Equity Research puzzles, solved step by step
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- 100
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- 30
089Estimate the annual market for school uniforms in India in Rs crore, from enrolment, the number of sets bought per child and the price of a set by school type.Indian brokerage researchConsulting style estimation
Try it first
Which choice changes the answer most?
Show the worked solution
About Rs 28,800 crore a year on these assumptions, most of it from private schools. Government schools: 13 crore children, 2 sets a year at Rs 300, Rs 7,800 crore. Private schools: 12 crore children, 2.5 sets at Rs 700, Rs 21,000 crore. A single blended average would have given Rs 20,000 crore, so the split matters more than any one input. Confirm enrolment against the latest official school data.
Why split by school type before anything else?
Think of two families on the same street. One sends a child to the government school, where the uniform is supplied through the state at a fixed allowance. The other pays a private school's appointed tailor for a blazer, a house t-shirt and two sets of the regular uniform. Who pays decides both how many sets are bought and what each costs, so the segments must be sized separately and then added. A national average price describes neither family.
State the assumptions plainly and treat each as a placeholder to be replaced with data. Assume about 25 crore children in school, 13 crore in government schools and 12 crore in private ones; confirm against the latest UDISE+ report. Assume 2 sets a year at about Rs 300 a set in government schools, where many states fund uniforms through schemes, and 2.5 sets at about Rs 700 in private schools, allowing for sports and house uniforms. Each number is round on purpose; the point is a structure you can defend.
Government schools give Rs 7,800 crore and private schools Rs 21,000 crore, a segmented market of Rs 28,800 crore, while one blended average of 2 sets at Rs 400 for all 25 crore children gives only Rs 20,000 crore. How do you sanity check it?
Turn it into a number a parent can feel. The market works out to about Rs 1,152 a child a year, roughly Rs 1,750 for a private school child and Rs 600 for a government school child. If a private school parent you know spends about that on uniforms each year, the build is in the right range. A second check comes from the supply side: the number of uniform makers and school tailors in one town, times their annual sales, scaled by the number of similar towns.
What would you refine with more time?
The private segment carries almost three quarters of the value, so refine it first. Private schools range from low-fee neighbourhood schools, where uniforms cost little more than in government schools, to premium schools with branded kits. Splitting private schools into two or three fee bands is the next step, because price varies most there. Replacement is a second lever: younger children outgrow uniforms every year, while older ones may make one set last two.
Where candidates lose it
The common approach multiplies all children by one price and one number of sets. It is quick and it misses the fact that the families paying the most are a minority of children, so the average is wrong for almost everyone it covers.
The second loss is quoting enrolment as a known fact with false precision. Say it is an assumption, name where you would confirm it, and spend your time on the split.
What the interviewer asks next
- How would the market change if every state doubled the uniform allowance for government schools?
- What share of the market would a single organised brand be able to reach, and why?
- How would you estimate the school shoes market using the same structure?
098Estimate how many cups of tea are sold in a day at a busy railway station.Consulting style estimationResearch KPO and GCC
Try it first
Where should the estimate start?
Show the worked solution
About 1.5 lakh cups a day on these assumptions. Take 5 lakh passengers. The 2 lakh long-distance travellers wait long enough that one in two buys a cup: 1 lakh cups. The 3 lakh commuters rush through, one in ten buys: 30,000. Staff, porters and drivers, say 5,000 people at three cups, add 15,000. That gives 1,45,000, and 50 stalls selling about 3,000 cups each agrees.
Why start from people and not from stalls?
If you wanted to know how many samosas a school canteen sells, you would count students and ask how many buy one at break, not count the frying pans. Demand comes from the people passing through, so the estimate starts with footfall and a buying rate; the stall count is useful only as a check on capacity. Starting from stalls forces you to guess sales per stall, which is the very number you are trying to find.
State every number as an assumption. Assume a busy junction handles about 5 lakh passengers a day. Split them by how long they stay: long-distance travellers wait on the platform for trains that may be late, while suburban commuters walk straight through. The split matters because waiting time drives tea buying far more than the station's size does. Give long-distance travellers a rate of one cup for every two people and commuters one in ten.
Passenger flow peaks in the morning and evening, and applying buying rates to 2 lakh long-distance travellers and 3 lakh commuters gives about 1,30,000 cups, to which station staff add 15,000, about 1,45,000 cups a day. How do you check it from the supply side?
Count the sellers. Suppose a big station has about 50 stalls and trolleys. A busy stall can pour a cup every 20 seconds for much of a 17-hour day, about 3,000 cups. 50 sellers at 3,000 cups is 1,50,000, close to the 1,45,000 from the demand side, so the two routes agree. If they had disagreed by a factor of three, you would know one buying rate or the footfall figure was off and could say which one you distrust.
What would you refine with more time?
The long-distance buying rate carries most of the answer, so refine it first. Waiting time varies with delays, time of day and weather: a winter morning sells far more tea than a summer afternoon. A sharper estimate would split the day into blocks and apply a rate to each, which is what the hourly chart does. The limitation is that footfall itself is an assumption here; railway data on passengers per day for the specific station would replace it.
Where candidates lose it
Candidates start from stalls, guess a sales figure per stall and multiply, which makes the answer a single unchecked guess. Others multiply every passenger by one cup, ignoring that a commuter running for a local train rarely stops.
The second loss is giving a number with no cross-check. The supply-side count takes twenty seconds and turns an estimate into a reasoned range.
What the interviewer asks next
- How would the answer change on a foggy winter day with long delays?
- What would the annual tea revenue of the station be?
- How would you estimate the number of stalls the station can support?