatic was a part of the kingdom of Hyderabad.
The region in the river basin of the Krishna and Godabiri, north of Madras, present Chennai, came to be known as the Northern Sarkar by the Europeans.
Occupation by the British:
Muhammad Ali, the Nawab of Carnatic was an inefficient ruler. He did not have even the money to run the administration.
To meet the expenses he borrowed money from the Company. Ultimately, he repaid the debt by assigning the revenues of the Carnatic to the English Company.
By 1787 the English Company got total control of the Carnatic in lieu of an annual tribute of 15-lakh Pagodas. Incidentally Pagoda was the currency prevalent in contemporary South India.
The Northern Sarkar comprised the four districts of Mustafa Nagar, Ellore, Rajahmundry and Chicacole.
Nizam Ali, the Nawab of the Northern Sarkar, being afrr.id of an attack from Tipu Sultan and the Mai athas, courted the help of the English.
On 12 November, 1768 Nizam Ali concluded a defensive and offensive alliance with the English in Madras.
By the terms of the treaty the English Company obtained full control of the Northern Sarkar in lieu of an annual tribute of rupees 9-lakh to Nizam Ali.