Lijjat - A Women’s Enterprise with a Difference1

Introduction

Shri Mahila Griha Udyog Lijjat Papad, popularly known as Lijjat, is an Indian women's
cooperative involved in the manufacturing of various fast-moving consumer goods. The
organisation's main objective is the empowerment of women by providing them employment
opportunities. Started in the year 1959 with a seed capital of Rs. 80, Lijjat has an annual
turnover of around Rs. 6.50 billion (over 100 million USD) in 2010, with Rs. 290 million in
exports. It provides employment to around 43,000 sisters across India. Lijjat is headquartered in
Mumbai and has 81 branches and 27 divisions all over India. Lijjat is primarily a cottage
industry, urban by its origin, that has spread to the rural areas. It is considered as one of the
most remarkable entrepreneurial initiatives by women that is identified with female
empowerment in India.

Lijjat is an atypical model since the members believed and practiced principles of co-operation
and collective ownership from the very beginning and in the process built an institution that
could compete and survive in a fiercely competitive market on its own strength. We are
conditioned to expect that cooperative economic ventures must have an in-built element of
subsidy, at least in the initial stages (e.g. NDDB and the milk revolution, or even sugar
production). However, Lijjat's success is entirely without any official support or subsidy. It is also
noteworthy that the venture began without any external agency or promoter. It was the up-
scaling of a cottage industry by a group of completely untrained and semi-skilled women. These
several factors make Lijjat an unusual and typical livelihood model. The fact that Lijjat not only
helped its members attain a steady income but also indirectly contributed to their empowerment,
which makes it unique among all the cases, studies in this series.

Case Methodology

In order to understand the process and its impact, the following methodology was used:

• Discussion with the key officials at the headquarters of Lijjat as well

as in the branches
• Semi-structured interviews with the members
• Sharing of preliminary findings with Lijjat functionaries to check the veracity
of the conclusions drawn
• Study of the secondary material on the organization

Based on the above, inferences were drawn about major learnings from the intervention and the
potential for replicating it in other areas.

Process of Intervention

Lijjat Papad is a highly decentralised enterprise where the production process is broken up into
several self-contained steps that engage a large number of women with low skills using their
homes as a workplace. Seven women initiated the venture in 1957 to earn additional income
through the use of their idle time. Even though these women made initial losses, they persisted
in their operations using ingredients from their houses. Their low overheads and attractive
1
Based on materials on official website of Shri Mahila Griha Udyog Lijjat Papa http://www.lijjat.com/ and other
documents available online. This meant for class discussion only
prices rapidly created a demand for their product. As demand increased, more and more
women entered the production process and the number rose to 25 within three months. With the
profits of the first six months, each of the members of the group bought 5 grams of gold.

Thus was born, again unconsciously, the practice of equal profit sharing among the group,
irrespective of their individual contribution. Additional rooms and space were rented as and
when required for rolling and drying papads, but by the third year, the physical space required
for rolling out the volume of papads in demand was simply not available. This paucity of space
forced the Lijjat sisters into their single most innovative production decision. This was a
significant decision to decentralise the production of papads from a centralised location to the
homes of the members of the group. Thus, at one stroke, the physical capacity to produce
papads dramatically multiplied. This enabled the group to respond to the growing demand
without having to invest upfront in workspace, machinery or overheads.

The new model of decentralised production was simplicity itself. Papads were prepared at home
premises using a simple technology through rolling and drying. The prepared papads were then
delivered to the branch office the next morning while another batch of pre-mixed dough is
collected for the next day production. The quality check of the papads was done by experienced
members in the branch on the spot at the time of delivery through visual inspection and the
rejection percentage was intimated and recorded. Payment for the production was made the
following day for each member. This is the standard operating practice of Lijjat Papad even
today. Thus a systematic production process evolved, with a keen eye on every detail leading to
high-quality standards and timeliness.

In addition to streamlining the production process as described above, Lijjat also carved out a
market niche for itself through the systematic brand building over the years. The strategy of
identifying commission agents and cash only sales resulted in the ready availability of funds in
the business rapid and continuous growth. Marketing was ensured through seven sales offices
across the country. Lijjat has also geared up towards changing times and exploring new
markets, including the exports.

Another innovative and strong aspect is the system of accounting. A daily record of sales and
payments is maintained and a statement of accounts is prepared every evening by the
accountant and vetted by the Sanchalika2. At the end of each month, a profit and loss account
as well as balance sheet has to be completed. Even today, if the accounts are incomplete, the
branch does not open for work the next day till the accounts are finalised. This has given a
tremendous sense of discipline to both workers and managers alike and has evolved to the level
of an ethic. Despite the effort required to achieve this level of updation through a largely manual
system, the exercise is treated as a routine and not exceptional.

Over time the intervention kept expanding horizontally. As the scale of operations grew, more
and more in-house divisions were formed - the processing of flour, grinding masala, printing and
polypropylene packing were formed one by one. Lijjat also expanded into producing and
marketing other products, such as powder detergent which have become fairly successful.

Organisational Structure: 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. The office-
2
The woman heading the branch is called the Sanchalika
bearers of the managing committee and the sanchalikas are chosen from among the member-
sisters on the basis of consensus every three years Each branch has a committee of eleven
member-sisters, again chosen by consensus.
Organisational Structure

Quality Control: The quality of papads can vary due to the quality of water used in various
parts of India. To avoid any inconsistencies, the final products are tested in the Lijjat's laboratory
in Mumbai. In the monthly meetings, the quality issue and modifications are tested. The central
office purchases and distributes all ingredients to maintain the quality of the final product. For
example, the urad dal is imported from Myanmar, asafetida is imported from Iran, and black
pepper comes from Kerala. The committee often makes surprise visits to various branches to
assure that production conditions are hygienic. When a new branch of Lijjat opens, a
neighbouring Lijjat branch helps it by guiding and training new members.
Marketing and Technology Linkages

In a pragmatic departure from the accepted practice of cooperative endeavours to rely on

official marketing outlets or on other semi-official organisations (such as KVIC or state
government retail outlets), Lijjat adopted strictly commercial techniques from the very beginning.
It appointed agents on a commission basis for marketing its products.

Marketing is a centralised function in Lijjat. The branch office is responsible for setting a target
for monthly production and marketing. Each Lijjat centre has a clearly delineated marketing
territory to avoid competition amongst centres. Commission agents are attached to almost all
Lijjat Centres and they account for a major part of the Lijjat sales. Another significant aspect of
marketing in Lijjat has been the decision to export its products. Lijjat's export revenue in the
year 2003-04 was 9 crores.

Lijjat has grown and prospered with its strategy of forward and backward linkages. The setting
up of various divisions for its input supply and output packaging needs has contributed to
creating economies of scale in procurement as well as production. Head Office sources
informed that they prefer dal from Myanmar, followed by algaon and Latur, as the Indian
varieties do not give them adequate yields, large quantities being wasted as a husk. Purchases
in bulk are made through agents. The dals are processed centrally in Lijjat's own mills at Vashi
and Nasik. Heeng (asafoetida) is imported from Iran whereas black pepper is purchased from
Cochin.
Lijjat: Distribution Flow Chart

Lijjat has separate marketing, sales, and advertising divisions. The commission/discounts paid
were over half of the total selling expenses incurred by Lijjat in the financial year 2003-04. The
advertisement expenses at around 3.71 crores were around 15% of the selling expenses.

The use of technology in production at Lijjat Papad would go against the basic principles of low
skill production techniques and decentralised production. As a natural corollary to its lack of
upgradation of production technology, its outreach in terms of the number of women it engages
is very high. Thus a successful balance has been achieved between scale, quality and
employment.
Core Values
Shri Mahila Griha Udyog Lijjat Papad is a synthesis of three different concepts, namely

(1) The concept of Business

(2) The concept of family
(3) The concept of Devotion

All these concepts are completely and uniformly followed in this institution. As a result of this
synthesis, a peculiar Lijjat way of thinking has developed therein. The institution has adopted
the concept of business from the very beginning. All its dealings are carried out on a sound and
pragmatic footing - production of quality goods and at reasonable prices. It has never and nor
will it in the future, accept any charity, donation, gift or grant from any quarter. On the contrary,
the member sisters donate collectively for good causes from time to time according to their
capacity.

Besides the concept of business, the institution along with all its member sisters have adopted
the concept of mutual family affection, concern and trust. All affairs of the institution are dealt in
a manner similar to that of a family carrying out its own daily household chores. But the most
important concept adopted by the institution is the concept of devotion. For the member sisters,
employees and well-wishers, the institution is never merely a place to earn one's livelihood - It is
a place of worship to devote one's energy not for his or her own benefits but for the benefit of
all. In this institution work is worship. The institution is open for everybody who has faith in its
basic concepts.

Scaling up Strategy
From an initial membership of 7 women in Mumbai, the organisation today boasts of a
membership of around 43,000 women across the country. Again, from a one-stop organisation
which completed all processes under one roof, the organization today has 67 branches and 40
divisions spread out in 17 states of India.

Lijjat scaled up its operations through a strategy of replicating the standard operating structure
and procedures of the Mumbai model in other parts of the country. The need for expansion was
caused by a "demand pull, whereas word of mouth publicity combined with good quality and
attractive pricing created an ever-increasing demand for the product. The decentralised
production model enabled Lijjat to rapidly respond to market demand, while its low-cost model
kept competitors from eating into its market share. The mode of replication is also highly
systematic. A few experienced members physically relocate to the city or site of the new branch.

The team goes through a checklist that includes finding adequate premises, selecting and
training core staff, training new members and establishing the physical and financial systems.
This can last for a period of several months. If one or more of the team members deputed from
the head office needs to return to Mumbai before the systems are fully functional, new
volunteers replace them to complete the job. This handholding period generally lasts up to 6
months but can continue till such time the new unit is able to run its own affairs efficiently. This
in essence is the basic manner of branch expansion. When the new branch stabilizes, it
nurtures additional branches in a similar manner. Members are deputed to fan out and are given
the responsibility of ensuring the proper functioning of the unit. Thus, the in-house method of
expansion through replication ensures both training and hand-holding support to new units. This
is the key to the high level of standardisation that Lijjat has been able to achieve.
Due to their consistent high quality, reasonable pricing, regularity and reliability of its supply
chain, Lijjat's papad slowly began to occupy a market niche. Largely by virtue of word of mouth
publicity of the home fresh nature of the product and the authentic cottage nature of the
enterprise, the demand for Lijjat products far outstripped its supply. This led to the opening of
more branches, first in Mumbai city, where operations were concentrated and then later in other
parts of Maharashtra, Gujarat and other states.

Today Lijjat has 67 branches, 17 being in Mumbai and its suburbs, 11 in the rest of Maharashtra
and 12 in Gujarat. The remaining branches are spread across the states of Andhra Pradesh,
Bihar, Delhi, Haryana, Jharkhand, Jammu &Kashmir, Kerala, Karnataka, Madhya Pradesh,
Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh and West Bengal. The strong
concentration in Mumbai, Maharashtra and Gujarat reflects the origins and growth of the
organisation as a natural progression of sorts, where affinity and perhaps more responsive for
growth and diversification than a conscious scaling-up strategy. It also reflects on consumer
dietary preferences in the region which Lijjat was able to identify and exploit successfully.

In the first 7 years of its existence (1959 to 1966) Lijjat functioned as an unregistered
organisation. In 1966-67 it was registered as a public trust and recognised by the Khadi &
Village Industries Commission (KVIC) for tax breaks and interest subsidies. Yet the professional
manner in which it was managed by women without any formal training in running an enterprise
reflects on their motivation and self-learning abilities. It also supports the notion that
entrepreneurship is an acquired asset and need not always be attained through formal learning
processes.

Lijjat is an excellent case of in-built expansion and diversification of a successful livelihood

strategy. Besides its branches in several parts of the country, it has also established its own
support divisions catering to most input supply and output packaging needs, thereby ensuring
that quality inputs are used in its production processes, which contributes to sustaining quality.
The allied divisions include dal and flour mills. Some godowns were also constructed to support
logistics.

The brand recognition of Lijjat was also used periodically into both related and unrelated
products. The Khakra division set up in 1974, flour mills in 1975, masala division in 1976 are
some of the related examples of diversification of the Lijjat enterprise. The attempt was to use
the positive brand image of Lijjat papads to push other food products. However, these products
did not succeed in the same manner as the papad venture, largely because Lijjat was not able
to independently promote them through a focused marketing effort. It relied on the goodwill for
the Lijjat brand to carry these products forward but did not factor in the much bigger competition
and cut¬throat marketing and advertising efforts that other competing products in these
categories could muster. Recently, Lijjat has ventured into the supply of chapattis in Mumbai. In
other unrelated diversification choices, there were failures such as leather and production of
matches. Both had to be closed down as these turned out to be unviable. However, the most
successful diversification was the production of detergent. The Lijjat detergent brand, SASA,
has met with tremendous success. SASA has 6 production units, a research and quality control
division and a sales and purchase office. Occupying a niche in a highly price-sensitive market
without the advertising blitz associated with larger brands, SASA is another example of
innovation and responding to market needs.

Marketing of Lijjat products is supported by the advertising division, seven sales offices and the
export division. This reflects another strong element of learning involved in the enterprise and
can be compared with many larger organizations that devote considerably greater resources to
these aspects.

Impact of the Experiment

The impact of the enterprise can best be understood by the outreach that Lijjat has been able to
attain over these years. Lijjat has a membership of around 43,000 women in 17 states of the
country. Lijjat has been a vehicle of social empowerment for these women as also benefiting
them financially by providing them sustained returns for their work3. According to the Annual
Report of 2003-04, the accumulated profits of the Lijjat enterprise stand at Rs. 48.32 crores
while the annual profit for the year are Rs. 6.54 crores. This was achieved on an annual
turnover in 2003-04 of Rs. 310 crores. The average monthly income to each worker is Rs.3000/-
.

The decentralised production methodology has ensured that the women do not have to leave
their homes for work and allows them flexible working schedules enabling them to discharge
other household responsibilities. This account for the easy acceptance of the work among such
a large number of women since they feel their economic activity will not disrupt the family by
their absence. Men are also less hostile to women working at home for extra income than
travelling to the workplace.

Lijjat has engendered democratic principles through member participation as part of its
administrative culture. The women not only make day-to-day decisions but also elect members
to the management committee from among themselves. In this respect Lijjat was much beyond
just an entrepreneurial venture, it was a symbol of women's strength. These women were
actually helping each other to grow beyond the confines of their homes, to take on greater
responsibility and develop a sense of self-worth and self-esteem. Many women who had little
formal education were handling money and banking transactions and managing a business of
over Rs. 600 crores annually.

Role of Institutions

The most remarkable aspect of Lijjat is the absence of an outside agency in kick-starting the
enterprise. It is truly a homegrown model based on the intuitive intelligence and self-learning
skills of a small group of poor women. It reiterates the now widely held belief that the poor are
highly entrepreneurial and only seeking an enabling environment to realise their potential. It is
equally remarkable that while the venture began on a very small scale, and went on to
organically grow in size, it retained its essential character in spirit and in practice all through.
Lijjat is a voluntary organisation with collective ownership and trusteeship being practiced. In the
process, Lijjat evolved into an institution based on some core principles strictly adhered by the
members and simultaneous development of simple systems and processes, understood and
practiced diligently by all members. The other unique feature in Lijjat is that it has remained a
member owned and managed body resisting the rise of small managerial elite that normally
takes control in all such institutions as they grow in size. This helped Lijjat become a highly
effective livelihood intervention which also promoted economic and social growth and mobility of
its women members.

3
Technically this income is in the form of profit sharing for all women of a centre/branch.
Some initial guidance, which in effect laid the founding principles of Lijjat Papad, was provided
by Chaganlal Karamshi Parekh or Chaganbapa, a community elder and social worker. He
advised these women on how to translate core Sarvodaya values into working principles.

One institution involved in promoting the growth of Lijjat was the Khadi and Village Industries
Corporation (KVIC), which recognised the value of Lijjat's work and registered it under the
'Processing of Cereals and Pulses Industry Group', under the KVIC Act which helped them to
access cheaper funds from banks and enjoy tax benefits.

Jyoti Naik-An Epitome of Women Empowerment

Jyoti Naik is the eldest of the family of four brothers and sisters. She is associated with Lijjat from 1971
when she started rolling pappads at the age of twelve. She got additional work in Lijjat through her
deputation into the packaging section. Thereafter, she has been taking higher responsibilities in the
organization and rose to rank of President. She started managing inventory at the Bandra branch in
1973, when she was in charge of stores, looking after stocks, preparing and packaging papad dough.
Despite tragedy of untimely demise of her mother in 1976, she was rolling papads and managing Lijjat
packaging section and in the process continued to earn well. Simultaneously, she managed four siblings
at home. She had to discontinue her education after class X as the demands on her time were too high.

From then onwards, Jyoti was transferred to the Vadala branch in 1981 as Sanchalika, also become the
Editor of the Lijjat Patrika. Later she became member of the Central Committee, which in turn made her
Vice President in 1989 and thereafter rose to rank of President. As is the practice of paying on basis of
papad rolled, Jyoti's income is equivalent to the value of 30 kg of rolled papads a day, attesting to the
value the organisation puts on her increased responsibilities.

Her long years with Lijjat have given her a huge wealth of intuitive institutional knowledge. Even today
Jyoti goes to a branch at 4 am 2 or 3 times a week, comes to the head office at 10 am and often stays till
7-8 pm in the evening for all seven days. Jyoti is in touch with Sanchalikas over phone daily across the
country ironing out administrative details, responding to queries and monitoring supply and production
figures. There is a collegiate atmosphere in her chamber as she confers with the VP and local
Sanchalika discussing issues that in other organisations of such size would be the preserve of male,
upper class, English speaking professionals. The next day, Jyoti ben, the VP, Smt. Kamal Bhandore and
the Sanchalika Mulund were going to Pune as the Pune Sanchalika had lost her husband and they
wanted to condole his demise.

Thus, Lijjat fosters a strange sense of dignity and equality among the women as all have risen from the
ranks. There is no organisational elite at Lijjat - only seniority within a sisterhood - bound together by
hard work and almost similar class background. "Sab papad belne wale hai” (all the women are those
that would roll papad), with strong shared ideals of collectivity, equality and mutual respect. In fact the
women refer to their co-sharers as "sisters”, or "sister workers.”

Financial Linkages

The perspective of equity was also strongly present in Lijjat's organisation and functioning. Only
women could be members and thus owners of the organisation. The member sisters had started
sharing the profits or losses among themselves from the start.

The other important learning in this regard is the fact that women have an innate ability to adapt
to new roles. Women who began by rolling papads went on to establish new branches, serve in
management positions, direct marketing efforts and undertake planning and strategic decision-
making functions. This adaptability has enabled Lijjat to achieve a virtually frictionless transition
from a cottage to a large-scale enterprise

All members, irrespective of their position in the organisation, receive the same per unit rolling
charges. In cases where a branch makes losses due to a fall in quality standards, all the
members share the losses equally by reducing their rolling charges. The office-bearers in the
organisation, such as the president and secretary, have to be not only from the same social
milieu, but must also have to be erstwhile members who rolled papads. The members who
show leadership skills are gradually given greater and greater responsibility, such as becoming
the sanchalika or the branch head and other administrative duties. This model of power-sharing
is unique and puts Lijjat virtually in a class of its own in respect of equity. As is stated in the oath
that each member takes on enrolling Lijjat fosters a sense of dignity and equality.

It is also noteworthy that there is no organisational elite at Lijjat -only seniority within a
sisterhood - bound together by hard work and a common social background. "Sab papad belne
wale hai" (all of us roll papads), is a slogan truly lived in practice. Strong shared ideals of
collectivism, equality and mutual respect are manifested in the organisation.

One of key factors to Lijjat's success in terms of outreach and rapid scaling up is the policy of
internal generation of resources and rotating working capital on a weekly/biweekly cycle.
Marketing is on a strictly cash-and-carry basis, allowing for funds to be continuously recycled in
the business profit margins were such that they enabled a rapid scaling up of operations
through continuous expansion. The Sisters Savings Fund is also available to the each of the
Lijjat branches, to tide over short-term cash deficits, in case of necessity. In addition to self-
generated resources, borrowings from KVIC were resorted to as and when required.

During 1971-76, KVIC had extended loans of Rs. 8.94 lakhs under the 'Processing Cereals and
Pulses Industry Scheme', which was used for expansion of existing branches, the establishment
of new ones and for purchase of equipment for the masala unit
.in Mumbai. The organisation scrupulously rejects charity and grants. Lijjat believes in running
its business with acumen and professionalism on its own resources.

Sustainability

The scale of operations and phenomenal success of Lijjat Papad without any external
institutional support right from its inception is proof of the basic soundness and sustainability of
Shri Mahila Griha Udyog Lijjat Papad as an institution. The tenacity with which Lijjat has held on
to its principles over a period of 55 years and yet continues to grow with all its members is a
great tribute to the strength and versatility of the organisation. The responsibilities of every office
bearer and member have been laid down in the constitution and have been modified with
changing times and growth of the organization. The social and economic milieu it engages in
the decentralised papad production, model the high sense of discipline in timing are among
many other such factors that fuel hope of its sustainability into the future.

In addition, Lijjat has kept pace with the changing marketplace and has emerged not just as
another profitable institution, but a world leader in papad manufacturing. The uncompromising
quality standards of Lijjat, its diversification into newer divisions to address its own growing
needs better, the scale it has managed to achieve has helped it achieve financial sustainability.

Replicability Potential

The model is replicable into other sectors which require labour intensive but simple production
processes with minimum use of technology. The caution is how the model is to be adapted to
create and maintain the quality standards as well as ensure concomitant sales of the produce.
This is where the greatest challenge during replication would come.

One of the key factors is the 'development of market power' which Lijjat has been able to enjoy
through its brand. Any replication model should have the aim of building the same, in case; it
has to succeed in the medium term of about ten years. The important factor underlying the
success of Lijjat is management by member-owners rather than by professionals, an effort
needs to be geared on similar lines from initiation.

Conclusions
Lijjat is a movement as much as an enterprise considering the number of women it has
productively engaged, the social impact it has had, and the augmented incomes it gave to its
members. The success of Lijjat does not need speaking for. The tremendous growth it has
achieved in around four decades while combining social and economic imperatives for its target
segment is unparalleled.

While Lijjat Papad is an outstanding institution, it might be in place to attend to the primary
factors that make it so. The institution was created on the planks of collective ownership and
management. The core factors behind its success and sustainability also remain its collective
ownership, management and its adaptability to changing market conditions.