A conglomerate giant comes to its knees in Brazil

In 1881, Francesco Matarazzo left his coastal town of Castellabate, Italy, with a few lire in his pocket and an idea of making a living selling pork fat in the new world.

He landed outside Sao Paulo and over the course of the next century turned a cottage industry into Latin America's largest family industrial dynasty.

Last week, however, Grupo Matarazzo - which 10 years ago would have made the Fortune 500 list if it were in the United States - went to civil court, sunk in repayment of its mounting debts.

The plea for concordata (essentially a declaration of inability to meet debt obligations, and a legal step shy of bankruptcy) comes ironically at a time when the Matarazzos' glorious century of entrepreneurship has been commemorated in a glossy new book, ''Matarazzo, 100 Years.''

Maria Pia Matarazzo, Francesco's granddaughter and heiress to his empire, blamed the ''economic model of Brazil'' and ''an ailing economy'' for the giant corporate network's ills. The company's lawyer, Hamilton Gomes de Oliveira, has announced that the group would have to sell off a number of properties.

The Matarazzos vowed, however, that the more than 11,000 workers would not lose their jobs. The plea for a court agreement asks for a rescheduling for two years of the group's debt repayments among 11 of the 43 enterprises: Creditors would receive 40 percent of what's due them within one year, and the balance at the end of the second. A court-appointed auditor would be assigned to watch the company books during this period.

The Matarazzo clan started its empire with a modest factory in 1882 that turned out pork fat, a manufacturing coup at a time when Brazil imported all its cooking lard. In 1890, Matarazzo and two brothers founded the ''Matarazzo Company,'' which a decade later mounted Brazil's first wheat mill.

In 1929, when Brazil's coffee barons were in the throes of the Great Depression, the Matarazzo concern - known then and ever since as South America United Industries - reached its zenith. Headquartered in a palatial estate on the broad Avenida Paulista, the company boasted 365 factories - ''one for each day of the year,'' as the saying of the day went. The industrial colossus produced everything from soap to cargo ships, agricultural products to movie theaters, petrochemicals to cellophane.

In 1950 the group employed 37,000 workers and by 1970 had holdings valued at Production dropped and US, West German, and French subsidiaries took over a number of the far-flung operations. In 1981, workers angered at delayed payments struck, paralyzing operations. From that year on, the company shrank steadily, cutting 15 percent of its work force, losing $3 million, and paring operations from production in 27 sectors of the economy to only 14 today.

The empire that once ranked No. 1 on the continent has slid to a middling 22 nd place within Brazilian industry.

The legal action, which shocked the Sao Paulo business community, lashed out in a 22-page document at the government, which had turned down an emergency request this year for an extension of a $45 million line of credit.

''The government,'' the document asserts, ''is practicing the basic premises of Marx's theory'' with the ''hundreds of public enterprises that discourage liberty and initiative, abuse economic power, eliminate competition, and impede the expansion of productive work opportunities.'' Brazil's economy, with dozens of giant semipublic enterprises, is committing ''economic suicide,'' the lawyers charge.