MUMBAI, INDIA, April 15, 2005: It all started forty years ago when seven women gathered together on a terrace of a building in Girgaum in Mumbai. They had a dream and that dream was to start a cooperative organization whereby they could supplement their family’s income by doing work in their own home. From that core idea and choosing a task that they knew how to do the best (making papad, India’s most popular crispy bread), the organization called Shri Mahila Griha Udyog Lijjat Papad has blossomed and now boasts annual sales exceeding US$68 million.
Jyoti Naik, President, Shri Mahila Griha Udgog Lijjat Papad explains how the system works, “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 organization. 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. Packed papads are sealed into a box (each box holds 13.6 kg) and the production from each center 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.” Distributors, who pay $3,409 to participate in the business, pick up the papad from a depot they have been assigned to. Each distributor usually has 8-10 salesmen to deliver the papad to retail outlets. The distributors are bound by the same code of ethics as everyone else in the organization and are required to pay cash for the product when they pick up the pasad from the depot.
The news release explains how profits are distributed, “We have accountants in every branch and every center to maintain daily accounts. Profit (or loss, if any) is shared among all the members of that branch. We have a committee of 21 that decides how the profits are to be distributed. We 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. Even one who has recently joined gets the same share as others who have been with us longer. Each branch calculates its profit and divides it equally among all its members. Mumbai has 12,000 members, the rest of Maharashtra has 22,000, and Gujarat has between 5,000 and 7,000 members.” Two interesting facts about the organization: firstly, each member has veto power and every decision requires 100% consensus before it can be implemented; and secondly, no male can become a member.
The organization has been able to avoid administrative nightmares by giving autonomy to each branch. The article says, “Each branch is responsible for all activities from production to packaging to collection and distribution of vanai and profit for its particular geographical region.” However, certain functions are centralized such as the selection of the raw materials (urad, rice, spice, et cetera) so that quality control is maintained. In addition, the grinding of flour and pricing of products is also centralized. Quality is emphasized throughout the organization. The news release explains, “From the moment a new member joins, she is repeatedly told to make quality her mantra. At the training session, new members are taught to make the ‘perfect’ Lijjat papad. And every member has absorbed the concept totally. If we find any one becoming careless about quality, we do not tolerate it. We give her a warning, then the option to take up any other work like packaging, testing, etc., and if she still displays a lack of concern for quality, we ask her to leave the organization.” Click “source” above for the complete article of this rags to riches story.
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