After their easy success in Bengal, the English were confident of their military strength. They concluded a treaty with the Nizam of Hyderabad (1766) persuading him to give them the Northern Circars (region) in lieu of which they said they would protect the Nizam from Haidar Ali. Haidar already had territorial disputes with the Nawab of Arcot and differences with the Marathas.
The Nizam, the Marathas, and the English allied together against Haidar Ali. Haidar acted with considerable tact and diplomatic skill. He paid the Marathas to turn them neutral and, promising to share conquered territories with the Nizam, converted the Nizam into his ally. He then joined the Nizam to attack the Nawab of Arcot.
Course of War
The war continued for a year-and-a-half without any conclusion. Haidar changed his strategy and suddenly appeared before the gates of Madras. There was complete chaos and panic at Madras forcing the English to conclude a very humiliating treaty with Haidar on April 4, 1769—Treaty of Madras. The treaty provided for the exchange of prisoners and mutual restitution of conquests. Haidar Ali was promised the help of the English in case he was attacked by any other power.