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The amazing Lijjat Papad story: from Rs 80 to Rs 800 crore

Does the jingle ‘Karram Kurram Kurram Karram’ ring a bell? The Lijjat Papad ad campaign in the 1990s featuring a muppet bunny created history in more ways than one. But that is nothing compared to the history of the company that the ad was created for: Shri Mahila Griha Udyog Lijjat Papad, popularly known as ‘Lijjat’.

Lijjat Papad, one of India’s oldest co-operatives supporting women, is an organisation manufacturing various products — papads, masalas, wheat flour, chhapatis, detergent powder, detergent cake and liquid detergent.

The story of  Lijjat (meaning ‘tasty’ in Gujarati) is one of ‘rags to riches’ propelled by the need to make a living by focusing on strengths and core values, rather than the intent of getting rich. And when hard work and determination are actioned, success is bound to follow.

Here’s the story of how Lijjat Papad became a successful cooperative employing 43,000 women, and grew from Rs 80 to Rs 800 crore.

Lijjat

Origin

Lijjat was the brain child of seven Gujarati women from Bombay (now Mumbai) who wanted to start a venture to create a sustainable livelihood using the only skill they had– cooking. This was in the 1950s.

The women borrowed Rs 80 from Chhaganlal Karamsi Parekh, a member of the Servants of India Society and a social worker. They took over a loss-making papad making venture and bought the necessary ingredients and the basic infrastructure required to manufacture papads. And what resulted was a historic company established and run by women for the empowerment of determined and dedicated women.

On 15 March 1959, on a warm summer day with the sun shining brightly in the cloudless sky, they gathered on the terrace of their building and started with the production of 4 packets of papads. They started selling the papads to a known merchant in Bhuleshwar, a popular market in Mumbai.

The early days were not easy. The institution had its trials and tribulation. The faith and patience of the members were put to test on several occasion. Self-reliance was the policy and no monetary help was to be sought (not even voluntarily offered donations). So work started on commercial footing.

Chhaganlal Parekh, popularly known as Chaganbapa, became their guide. Initially, the women were making two different qualities of papads, to sell the inferior one at a cheaper rate. Chaganbapa advised them to make a standard papad and asked them never to compromise on quality. He emphasized to them the importance of running it as a business enterprise and maintaining proper accounts.

Growth

Lijjat expanded as a cooperative system. Initially, even younger girls could join, but later eighteen was fixed as the minimum age of entry. Within three months there were about 25 women making papads. Soon, the women bought some equipment for the business, like utensils, cupboards, stoves, etc. In the first year, the organisation’s annual sales were Rs 6,196. The broken papads were distributed among neighbours.

During the first year, the women had to stop production for four months during the rainy season as the rains would prevent the drying of the papads. The next year, they solved the problem by buying a cot and a stove. The papads were kept on the cot and the stove below the cot so that the process of drying could take place in spite of the rains.

The group got considerable publicity through word of mouth and articles in vernacular newspapers. This publicity helped it increase its membership. By the second year of its formation, 100 to 150 women had joined the group, and by the end of the third year it had more than 300 members.

By this time, the terrace of seven founders could no longer accommodate the members and the ingredients, so the kneaded flour was distributed among the members who would take it to their homes and make papads. The papads were brought back for weighing and packaging.

In 1962, the name Lijjat (Gujarati for ‘tasty’) was chosen by the group for its products. The organisation was named Shri Mahila Griha Udyog Lijjat Papad. In many Indian languages, Mahila means women, Griha means home, Udyog means industry. By 1962–63, its annual sales of papads touched Rs 182,000.

In July 1966, Lijjat registered itself as a society under the Societies Registration Act 1860. In the same month, Khadi Development and Village Industries Commission, a statutory body set up by the Government of India for development of rural industries, formally recognised Lijjat as a unit belonging to the ‘processing of cereals and pulses industry group’ under the Khadi and Village Industries Act. It was also recognised as a ‘village industry’. In 1966, KVIC granted it a working capital of Rs 8 lakh and was allowed certain tax exemptions.

After tasting tremendous success with their papads, Lijjat began producing other products like khakhra (1974), masala (1976), vadi, wheat atta, and bakery products (1979). In the 1970s, Lijjat set up flour mills (1975), printing division (1977) and polypropylene packing division (1978). The group also initiated some unsuccessful ventures such as cottage leather (1979), matches (1979), and agarbattis (incense sticks).

In the 1980s and 1990s, Lijjat started attracting attention of foreign visitors and officials. Lijjat started exporting its products with the help of merchant importers in the United Kingdom, the United States, the Middle East, Singapore, the Netherlands Thailand, and other countries. Its annual exports accounted for more than US$2.4 million in 2001. As its popularity grew, Lijjat started facing the problem of fake Lijjat papads being introduced in the market. In June 2001, three persons were arrested in this connection, in Bihar.

In 2002, Lijjat had a turnover of Rs 300 crore and exports worth Rs 10 crore. It employed 42,000 people in 62 divisions all over the country. In 2003, Lijjat received the ‘Best Village Industry Institution’. It also received the PHDCCI Brand Equity Award 2005. Lijjat marked its 50th year of existence on 15 March 2009. Its current annual turnover is at Rs 800 crore.

Management

Lijjat believes in the philosophy of sarvodaya (the economic and social development of a community as a whole) and collective ownership. It accepts all its working members as the owners and an equal partaker in both profit and loss. The members are co-owners and fondly referred to as ‘sisters’.

All the decisions are based on consensus and any member-sister has the right to veto a decision. Men can only be salaried employees (accountants, drivers or security guards), and not the members of the organisation (i.e. they are not the owners).

The running of the organisation is entrusted to a managing committee of twenty-one members, including the President, the Vice-President, two secretaries, and two treasurers. Sanchalikas are in-charge of various branches and divisions.

Process

The entire cycle begins with a simple recruitment process. Any woman who pledges to adopt the institution’s values and who has respect for quality can become a member and co-owner of the organisation.

In addition to that, those involved in the rolling of the papads also need to have a clean house and space to dry the papads they roll every day. Those who do not have this facility can take up any other responsibilities, like kneading dough or packaging or testing for quality. Packed papads are sealed into a box and the production from each centre is transported to the depot for that area.

In some smaller towns or villages, the branch itself serves as the depot. The depots are our storage areas as well as pick up points for distributors. Distributors pick up the quantity of papad they require and pay cash on delivery to the sisters or ‘bens’ every day.

Profit-distribution

Accountants in every branch and every centre maintain daily accounts. Profit (or loss, if any) is shared among all the members of that branch.

A committee of 21 decide how the profits are to be distributed. Generally gold coins of 5gm or 10 gm, are purchased depending on the profit. Everyone gets an equal share of profit, irrespective of who does what work, irrespective of seniority or responsibility.

Even a ben/ sister who has recently joined gets the same share as others who have been with the company for longer. Each branch calculates its profit and divides it equally among all its members.

Source: http://www.lijjat.com/, wikipedia, and other sources