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Sakthivelu Nayakar (Kamal Hassan), the protagonist, is born to an anti-government union leader. The child Velu is tricked by the police into locating his father, and then witnesses his father's death in a police shootout. Then after doing the final rites for his father, he kills the person who was the cause for his father's death. Orphaned, he escapes to Bombay.

Stranded and homeless in the big city, he is rescued by a kind-hearted Muslim fisherman who takes him into his home in the sprawling suburban slums of Dharavi. His foster-father is also a small-time smuggler known for his generosity in the slum. Upon his running afoul of a senior crime lordthe corrupt local police officer Inspector Kelkarthe fisherman is arrested on smuggling charges, and later murdered. Velu Naiker, now a young man who has come into his own, goes in search of the officer and bludgeons him to death.

With this act, he is seen at once a saviour and a man to be feared amongst the slum residents. As their godfather and protector, he flourishes by resuming his dead foster-father's local smuggling activities. He marries a destitute school-girl-turned-prostitute (Saranya) and has two children. Conflicts and power struggles occur in the competitive web of the smuggling world, in which Velu's wife becomes a casualty. Velu's kids are sent away to Chennai as a result and return years later to their father's home, as young adults.

The son, Surya (Nizhalgal Ravi) is eager to join his father in his activities. He hires outside thugs to eliminate a potential witness against his father. They succeed in eliminating the witness, but their failure to cover their tracks leads police to him at a gas station and an accident costs him his life. Velu is heartbroken. Velu's daughter (Karthika) is at odds with her father over his form of justice and killings. The death of her brother was the last straw for her and she cuts off her relationship with her father and leaves him.

A newly appointed Assistant Police Commissioner (Nassar) starts afresh the hunt to bring Velu Nayakar to justice over his alleged activities, and manages to secure an arrest warrant. This Commissioner is unknowingly Velu's son-in-law, as his daughter had secretly married him. After continued pursuit resulting in the beatings by police and self-immolation of slum dwellers, Velu surrenders to the police to spare the lives of the residents of his slum. He is tried in court but is released due to the lack of adequate evidence for his alleged nefarious activities. A supportive and emotional crowd gathers at the courthouse, awaiting Velu's release. Velu emerges to greet the tumultuous crowd but unexpectedly gets shot by Inspector Kelkar's retarded son whom Velu had adopted after he learns that Velu had killed his father long ago.

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