lijjat papad stm

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Sri Mahila Griha Udyog Lijjat Papad

[A case study]

S T R A T E G I C M A N A G E M E N T C O U R S E


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Introduction Sri Mahila Griha Udyog Lijjat Papad had grown from

the humble beginnings in 1959 to the position of a

national leader in papads with a sale of over Rs.2

Crores in 1976, including exports of Rs.24 lakhs.

It was started by seven women, all members of theLohana Community from the Saurashtra/Kutch area

of Gujarat.


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Philosophy

Only women could become members of the

organization.

They introduced a pledge for members based on

Sarvodaya ideals.

These ideals required members to treat any job ofthe organization as a divine task and accept as

divine Prasadam whatever the reward.


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Philosophy Contd. Members were expected not to aspire for how much

more they get but aspire that others should not get less

than them.

Its philosophy is a synthesis of three different concepts

namely

1. The Concept of Business2. The Concept of Family

3. The Concept of Devotion


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Growth The Growth in the beginning was slow.

In 1961 the membership grew and so did the business

which led to the opening of new centers.

In 1977 the membership grew to 3700 with 15 centers in

5 states.

With the plans a to open new centers at different

locations across the country, the membership was

expected to reach 4000 by October 1978.


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About The Product. Product was Papad, Thin round sheet of lentil dough.

Product was differentiated in North (More spiced) And

South India (Less spiced).

A week TAT after being rolled.

7 Variety of Papads,

In 1977 they diversified to Spices as well, like curry,

chilli, turmeric powders etc.


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Marketing Several variety and size of papads. Best quality in the

market.

Price points ranging from Rs4.50 14 /Kg.

3/4th of sale from Mumbai.

Trade terms and packaging size were different.

Only cash selling to wholesaler.

Was market leader with great difference in sales.

(Demand was too high to meet).


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Customers

Kirana Dealers.

Institutional selling was an important segment.

Sales

Van distribution

Different commission for different packet size. (5 paise

and 7 Paise).

Sanchalika to monitor centres sales and salesmen.


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Contd.. Non moving stale products were not allowed to get replaced.

Account mishandling and stealing.

Pricing

Top price range, same across India.

Materials were 65 % of cost and mixing. Kneading etc was 35%.

Prices were revised in response to raw material.


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Advertisement

To establish good image.

Newspaper and POS advertisement were used.

Famous people featured in advertisement (Jayaprakash

Narayan).


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Organization & Working

Executive committee of 21 women.

Decentralized power but based on consensus.

Unique way of handling disputes and discussions. (At

least 3 people to be present)

External advise was also welcomed

Shri Dattani, in charge of purchases used to visit many

centers in Mumbai daily for visit.

There were 2 cashiers, 1 for raw materials account, 1 for

sales register at the head office in Girgaum.


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Production operation

Issue ofdough &

papad rolling

Preparation of dough done a night before issuing.

Maximum limit for 1 person is 3/4/5 kg. different type of dough is issued to members (chilli/pepper). Organization issue rolling stand and pin.

Acceptanceof papad

Members are expected to separate the good ones and broken papads.

Packers do the quality inspection for colour, dryness, roundness. Deduction is made over wholly defected papads not for partial defected. Standard consumer packets were 240 & 390 gm.

payment

Payment is made one day after the papad is accepted.

Rates for accepted quality was Rs. 1.60 per Kg. of dough (Rs. 1.40 cash+20 paisesaving stamp.

For rejected ones the amount was deducted from the rolling charges which wasequal to the price of the papad of that weight.


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Production norms

From the inception till Sept. 1977 the norm was 810 gm

of dried papad for 1Kg of dough.

But as many members were finding shortages, so the

new norm said that no charge was made for any

shortage up to 10 gm.

However if the quantity is less that 800 gm then the

deduction will be calculated from the earlier norm of 810

gm.


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Quality Control

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Each center sends a sample packet to Central Office where after

coding, four papads of each center were sent to all centers for

testing.

Experienced women tasted the papads to check for Lijjat quality

after which they send report to Central Office .

In case of quality issues, experienced members were sent to centre

for taking corrective action.

One set of coded papads are sent to Cotton Green Laboratory to

check the moisture content, salt, soda bicarbonate, thoroughness in

mixing, fibrous texture etc.

The Lab sends the report to the Central Office once every week.


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Head Office Relations with the Centers

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All centers in Bombay are considered as one.

P&L, Balance Sheet were prepared separately for each centers.

Center purchased Raw Material from the Head Office.

Any centre or HO can purchase the finished goods from the center at

dealer prices.

When new centers are opened, HO provide loans for purchase of

vehicles, furniture's, advance rent, raw materials and working capital.

HO also sends its sisters and employees to the new centre's for training

the members in procedures and control systems.

HO purchased the finished goods from the centers at the dealers prices

and incase of any financial difficulty, the purchase prices was increased

up to 10 p less than consumer prices.


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Working of the centers

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Some centers have their own premises while others have

rented ones.

In the Bandra Centre, there were one Sanchalika, one

member each for stores, Storekeeper, Asst Storekeeper,loan accounts and rolling charges.

Besides, there are 33 sisters looking after packaging and

QC, kneading, distribution and pounding of dough.

Three salesmen to look after the sales activities.


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Members

Source of membership differed for different centre.

Advertisement and word of mouth is effective way of

communication.

In Mumbai members are located nearby places.

In Delhi members came from very far place.

In Valod only one person was member from a family.

Members were from different family background

Members were benefited by interest free loans also


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Hospitality

It is a part of Organizational culture

New members are treated as guest for few weeks.

Monthly accountingMonths accounts closed on last day of the month

Lijjat prepared a monthly report of account of each centre.

Printed copies of accounts distributed among the members

in local language.

Raw material would issue only if the accounts are cleared.


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Profit and Distribution

Major source of finance was KVICs loan.

Also borrowed from brokers at 16-18% of interest.

Profit are depend on the rolling charges.

Different cities has different rolling charges

Distribution of surplus in the form of gold ornament.


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Growth factors:

A. good article was chosen, where the labor charges were

high

B. women can work at homeC. ideology of a joint family working and earning together

D. endeavors of TISS, Mumbai to organize small groups to

explain the ideology to the members to increase the

efficiency.

Diversification :

new products like Pickles and Agarbattis or incense sticks.

Growth & Diversification..


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Organizational problems


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Case learnings

Synthesis of three different concepts:

the concept of business

the concept of family

the concept of devotion

Meaning of common ownership :Aspire that others should not get

less than herself

Excellent example of women participation in the development

process. They too can be good entrepreneurs.

The strategy that the product must sell itself: focus on product quality

and relationship building.


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