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Studying Labour Cooperatives with Lijjat Papad

By: Pratik Shah [ I have completed my Bachelor of management studies and I am working with www.managementfunda.com I am proud to be a part of its Success. Contact me at : - pratik@managementfunda.com ]
on October 30, 2009
9 Comments

Definition of Cooperative:

A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.

Values:


Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility and caring for others.

Labour Co-operative Societies:

Labour co-operatives societies are those which work for giving employment to the group of labourers. The remuneration received after the work done is distributed equitably among the labourers by organizing themselves into labor co-operatives. Workers can do collective bargaining instead of individual bargaining.

Labour co-operative undertakes work in building construction, roads, factories, irrigation canals, dam projects etc.

The labour co-operative societies take the contract for providing labour and thereby eliminate the middlemen or contractors which increase their profit margins. As a result, the labourer gets higher profits.

The labour co-operative societies are developed in the states of Punjab, Rajasthan, Gujarat, Maharashtra, Haryana and Tamil Nadu.

Objectives Of Labour Co-operatives:

1. To impart skill training to members at reasonable rates and provides education.

2. To help in collective bargaining instead of individual bargaining.

3. Better working conditions for its members.

4. Better Payment of salaries/wages to its members.

5. To take the contract directly from Government or non-government organizations so the workers are saved from exploitation.

6. To provide basic essential tools to members to carry forward the job.

7. Inculcate the habit of service in the members.

8. To eliminate the middlemen in order to give fair share of return on investment to them on their day’s hard work.

Shri Mahila Griha Udyog Lijjat Papad

Lijjat Papad

Shri Mahila Griha Udyog Lijjat Papad is a Women’s organisation manufacturing various products from Papad, Khakhra, Appalam, Masala, Vadi, Gehu Atta, Bakery Products, Chapatti, SASA Detergent Powder, SASA Detergent Cake (Tikia), SASA Nilam Detergent Powder, SASA Liquid Detergent.

The organization is wide-spread, with it’s Central Office at Mumbai and it’s 69 Branches and 35 Divisions in different states all over India.

The organization started of with a paltry sum of Rs.80 and has achieved sales of over Rs.300 crores with exports itself exceeding Rs. 12 crores. Membership has also expanded from an initial number of 7 sisters from one building to over 40,000 sisters throughout India. The success of the organization stems from the efforts of its member sisters who have withstood several hardships with unshakable belief in ‘the strength of a woman’. It has been registered under Societies Registration Act, 1860 and got recognition from Khadi & Village Industries Commission as a village industry.

Objectives of Lijjat:

  • The main objective of Lijjat is to provide employment to women to enable them to earn decent and dignified livelihood. Any women who can render physical work to the organization without distinction of caste, creed and color and agrees to abide by the objective of the organization can become a member from the date on which she starts working.
  • To get the work for the society and plan it in such a way that the women labor will get regular employment.
  • To get mutual understanding amongst women members, self service and inculcation of saving habit among the women to be increased.
  • To increase the dealings power of women members.

Organisational Structure of Shri Mahila Griha Udyog Lijjat Papad:

Organisation Structure of Lijjat Papad

Every branch is headed by a Sanchalika or supervisors, for each centre to look after the daily affairs and production of the branch. We have a Central Managing Committee, which consist of 21 members out of, which we have 6 (Six) elected Office Bearers i.e. President, Vice – President, 2 (Two) Secretaries and 2 (Two) Treasurers.

Six Office – Bearers

1. Smt. Jyoti J. Naik – President

2. Smt. Pratibha E. Sawant – Vice-President

3. Smt. Sunanda R. Belnekar – Secretary

4. Smt. Swati R. Paradkar – Secretary

5. Smt. Priyanka G. Redkar – Treasurer

6. Smt. Sheetal S. Koyande – Treasurer

The cooperative form of organization has a committee of 21 that decides how the profits are to be distributed. They generally buy gold coins — 5gm or 10 gm, depending on the profit. Everyone gets an equal share of profit, irrespective of who does what work, irrespective of seniority or responsibility.

Core Value:

Shri Mahila Griha Udyog Lijjat Papad is synthesis of three different concepts, namely
(1) The concept of Business
(2) The concept of family
(3) The concept of Devotion

These concepts are completely and uniformly followed in the organization. The organization has adopted the concept of business from the very beginning. It believes Production of quality goods and at reasonable prices. It has never and will not accept any charity, donation, gift or grant from any quarter. On the contrary, the member sisters donate collectively for good causes.

The organization along with all its member sisters has 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 organization is the concept of devotion. For the member sisters, employees and well wishers, the organization is a place of worship to devote one’s energy not for his/her benefits but for the benefit of all. In this institution work is worship.

How does it work?

The entire cycle starts 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.

After a woman has signed the pledge form, which serves as her formal entry and introduction to the formal working environment, she is considered as a sister-member. The branch office normally operates from 6.00 to 10.30 am during which time some sisters prepare the dough, while others receive ready papads from those who had taken the dough home the previous day.

Packed papads are sealed into a box (each box holds 13.6 kg) and the production from each centre is transported to the depot for that area. Mumbai alone has sixteen branches and six depots. Each depot stocks production from the nearby three to four branches — roughly about 400 boxes. In some smaller towns or villages, the branch itself serves as the depot. The depots are the storage areas as well as pick up points for distributors.

Distribution and Exports:

The distributors pick up the quantity of papad they require and pay cash on delivery because the organisation pay sisters every day. Since they have an estimate of the quantity each distributor takes, they produce accordingly. This ensures them neither stock inventory nor pay heavily for storage.

The cooperative have about 32 distributors in Mumbai. Each distributor picks up an average of 100 boxes per day from the depot. This is where the job ends. The organization is not involved in how and where a distributor delivers as long as he stays within the area they have marked for him. Generally each distributor has his three-wheeler and about eight to ten salesmen to deliver to retail outlets within his territory.

To select a distributor, first an advertisement in newspapers for the areas will be given. Members from the marketing division personally go and check the godown facilities and only on their approval do the distributors are appointed. A distributor has to pay certain amount as deposit. Distributors have to pay final payment at the time of delivery.

For example, they do not have any centre in Goa, but the organization have appointed a distributor for that area to ensure that Lijjat papad reach Goa. The communication with distributors is regular through monthly meetings where both the party discusses their problems and also the issues that the organization may have about quality, price, reach, etc.

The organization does not have individual door-to-door salesmen or women selling from homes — only the appointed distributor for the area. The same system is followed for other products, but they may have different distributors and depots for different products.

The organization is not directly involved in exporting, but recognized professional merchant exporters (who also export other food products) place an export order.

Only on receiving the full advance through a cheque do production begins. All exports are done from Mumbai. Export production is of the same quality as daily production. Again with exporters, the responsibility ends with delivery. At present, 30% to 35% of the production of Lijjat Papad is being exported, mainly to countries like the United States, the United Kingdom, the Middle East, Singapore, Hong Kong and Holland.

Distribution Flowchart

Distribution FlowChart

Collection Flowchart:

Collection FlowChart

Decentralization:

The Lijjat, have never shied away from sharing power in all of the activities. All sister members of the institution are the owners.

Each and every member has the veto power. All decisions, major or minor, are based on consensus among members. Any single member’s objection can nullify a decision. Another important fact about the organization is that no male can become a member and has voting rights.

Production is carried out not in one central location but in hundreds and thousands of individual homes. The branch system ensures that every activity happens within its own ambit. Testing for quality and packaging are done at every branch.

The branch is responsible for all activities from production to packaging to collection and distribution of vanai (payment) and profit for its particular geographical region.

Certain activities, however, are centralised. For one, all raw materials are purchased in Mumbai and then distributed to the branches to ensure consistent quality of Lijjat Papad.

The other centralized process is the grinding of flour. The organization own two grinding mills, one in Vashi (Navi Mumbai) and one in Nashik (in Maharashtra). Since the raw material is purchased in Mumbai, grinding the flour at their own mills helps reduce costs. Pricing of the products is also done at the head office. This price factors in the cost of raw materials, transport, taxes, distributors commission, and profit percentage and so on.

Delivering Quality:

They proudly claim ‘consistently good quality’ to be their USP. From the moment a new member joins, she is repeatedly told to make quality her mantra. At the training session, sisters are taught to make the ‘perfect’ Lijjat papad. And every member has absorbed the concept totally. It is evident in the fact that even without modern machines, every consumer of Lijjat papad, wherever she is, gets the same consistent quality of papad because every ben rolls the papad to the same specification and every lot of papad goes through testing.

They get papad for testing from all centers everyday and if  any deviation is found in the quality, for example, if the salt is less or more, etc, they immediately intimate that particular centre to destroy the entire lot, even if amounts to a million rupees worth of production.

Challenges and Potential:

The story of seven illiterate and poor women who borrowed Rs 80 to start a papad business, and took its turnover from Rs 6,196 in the first year to Rs 300 crore in the next four decades, involving over 40,000 women on its revolutionary march, is fanciful at any rate. The vision was clear– an exclusive women’s organization run and managed by them, a quality product that these women had the expertise to make, and a work environment which is not competition-driven and mechanized but based on pure labour and love for the organization and its people.

Lijjat is today guided by separate divisions of advertising, marketing, sales promotion and exports. There is greater coordination between branch offices (different production and marketing units) and centralized marketing, advertising and exports departments.

But more than its much-hyped sales figure, Lijjat’s experiment in the realm of corporate governance stands out as one of a kind. All the centers are autonomous, profits remain with the respective branches and are normally used to augment the business after a due share is distributed as extra vanai charge to sister-members.

As an experiment, Lijjat has insulated its sister-members from joblessness. These women also work from their homes, where help from other family members not only adds up to the income but also makes the work more enjoyable. At the workplace they are self-respecting, hard-working and sisterly to one another.

Achievements:

1. Received Award from Khadi & Village Industries Commission as
‘Best Village Industries Institution’.

2. The Economic Times Award given to the Institution for Corporate
Excellence “Business Woman Of the Year”

3. Received the “Best Village Industry Institution” award at the National Convention on “Rural Industrialization”, held by Khadi & Village Industries Commission along with Ministry of Agro and Rural Industries

Problems faced by Labour Co-operatives:

1. Lack of continuous work

2. Shortage of share capital

3. Competition from private sectors.

4. Lack of skill among members.

5. Lack of good and healthy working conditions.

Remedies:

1. Labour co-operatives must have skilled and unskilled kind of Jobs.

2. Labour co-operatives should be exempted from paying earnest money or guarantee amount.

3. The machinery required for jobs should be provided to them on rental basis.

4. Assignment of work that is safe and perennial in nature.

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9 Responses to “Studying Labour Cooperatives with Lijjat Papad”

  1. pratiksha mokashi on: 6 January 2011 at 10:33 am

    dear sir,

  2. shish makwana on: 11 March 2011 at 3:32 pm

    good 1…

  3. shish makwana on: 11 March 2011 at 3:34 pm

    congrats and good 1.

  4. priyanka more on: 5 September 2011 at 2:09 pm

    hiiii dis priyanka more
    we have project work in tybms and my topic is related to lijat papad.
    i want to visit in your company…….
    give your suitable reply on my mail id…!!!!
    thank you

  5. VIRENDRASINGH CHAUHAN on: 12 September 2011 at 12:35 am

    I WANT MEET YOUR COMANY

  6. Shraddha Patil on: 5 January 2012 at 9:58 pm

    Respectd sir,
    v had a presentation plz gve ur visit detail in need 2 visit ur company lijjat papad its really cripsy n spicy

  7. Shraddha Patil on: 5 January 2012 at 10:00 pm

    Respectd sir,
    lijjat papad its really cripsy n spicy

  8. ASHWIN BHATT on: 7 February 2012 at 9:02 pm

    Res Sir

    I want visit Rajkot Branch Production Deaprtmnet. I am Marketing person.

    ASHWIN BHATT
    JAMNAGAR
    9426229400

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