The ₹80 loan: what Lijjat Papad teaches about the business structures India forgot

On 15 March 1959, seven women gathered on a terrace in Girgaum, South Bombay, with ₹80 borrowed from a social worker named Chhaganlal Karamsi Parekh. They rolled four packets of papad and sold them to a shop at Girgaon Chowpatty. Jaswantiben Popat, the last surviving founder, remembered the first day's takings in an interview sixty years later: one kilo sold for eight annas. The next day two kilos fetched a rupee. The first year's sales came to ₹6,196.

Shri Mahila Griha Udyog Lijjat Papad now has about 45,000 members, 83 branches and 31 divisions across 16 states, exports to more than a dozen countries, and a turnover that the press has reported at ₹1,600 crore. In September 2026 it entered the NCERT Class 9 social science textbook, and the KVIC chairman felicitated its artisans in Mumbai. It has never issued a share, never taken a loan, never accepted a donation and never franchised a branch.

It is not a company: Lijjat is registered as a society under the Societies Registration Act 1860 and as a public trust under the Bombay Public Trusts Act 1950, both since 1966. For a firm like ours, which spends most of its days incorporating private limited companies, that fact is the interesting part.

How is Lijjat Papad organised?

Lijjat is owned by its members, all of them women, and run through branches that each share their own profit and loss.

Every member is called a "sister" and is described by the organisation as an equal co-owner. Membership is open only to women aged 18 and above. Men work for Lijjat as salaried accountants, drivers and security staff, but they cannot be members. Each branch is headed by a Sanchalika, and the whole organisation is governed by a Central Managing Committee of 21 members with six elected office bearers (a president, a vice-president, two secretaries and two treasurers), elected every three years.

Decisions at a branch are taken by the sisters present on the day, and a single member's objection can block a decision of the whole group. That veto is written into the way Lijjat describes its own working, and a World Bank case study on the organisation recorded it as a defining feature.

The economics are equally unusual. Members are paid a piece rate for the papad they roll, and payment is made daily. Profit or loss at a branch is shared among that branch's members by raising or lowering the rolling charges. In the first six months, the profit was distributed in gold rather than cash, and branches have retained the choice between the two. The organisation's stated core value is that it "has never and nor will it in the future, accept any charity, donation, gift or grant from any quarter". It is willing to give, though: after the 2001 Gujarat earthquake it contributed ₹48 lakh to relief.

Quality control is centralised. Samples are tested daily, and batches that fail are destroyed regardless of their value. By 2022 the organisation was producing 4.8 million papads a day. The "Lijjat" trademark was first registered in 1967, and the organisation holds more than 40 marks including registrations in the United States and the European Union. It carries ISO 9001 and ISO 22000 certification, and in 2024-25 it gave scholarships to 446 children of member families.

The growth came in steps. Membership went from 7 to 300 in three years. Sales reached ₹1.82 lakh in 1962-63, ₹300 crore by 2002, a reported ₹650 crore by 2013, ₹800 crore in 2018 and the ₹1,600 crore figure first reported for 2019 and repeated by NCERT for 2023. Lijjat publishes no audited turnover, so every figure here is press-reported, and the jump from ₹800 crore in 2018 to ₹1,600 crore in 2019 reflects different reports more than audited growth.

Why a society and a trust, and not a company?

Lijjat chose its structure because its purpose was member income rather than owner profit, and because it had no capital to raise and no intention of raising any.

A private limited company exists to concentrate ownership in shares and to let those shares be bought, sold and valued. Lijjat wanted none of that: every woman who rolls papad is an owner for as long as she rolls papad, with the same vote as every other owner, and nobody can buy her out or buy in. A society gives a membership-based organisation a legal identity, a governing body and property that vests in that body. The public trust registration adds the supervision of the Charity Commissioner and the tax position of a public trust. Recognition by the Khadi and Village Industries Commission in 1966 brought the organisation into the village industries framework, which by 2002 had given it exemption from income and sales taxes.

A society cannot issue equity, so Lijjat could never take outside capital even if it wanted to. It cannot be sold. Its property vests in a governing body rather than in a corporate entity, which banks and large customers sometimes find harder to deal with. Lijjat compensated for all of this by never needing capital: a daily-paid, piece-rate, branch-level business funds itself from cash flow.

Which other large Indian businesses are not companies?

Some of the largest consumer businesses in India are cooperatives or societies.

Amul is the clearest case. The Gujarat Co-operative Milk Marketing Federation, a federation of 18 district milk unions owned by 36 lakh farmers in 18,600 villages, reported turnover of ₹65,911 crore in FY25 and ₹73,450 crore in FY26, and said the Amul brand crossed ₹1 lakh crore in sales across the group. It handles about 300 lakh litres of milk a day.

The Uralungal Labour Contract Co-operative Society in Kozhikode, Kerala, founded in 1925, is a worker-owned construction cooperative with about 18,000 workers and turnover of ₹2,007.87 crore in 2023-24. It builds highways, bridges and flyovers, including a 39 km stretch of NH-66, and it built the UL CyberPark in Kozhikode, an IT campus that houses more than 90 companies. Its workers are paid a daily wage of ₹1,030 plus a 12 percent bonus.

The Indian Coffee House chain is run by 13 worker cooperative societies with around 400 outlets, a structure that dates from 1957 when the Coffee Board handed its outlets to the workers.

The structures a founder can choose from

Indian law offers at least five ways to organise an enterprise that is not a private limited company. The table gives the shape of each; the sections after it give the detail that matters in practice.

Society

Section 1 of the Societies Registration Act 1860 lets any seven or more persons associated for a literary, scientific or charitable purpose form a society by filing a memorandum with the Registrar. The memorandum sets out the name, the objects and the governing body. Registration is at state level, and many states have their own versions of the Act. The society files an annual list of its governing body, and its property vests in that body. In Maharashtra a charitable society must also register under the public trusts law, which is why Lijjat holds both registrations.

A society is cheap and democratic. Its weaknesses are the weak title to assets, recognition that varies from state to state, and the fact that banks and donors tend to see it as the weakest of the structures.

Public charitable trust

Private trusts are governed by the Indian Trusts Act 1882, which specifically excludes public charitable and religious endowments. Public trusts are a matter of state law. Maharashtra and Gujarat have public trust acts that require registration with the Charity Commissioner; in states without such an act, a trust deed is registered under the Registration Act 1908. There is no statutory minimum number of trustees; practice is at least two.

A trust is the fastest structure to create and the one that gives founders the most control, because trustees are appointed by the deed rather than elected by members. It cannot raise capital and its assets are locked to its objects. For a family that wants to run a school or a foundation without annual elections, it is usually the right choice.

Cooperative society

A cooperative is owned by its members, each with one vote regardless of capital contributed, and distributes surplus in proportion to members' dealings with it rather than their shareholding. Single-state cooperatives are registered under the state's cooperative act. Societies operating in two or more states register under the Multi-State Co-operative Societies Act 2002 with the Central Registrar, which requires a minimum of 50 members in each state and promises disposal of the application within four months.

The 2023 amendment to the multi-state law created a Co-operative Election Authority, a Co-operative Ombudsman, and a Rehabilitation, Reconstruction and Development Fund to which profitable societies contribute ₹1 crore or one percent of net profit, whichever is less. The Ministry of Cooperation was created in July 2021. Cooperatives suit producer, worker and consumer ownership, as Amul and ULCCS show. Their cost is heavy registrar supervision and political exposure that private companies do not carry.

Section 8 company

A Section 8 company is a company incorporated under the Companies Act 2013 for the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, environmental protection or similar objects, which applies its profits to those objects and pays no dividend. It needs a licence from the Central Government, a power delegated to the Registrar, and it may drop the words "Limited" or "Private Limited" from its name.

Since 2019 the licence application has been merged into the incorporation form, so a new Section 8 company is formed through SPICe+ with Form INC-13 (the memorandum), INC-14 (a professional's declaration) and INC-15 (the subscribers' declaration), plus a three-year estimate of income and expenditure. A private Section 8 company needs two members and two directors; there is no minimum paid-up capital.

The memorandum and articles cannot be changed without Central Government approval. Conversion into an ordinary company requires a special resolution, an application to the Regional Director and a public notice. On winding up, any surplus goes to another Section 8 company or to the Insolvency and Bankruptcy Fund. The licence can be revoked for breach, and the penalties after the 2019 amendment are a fine of ₹10 lakh to ₹1 crore on the company and ₹25,000 to ₹25 lakh on each defaulting officer.

In return the Section 8 company gets the strongest credibility of the five: limited liability, MCA-level transparency, and the structure that CSR donors and foreign funders prefer.

The tax and funding registrations that come after the structure

Whichever non-profit structure a founder picks, the income tax and funding registrations are the same, and they are where most of the real work sits.

Registration under Section 12AB of the Income-tax Act 1961 (which replaced the older 12A regime from 1 April 2021) is what exempts a charitable organisation's income. It is granted provisionally for three years and then regularly. From 1 April 2025 the regular registration lasts ten years instead of five for organisations whose income before exemption does not exceed ₹5 crore in each of the two preceding years. Approval under Section 80G is what lets donors claim a deduction, generally of 50 percent of the donation, and it comes with annual filing of donation statements in Form 10BD and certificates in Form 10BE.

The Income-tax Act 2025, in force from 1 April 2026, consolidates the charitable provisions into a single part of the Act and renumbers the sections. Approvals and registrations granted under the 1961 Act continue in force under the new one, and applications made after 1 April 2026 use Form 104 in place of Form 10A.

A company that wants to receive corporate social responsibility money must file Form CSR-1 with the Ministry of Corporate Affairs; since April 2021 only Section 8 companies, registered public trusts and societies with 12A and 80G registration, and either a three-year track record or establishment by the donor company, qualify. Foreign funds require registration or prior permission under the Foreign Contribution (Regulation) Act 2010, which since the 2020 amendment prohibits transferring foreign contributions onward to other organisations, requires receipts in a designated account at the State Bank of India's New Delhi main branch, caps administrative expenses at 20 percent, and requires Aadhaar details of office bearers. The NGO Darpan portal of NITI Aayog issues the unique ID that central grants and FCRA filings require.

Which structure should a founder choose?

The answer depends on three questions: who should own it, whether it needs outside capital, and who it needs to be trusted by.

A business that wants to be owned by the people who work in it or supply it, that can fund itself from cash flow, and that will never be sold should look hard at a society or a cooperative. That is Lijjat, ULCCS and Amul.

A charitable activity that needs the control of a small group and speed of formation is a trust. A charitable activity that will approach corporate donors, foreign funders, banks and government for grants is better off as a Section 8 company, and will be asked for its 12AB, 80G, CSR-1 and FCRA registrations in that order.

A producer collective that wants to trade commercially, hold inventory, process produce and take on debt should use a producer company, which we cover in the Sahyadri Farms case study.

And a business whose plan involves investors, employee stock options, an acquisition or a listing needs a private limited company, with everything that implies about shares, valuations and the compliance calendar.

What a modern founder can borrow from Lijjat

Most founders we meet will never run a society. The transferable lessons are about design.

Lijjat aligned ownership and labour completely: the people who make the product own the enterprise, and their income rises when it does well. Daily payment kept 45,000 households attached to the organisation without a single employment contract. Quality control stayed central while everything else sat at the branch, which let the organisation scale without a head office of any size. The refusal of debt and donations meant that no bad year could become a crisis of control. And the trademark was registered in 1967, eight years after the first packet, which is earlier than most companies we incorporate manage.

Lijjat cannot raise equity, cannot acquire another business for stock, cannot give a member a stake she can sell, and cannot offer an investor an exit. It has grown slowly and steadily for 67 years because that is the only way its structure allows it to grow. A founder who wants that kind of business should choose the structure that makes it possible.

Frequently asked questions

Is Lijjat Papad a company or a cooperative?

Neither. Shri Mahila Griha Udyog Lijjat Papad is registered as a society under the Societies Registration Act 1860 and as a public trust under the Bombay Public Trusts Act 1950, both since 1966, and is recognised by the Khadi and Village Industries Commission as a village industry. NCERT's textbook calls it a cooperative, but legally it is a society and trust.

How much is Lijjat Papad's turnover?

Lijjat does not publish audited figures. The press reported turnover of about ₹1,600 crore in 2019, and the NCERT Class 9 textbook repeats that figure for 2023. Earlier reported figures were ₹300 crore in 2002, ₹650 crore in 2013 and ₹800 crore in 2018.

How many women work at Lijjat Papad?

About 45,000 women are members, each an equal co-owner. Lijjat operates 83 branches and 31 divisions across 16 states. Only women can be members; men are employed as salaried staff.

What is the difference between a society, a trust and a Section 8 company?

A society is a membership organisation registered under the Societies Registration Act 1860 with at least seven members and property vesting in its governing body. A public charitable trust is created by a deed and run by trustees who are appointed rather than elected. A Section 8 company is a company under the Companies Act 2013 with limited liability, a licence to omit "Limited" from its name, and a prohibition on paying dividends. The Section 8 company is the most credible with donors and banks; the trust gives founders the most control; the society is the cheapest and most democratic.

Can a society or trust get 80G and 12A registration?

Yes. Registration under Section 12AB and approval under Section 80G of the Income-tax Act are available to societies, public trusts and Section 8 companies alike. From 1 April 2025 regular registration lasts ten years for organisations with income up to ₹5 crore. Under the Income-tax Act 2025, which took effect on 1 April 2026, existing registrations continue and new applications use Form 104.

How many members are needed to register a cooperative society in India?

For a society operating in one state, the minimum is set by that state's cooperative act. For a multi-state cooperative society registered with the Central Registrar under the Multi-State Co-operative Societies Act 2002, at least 50 individual members are required in each state, from at least two states.

Sources

lijjat.com (Brief Information, Beginning, Core Value, Management and Milestones pages, accessed October 2026); World Bank case study on Shri Mahila Griha Udyog Lijjat Papad; WIPO IP Advantage case study on Lijjat; ANI reports of 1 October 2026 on the KVIC felicitation; WION and Amar Ujala reports of 30 September 2026 on the NCERT Class 9 textbook; The Better India interview with Jaswantiben Popat (July 2020); DNA report on Lijjat's turnover (2022); The Week on GCMMF's FY25 results and AgroSpectrum on FY26; ThePrint on ULCCS (February 2026); Societies Registration Act 1860; Multi-State Co-operative Societies Act 2002 and the Central Registrar's FAQ; PRS Legislative Research summaries of the Multi-State Co-operative Societies (Amendment) Act 2023 and the Foreign Contribution (Regulation) Amendment Act 2020; Companies (Incorporation) Sixth Amendment Rules 2019; Union Budget 2025-26 memorandum on Sections 12AB and 80G; CBDT FAQs on the transition to the Income-tax Act 2025.