BY ShivaharshM

Lijjat Papad Business Model & Journey – From 80 Rupees To 800 Crores

Lijjat Papad - Business Model Featured Image

Any Indian who has been a part of the TV revolution in India from the mid 1990s to the early 2000s probably knows of a little rabbit puppet that goes around distributing tasty discs of “papads” and people gathering and happily singing “Karam Kurram” on the roads. Fun times, apparently.

Lijjat Papad Logo

The ad was big for its time, but it was nothing compared to the history of the company for which it ran, India’s biggest “Papad” company – Shri Mahila Griha Udyog Lijjat Papad. It is still one of the oldest cooperative Indian companies, focused on helping women in an organization run their families, where they manufacture various products such as papads, masala, wheat flour, chapatis and detergent powder as well as liquid detergent and detergent cakes.

Lijjat (which literally means tasty in Gujrati) follows the classic rags-to-riches story, starting extremely humbly with a mere 80 INR, and eventually building itself into a 43,000 women strong organisation generating a revenue of 800 crores in 2018. And in this article by Growth Insights, we’re going to take a look at how seven women achieved something something a million startups dream of doing today, and what they can learn from one of the biggest companies in the country today.

Humble Beginnings

Lijjat was originally the idea of seven women. They resided in Mumbai and later went on to start a venture for a sustainable livelihood because the only skill that they had was cooking. This happened back in 1950, when India wasn’t as inclined toward gender equality as it is now.

Jaswantiben Popat

Jaswantiben Jamnadas Popat borrowed 80 Rupees from a member of the Servants of India Society social workers. They took over a business which was suffering heavy losses and turned it into a venture that produces one of the most common yet overlooked snacks of India – a papad. Being an organisation for and of women, it brought about a change in people’s minds towards women and encouraged a more liberl society of sorts.

Shri Mahila Griha Udyog Logo

In 1959, the first seven members of the Shri Mahila Griha Udyog got together on a terrace to make their first batch of papads – 12 in total. They started selling them to local merchants from Bhuleshwar, which was(and still is) one of the most popular market places in Bombay. Every business goes through its own set of trials and tribulations, and the Lijjat Papad was no different. 

For whatever reason, people were hesitant to purchase a product from a company that was only composed of women. But that wasn’t enough to break the spirits of these Mumbai women. They stuck together and cruised through their problems one by one, and eventually, were making enough to sustain themselves and earn a stable livelihood for their families. They had the policy of self Reliance and not monetary and they did not even accept donations.

Setting Up A Business Model

Perhaps the best thing to happen to Lijjat Papad was their meeting with the famed philanthropist and social worker Chhaganlal Parekh, also known as Chhagan Bappa, who went on to serve as their guide, and incidentally the person who lent them the initial 80 Rupees. The women were initially serving two qualities of Papads, and planned on selling them at two different costs, the lower quality being much cheaper (kind of like the range of iPhones we have today). Chhaganlal insisted that while it was a good idea, different products needed different approaches. And Papads had to be sold in just one standard quality to make an impression.

Chhaganlal Karamshi Parekh Stamp

Chhaganlal’s approach to the Lijjat Papad Business Model worked miracles for the organisation. In the first year, they learnt from a series of problems and always came out on top victorious. The world started to see how there was so much more to this vision of seven women than just making money selling bread.

Picking Up Steam

Shri Mahila Griha Udyog later on established a cooperative system. What this essentially meant was that the organisation had growing demands to be met, and not a lot of people to help with. So they set up a model to hire more people to help out. The joining criteria? Being a hardworking woman!

There was a leniency in hiring so that the company could hire even younger girls but due to stringent guidelines, they had to set the minimum age limit to 18. Within three months of this new setup, they had around 25 women employed at the company. The company purchased more “machinery” – which was basically more utensils, plates and urad flour.

The first year brought a pleasant 6196 Rupees in total revenue, from not so perfect Papads supplied to neighbourhood shops and locals. The company realized its mistakes. They had not paid attention to what would happen during the monsoon season, as four months of rain caused them to stop production (Papads had to be dried out in the sun to get their appreciated crispness). To solve this problem, they bought a cot and a stove the very next year. The papads were placed on the cot and the stove below was used to dry it out even in the rain – a cheap solution to a problem that caused them four months of revenue.

The good things kept piling up. People from other neighbourhoods learnt of the delicious Papads through word of mouth and started placing huge orders. Lijjat was gaining traction, but they needed more people to meet these demands, and fast.

Scaling New Heights

The Lijjat Papad company’s growing demand meant they needed to hire new personnel. The company grew from a mere 25 women in the first year to 150 willing women. More production power meant more Papads and more customers craving the crispy snacks. In the third year of the company,the world saw just how powerful this vision was getting. The Shri Mahila Griha Udyog had grown to a 300-member strong family.

The whole of Bombay had become a factory of sorts. Since 300 members working in a single home became a bit too crowded, the work was split up. A group of women were assigned to purchasing dough and kneading it. Another group was assigned to transporting the kneaded dough to different houses, where the dough was made into Papads and dried out. The dried Papads were brought back to the main warehouse for weighing and packaging by a different group. The streets of Bombay were brimming with the fresh smell of bread and the crispy sounds of Papads. There was one question running through people’s minds however: what was this crispy disk going to be called?

Branding

In 1962, three years after their crispy snacks had hit the streets, the company finally had a name for its product – it would be called Lijjat, which means tasty in Gujarati. Their organization was named the Shri Mahila Griha Udyog Lijjat Papad. In most Indian languages, Mahila means women, Griha means home and Udyog means industry. The name caught on, and so did the taste. Between 1962 and 1963 annual sales of Lijjat had touched around 182,000 Rupees.

Later on, in July 1966 Lijjat registered itself as a Society under the Societies Registration Act 1860. In the same month, the company was recognized as a unit of Processing of Cereals and Pulses Industry Group under the Khadi and Village Industries Act(KVIC). In the same year, the KVIC granted them a working capital of 800,000 INR, under certain tax exemptions, to grow and scale the already successful business into something bigger.

And the Shri Mahila Griha Udyog did move on to bigger things. The women were tremendously successful with their Papads, so the company started branching out into other products like Khakhras(wafer-thin rounded crackers) and Masalas(spices) and then they went on to produce Wheat flour and other Bakery products.

This was the period where the Shri Mahila Udyog suffered a major blow. In 1968, one of the company’s biggest pillars of support, Mr. Chhaganlal Karamshi Parekh passed away. Things slowed down for a bit, but they picked up soon after, carrying forward Mr. Parekh’s vision for the women of India, and his ideals and passion for gender equality.

Scaling: Again

In 1975, flour mills were set up to increase the scale of production, and then two years later the Printing divisions and Polypropylene packing divisions were set up. Lijjat was getting bigger by the day, and supplies to other cities and states were in full swing. Things were looking good.

And then came some unsuccessful ventures. Lijjat, seeing their success with their Papads, flour, and bakery products, decided to expand into products like leather, matches, and even incense sticks. The company learnt some important lessons in business during these periods – stick to what you know, and manage your expectations.

At this point, the company had grown so much that it started gaining the attention of foreign visitors and officials. With a little help and a lot of effort, they started exporting products to some importers in the United Kingdom as well as the Middle East, the United States, Singapore, Netherlands and Thailand. In the year 2001, the company raked in 2.4 million USD in annual revenue, thanks to its overseas scaling. Lijjat’s strategies were working.

When you’re successful, you make a lot of negative headlines as well. The company started facing complaints of poor quality products being supplied to states like Bihar. Thorough investigation revealed that a number of companies were using the same name and supplying cheaper Papads. Overcoming this was troublesome and took some time.

Despite these problems, the company recorded a whopping 300 crores in 2002. About 10 crores was reported to have been generated through their overseas exports. They now had around 42000 employees with 62 divisions all over the country.

The company also received a reward of the best village industry institution in the year 2003. On 15th of March 2009, the company celebrated its 50th year of existence, and in 2018, it recorded an annual turnover of 800 crores.

Management

Sri Mahila Griha Udyog works with “Sarvodaya” at its core – which can be roughly translated to development of the economy and social community as a whole. This also means that it has collective ownership as it accepts all the working members as the owners and provides them with equal profit or loss. The people who work there are all the members of all the co-owners of the company, and are referred to as ‘sister’. The decisions taken by the company are based on consensus of the employees and the sisters have every right to veto the decision.

Men, on the other hand, can only be salaried employees such as accountants or drivers or security guards, and not the core members of the organization. There are 21 members in the managing committee who are entrusted with running the whole organization. These 21 members are split into the President, the Vice-President, two Secretaries, and two Treasurers. So far, this working structure of Lijjat Papad has worked well for the company.

Work Flow

Everything begins with a single recruitment process. Whoever is ready to adopt and follow the values of the company and respect all the members can also become a co-owner of the organization. Further, it is necessary for all the people who are making papads daily to have their own clean space for them to dry. If they do not have this facility then other responsibilities such as kneading dough for packaging or testing the Papads is handed over to them.

After production, the products are sealed into a box and whatever is produced from each centre is transported to the depot for that area. There are some villages where the branch itself acts as the depot. The depots are nothing but storage areas and pickup points for distributors. Distributors visit the depots and get their requirements sent over to different buyers. The sisters make cash on a daily basis, as has been the tradition.

Closing Thoughts

Lijjat Papad’s journey from seven women selling snacks to their neighbours to employing over 42,000 women all over the country is nothing short of inspiring. It enforces how no business idea is too big, and no product too small. The vision of seven women – Jaswantiben Jamnadas Popat, Parvatiben Ramdas Thodani, Ujamben Narandas Kundalia, Banuben. N. Tanna, Laguben Amritlal Gokani, Jayaben V. Vithalani, and Chutadben Amish Gawade – is what made Chhaganlal Parekh take initiative into building a good business out of it.  The Lijjat Papad story is one of exemplary execution, steadfast determination, and perfect guidance. All of this and the entity’s efforts of women empowerment at the grass-root level has led the Indian Government in 2021 to award Jaswantiben Jamnadas Popat with a Padma Shri. And Growth Insights thinks every startup in the country today could learn something from that story.

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Shivaharsh Murugan
Shivaharsh Murugan

A company secretary and lawyer-turned SEO geek and also someone who thinks he is deeply passionate about startups.

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