Hyderabad city in the earlier history was known as Nayrun Kot, as this city was established by a Hindu Raja, Nayrun. It's commonly narrated that Hazrat Ali [(A.S), The first Imam of Shia Muslim] had visited the Nayrun Kot during the reign of Raja Nayrun. The footprints of Hazrat Ali (A.S) are preserved in a Dargah called "Qadam Shah", situated at the foot of Qila Chari Kalhoras. To honor the visit of Hazrat Ali (Hyder) and as a remembrance, Miya Gulam Shah Kalhoro, changed the Nayrun Kot to "Hyderabad".
The city established by the Raja Narayan was destroyed by the Arabs. Miya Gulam Shah Kalhoro decided to reconstruct and revive the city as his Capital and decided to build a new Fort at its site. He deputed Diwan Gidumal (Gidwani), the task. Diwan Gidumal, with two boat loads of money, landed at Kotri, (a village opp. Gidu Bunder at Hyderabad) on the bank of Sindh River, and on the other bank set up a Camp for his crew. This Camp came to be known as Gidu Jo Tando, now called Gidu-Bunder.
Diwan Gidumal constructed Two Forts. One solid (Pakka), made of stone, and other (katcha), made of earthen material. Miya Gulam Shah Kalhoro would visit Hyderabad from time to time to supervise and would stay at Katcha Qila. In the year 1768, construction of (Pakka Qilla) solid fort made of stone was completed. Miya Gulam Shah Kalhoro then donated the earthen material made the fort (Katcha Qilla) to Shah Makai's Dargah.
The city was then sparingly inhabited as Miya Gulam Shah Kalhoro had yet to shift to live there. However, he did not live to enjoy it's comforts. Miya Gulam Shah Kalhoro expired in the year 1771 and is buried at Hyderabad. After him, the Throne was inherited by Miya Sarfirar Khan Kalhoro. He built a new capital city in the year 1772, a mile and half from New Halla, known as New Khudabad. Towards the end of the reign of Kalhoras, Talpur's, (Mirs), took control of the Government. In the year 1783, their reign began. New Khudabad continued as Capital city with many Amils and Bhaibunds still living there till 1789.