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Lijjat - A Women’s Enterprise with a Difference

Introduction

his case study highlights the growth of the Shri Mahila Griha Udyog Lijjat Papad (popularly known just as Lijjat) over a period of four decades. Lijjat is an endeavour managed solely by women which has attracted worldwide attention. The prime reason for its success can be attributed to adherence to some core principles and practices by its members and by following a simple process of manufacturing with great stress on maintaining quality. The study traces the evolution of Lijjat from a tiny endeavour of a group of women to its present scale of operations and attempts to develop an understanding of the underlying factors that contributing to its phenomenal success as well as the scope for replicating such models or processes in other sectors for generating sustainable livelihoods.

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 a 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 which engage a large number of women with low skills using their homes as a work place. 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

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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 to 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 systematic brand building over the years. The strategy of identifying commission agents and cash only sales resulted in 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 explored 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 Sanchalika1

Over time the intervention kept expanding horizontally. As the scale of operations grew, more and more in-house divisions were formed - processing of flour, grinding masala, printing and

. 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.

1 The woman heading the branch is called the Sanchalika.

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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.

Scaling up Strategy

From an initial membership of 7 women in Mumbai, the organisation today boasts of a membership of around 42,000 women across the country.

Again, from a one stop organisation which completed all processes under one roof, the organization today has 63 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 pulli, 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.

Gaura Bai- A Lijjat Sister's Story

Dharavi supplies papad to 5 Lijjat centres in Mumbai. Gaura Bai Wadkar is 32 years old and lives in a jopadpatti in the Dharavi slums. Her appearance testifies a life full of activity and work combined with an air of quiet competence and efficiency. She has also become a Lijjat packer for the past nine years. In addition, she rolls papad daily, the quantum of which depends on her engagement in packing at the Centre. On such packing duty days, she takes home 3 kgs of dough for rolling the papads. This is because she is busy in the Centre till 11 AM in the morning. Packing fees are generally worth 5-6 kgs of dough which is around Rs.70 approximately. The days that she is not allotted packing duty, Gaura Bai takes home 5 kgs of prepared dough which takes her 4 hours to prepare, she gets around Rs.70/-. The average monthly income is around Rs. 3,000. Gaura Bai's husband is a daily labourer who earns less than Gaura Bai, due to irregular employment.

Her day begins at 4 a.m. when she cooks for the day. Thereafter she goes to the Bandra centre, which is about 15 minute ride on the bus run by Lijjat enterprise. On days of packing duty (which is about 4 times a week) she is engaged in packing until 10 or 11 a.m. On other days, she picks up dough and gets back home by 6-6.30 a.m. She has to devote around four-to five hours daily to roll the papads. Gaura's papad rolling has brought a stable income into her home, allowing her to send both sons and daughter to school. She would love to be in a managerial position in Lijjat, but feels she is not educated enough to be in a decision making position and is not in a position to give time to educate herself. She feels that her association with Lijjat has helped her in own self development.

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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 need to return to Mumbai before the systems are fully functional, new volunteers replace them to complete the job. This handholding period generally last 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 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 62 branches, 17 being in Mumbai and its suburbs, 11 in the rest of Maharashtra and 12 in Gujarat. The remaining 23 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 go-downs were also constructed to support logistics.

The brand recognition of Lijjat was also used periodically into both related and unrelated product. 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

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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 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 Programme

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 42,000 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 work2

Lijjat has engendered democratic principles through member participation as part of its administrative culture. The women not only take 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

. 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 schedule 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 a workplace.

2 Technically this income is in the form of profit sharing for all women of a centre/branch.

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formal education were handling money and banking transactions and managing a business of around Rs. 300 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 a 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.

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.

Targeting and Equity Issues

By the nature of its work and philosophy, Lijjat is a self-targeting enterprise. Its pro-poor bias is part of its institutional genetic code. It is an articulated working philosophy that the organisation is "neither for the poor sisters, nor for the rich onesi (Basic Philosophy and Practices of our Organisation, Symbol of Women's Strength- Lijjat Press 2004)3

3 Jaswantiben Popat, quoted in EPW, Malathi Ramanathan, Women & Empowerment, Shri Mahila Griha Udyog Lijjat Papad, April 24, 2004.

. Since only women from the lower income groups are actually willing to do the work of rolling papads, in itself a highly laborious and time consuming undertaking, the nature of the activity makes for a self-selection among the economically active poor. There is also self-selection in terms of women with a somewhat entrepreneurial aptitude since the earnings are both in the form of both in the form of wages and shared profits. What is even more important is their sense of ownership of the enterprise and the role that many of them play in management. This makes Lijjat one of the most equitably owned and managed enterprises operating at this level. It also accounts for its

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rapid expansion and growth, which is a reflection of a collective decision. Without proclaiming themselves as icons of gender equity, the Lijjat members have demonstrated that it is possible to run a profitable commercial enterprise entirely for and by women.

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.

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.”

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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.

Financial Linkages

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, 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.

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 the 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

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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 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 has a 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 technique 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.

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 over forty years and yet continue 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 in 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.

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Conclusion

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.

Major Learnings

The most critical learning is that even uneducated women can take up higher responsibility, when one gives the right autonomy and environment to them. The existence of Lijjat empire is a great proof, in which belief in business and leadership acumen of the women was given a priority to formal training.

The sense of ownership among the Lijjat sister was an important factor in its success. This helped in achieving efficiency in operations and reaching a scale with uncompromising quality. It is altogether different from recipient approach to development which often makes the intervention unsustainable.

The labour intensive and familiar nature of the activity chosen lead to the success of the initiative. The diversification into new products was a well thought out decision in Lijjat wherein the skill set of the people was taken into consideration. The thrusting of new activity to people through training and capacity building can have chances of failure as was seen in Lijjat also.

The critical aspect of catering to the market demand and tapping the same is evident in the Lijjat case. It is necessary that markets for products should be identified first in case of such intervention so that a continuous cycle of production and sale is maintained. This helps in building confidence in the beneficiaries to engage themselves in a sustained manner.

Brand building strategy has to be in place, provided the intervention is to be taken to a scale as Lijjat. This helps in not only having their own niche market but also helps in diversification into new areas, often seen in large corporates. Such a large scale operation also requires establishment of backward and forward linkages for easy and smooth operations as was evident in Lijjat.