Weekly Lecture Series on 5th October 2011

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Objectives

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To find the reasons behind this Cluster Development

Find the circumstances under which it can be replicate at some other location also

To Find the Market Leader and know its USP

Comparison Between Papad Cluster of Uttarsanda and Lijjat Papad

Research Design1. Sources of Data : Primary and Secondary sources

2. Primary Data Collection Method: Semi-Structured Interviews

3. Research method : Descriptive

4. Method of contact : Personal Interview

5. Sampling Method : Snow Ball

6. Sample Size : 4 + 1

7. Sampling Plan : 4 – Papadmanufacturers of Uttarsanda and 1 – Machine Designer(seller)

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About Uttarsanda

Uttarsanda is predominantly a farmingcommunity. Uttarsanda Peoples Cooperative BankLimited was established on 9th April 1940 to helpthe local businesses and farmers. On 1st March1967, the Bank of Baroda also opened its branchoffice. To help the milk producers, UttarsandaMilk Producers Cooperative was started in 1951.Due to the location along the railway line andclose proximity to Nadiad and Anand, Uttarsandahas attracted a variety of small industries. Thereare several Cold Storage houses, Cement spunpipe factories, Ice-crème and Papad Factories.When tobacco was a very attractive cash crop,there were several tobacco storage warehouses.

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Introduction Papad is a popular and tasty food item

in the Indian diet since many centuries.It is essentially a wafer-like product,round in shape and made from doughof powdered pulses, spices, powderedchilly and salt. Variety of pulses andproportion of pulses and spices variesfrom region to region depending uponpreferences of local people whereascertain varieties are popular on a largerscale.

PFA (now, FSSAI) and BIS (IS:2839)standards

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What is Business Cluster?

A business cluster is a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field.

Clusters are considered to increase the productivity with which companies can compete, nationally and globally.

Clusters are also very important aspects of strategic management.

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Prof. Michael Porter claims that clusters have the potential to affect competition in three ways:

1. By increasing the productivity of the companies in the cluster,

2. By driving innovation in the field, and

3. By stimulating new businesses in the field.

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Types of Business Clusters

By Development

1. Geographical cluster : Papad Industries in Uttarsanda

2. Sectoral clusters : A cluster of businesses operating together from within the same commercial sector

3. Horizontal cluster : Interconnections between businesses at a sharing of resources level e.g. knowledge management

4. Vertical cluster : i.e. a supply chain cluster

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By Knowledge

1. Techno clusters : These clusters are high technology-oriented, well adapted to the knowledge economy, and typically have as a core renowned universities and research centers

Ex: Silicon Valley

2. Historic knowhow-based clusters : These are based on more traditional activities that maintain their advantage in know-how over the years, and for some of them, over the centuries.

Ex: Kites in Nadiad

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USP

• Low Price

Historic know how-based

clusters

• Availability of Skilled Manpower – large Production & Productivity – low cost

• Storage Facility

Mass Produc

tion

• Each kites moves/passes from different home to home

• Production in Continuous flow

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3. Factor Endowment clusters :

Ex:1. Pataveliya at Kanjari-BoriyaviRailway crossing

Ex:2. Rice Mills in Khambhat

Ex:3. Agarbathies in Shrirampuram, Banglore

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• Traditionally this activity was confined tohousehold making by sun-dry but in view ofincreasing demand and availability of machinery(automation) it has now been developed incottage and small scale sector to Ltd Company.

• Three types of processing techniques used are;

1. Handmade and then Sun-dry

2. Semi-automatic

3. Fully automatic (Dryer is Used)

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Now, back to Papad

Basic Manufacturing Process

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To find the reasons behind this Cluster Development

Find the circumstances under which it can be replicate at some other location also

To Find the Market Leader and know its USP

Comparison Between Papad Cluster of Uttarsanda and Lijjat Papad

Beauty of Business ClustersOne company will succeed, Competitor &

supplier will immerge..... Easy Entry & Low Risk

All raw material was available here.

He Initiate with Risk. 'No business can start without Risk and can start from smaller Investment‘

• Since 1980• Started using Pendle Machine with investment of Rs.10000• Direct Marketing(Door to Door selling)

Said Mr. Trivedi, Uttam Papad, Pioneer of this ClusterCMS DDU

• Job Work

• Daily basis pay to workers

• Scheme of EMI on Machinery by Kirtiraj

• There are not much seasonal fluctuations in sales ofPapad but demand generally goes up by 15 to 20%during winter season(Nov.– Feb.)

• But for other allied products sell time is only diwaliseason. so, 60-65% contribution of annual sells in thisduration only

• Gov. Provides Subsides for Starting the Business aswell as for Expansion

• Industry Enjoys Tax ExemptionsCMS DDU

Example of Automobile Industry @ Sanad

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To find the reasons behind this Cluster Development

Find the circumstances under which it can be replicate at some other location also

To Find the Market Leader and know its USP

Comparison Between Uttarsanda Cluster Papadand Lijjat Papad

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Ingredients Used For 1 kg Papad,• Urad Dhal flour (Black Gram) – 1 kg

• Black Pepper Dal – 25 gm

• Soda-Bicarbonate (NaHCO3) – 35 gm

• Salt– 35 gm

• Asafoetida (Hing) – 12.5 gm

• Edible Oil – 25 gm

• Flavors (as per choice) - ground black pepper or garlic, or chili

• Water - 350 ml

Supply ChannelTechnology

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To find the reasons behind this Cluster Development

Find the circumstances under which it can be replicate at some other location also

To Find the Market Leader and know its USP

Comparison Between Uttarsanda Cluster Papadand Lijjat Papad

USP of Market LeaderISO 9001:2008 and 5S

Strengthen Distribution Network C-n-F NetworkDealersRetail outletsExport Network (U.S., U.K., Australia, Africa)Turnover : 3.5 Cr. - includes Exports of 65lacs

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To find the reasons behind this Cluster Development

Find the circumstances under which it can be replicate at some other location also

To Find the Market Leader and know its USP

Comparison Between Papad Cluster of Uttarsanda and Lijjat Papad

Vs.

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Parameter UttarsandaCluster

Lijjat Papad

Established in Year 1980 – 2000 1968

Annual Sales Turnover (Rs. in Crores) include

allied products

20 – 25 > 65O

Exports (% of total sales in Rs.)

< 10 < 10

Price Range /M.R.P. (Rs. / kg)

80 – 120 163 – 182

Self Life (months) 2 - 3 3

Taste (based on sensory evaluation)

Average Very Good

Technology Machine Made Handmade

No. of Units 7 – 8 (regular)12 – 15 (only seasonal)

73 Branches and 27 Divisions

Employment 200 – 500 > 42000 womanCMS DDU

Issues Identification o Fast life and Today, majority doesn’t know how to

make Papad?

o Technology not strengthen to compete traditional

o Round shape of Papad

o NaHCO3 and NaCl

o Quality Standards

o Think Beyond Papad i.e. Pickle

IDEA !!!!

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References

lijjat.com

wikipedia.org/wiki/Business_cluster

indianclusters.org/

ibef.org/download/Gujarat_190111.pdf

craftofgujarat.com/showpage.aspx?contentid=1127

mapsofindia.com

REPORT ON RURAL CLUSTER DEVELOPMENT - A

CASE STUDY By Society for Economic and Social

Transition, New Delhi

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Shri. Jitubhai Trivedi, Utam Papad

Shri. Priteshbhai Patel, Harsh Papad

Shri. Kanubhai Patel, Shreeji Papad

Shri. Ismilebhai Vohra, Yash Papad

Shri. Munnabhai, Kirtiraj Foods, Anand

Prof.(Dr.) Nareshbhai Patel, CMS DDU

Prof.(Ms.) Mansiben Rathod, CMS DDU

Prof.(Ms.) Falguniben Pandya, CMS DDU

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