-3-

-4-

INTRODUCTION Tayagam is a trust that was started in 2003. During the initial days of operation, Tayagam was meant to be a charity based organization. Nevertheless, the passage of time and the increasing awareness of business world concepts among the trustees of Tayagam have given a change in the plan of future course for the organization. In the year 2007, Tayagam is zealously embarking on a business model called Centre of Excellence Model (CEM). Tayagam believes that CEM when implemented in the apparel manufacturing sector can provide a compelling value proposition to the consumer (apparel consumer) and the beneficiaries (rural women, who will be the employees in the apparel manufacturing units).

CEM aims and hopes to seamlessly integrate the 1. business motive of profit based apparel manufacturing and 2. social motive of provision of employment to the lower most economic strata (in rural areas) without requirement of dislocation 3. social motive of providing opportunities for school children to expand their learning and discover their talents and thus complementing school education MOTIVATION & OPPORTUNITY
MARKET OPPORTUNITY:

The IMAGES-KSA Technopak Indian Apparel Report 2006 estimates the market size of the mens shirt market at Rs 12010 crore.1 In fact, the shirts category commands 14% of the market share of the total apparel market in India. In addition to being the largest selling segment in India, this segment has the potential to grow extremely fast. This is one of the reasons for us to pick this segment to compete in. Also, the variety in terms of size and designs are not as much as one would expect from other apparel such as sarees, etc. This lends itself to be produced in a business model such as ours. As of 2002, 88 million branded and unbranded shirts were sold in India. This has been growing at the rate of 100%. The ensuing GDP growth has been much higher than in 2002 and hence the demand growth now is also expected to be really good.

-5Apparel Manufacturing in India2 Indian textile sector has a dualistic manufacturing structure, each of which has its own merits and demerits. The 2 models of operation of the apparel manufacturing segment are as follows 1. Model 1 Apparel retail store X middleman - fabricators: This is very dominant model where the entity X feels the pulse of the market and understands the fashion of the season (in terms of clothing material, design, colour etc). X then decides a manufacturing scheme and out-sources the fabricating work to highly decentralized small scale fabricating units (say, in rural areas), through middlemen. This is a phenomenon of the recent years with X ranging from textile showrooms in India (like RMKV, Pothys of Chennai) to international retail chains (like Walmart). Example of this model are the manufacturing units in Pudhiyamputhur in Tuticorin (Tamil Nadu) 2. Model 2 Vertically integrated, large scale composite mill and apparel manufacturing segment: This model is fast declining in the Indian context. Typically in this model, there will be a centralized factory location where fabrication of apparels takes place. The centralized factories are generally located in city centers and therefore this model mandates many of the employees to be from the city In model 1, because of the following reasons the rural apparel manufacturers dont capture enough value 1. The retailer X is the one which knows about the market and therefore can decide better about kind, texture, design of material etc. This makes X to capture more value in the value chain. 2. The middlemen capture a significant portion of the remaining value because the apparel manufacturers are insulated from X and therefore are at a disadvantageous position when it comes to bargaining for a better price Model 2, because of the following reasons, is not of significant value to rural people 1. The employees are to an extent compelled to stay in urban or semi urban areas, where cost of living is relatively high

Indian Textile and Clothing Industry Report, ICRA, October 2005

-62. When moving to the urban / semi-urban areas, the whole family setup is disrupted either in terms of earning potential (getting USD 1 while being in a township may be probably better than getting USD 2 while being in a city, when it comes to earning potential) or in terms of staying together (just to join workforce, spouses split up at least for a short period which will disrupt family life).

There is significant benefit in consolidation of the highly fragmented apparel fabrication activities (model 1) and operating on a model which is very similar to cooperatives in terms of operations alone. This hybrid model (hybrid of models 1 and 2) will eliminate the impairments of individual models and thereby helping CEM achieve best of both the worlds benefits and also helps to pass on significant benefits to the employees (rural people). School Education in India (Specifically in Tamil Nadu)3 In terms of education, school education has been identified as the most important part of the entire academic life for a student in any country (Refer to Exhibit 1 to see the return to education). Understanding this, the Government of Tamil Nadu has set up massive infrastructure for primary, secondary and higher secondary schools around the state. However, the significant problem that haunts the educational department (and the society, of course) is the fact that the government schools are not performing up to the standards to which they are expected to perform. In fact, some of the private schools which have been set up in rural areas (some time closer to rural areas), are out beating the government schools in terms of performance (Refer to Exhibit 2 to understand the comparison between private and government schools in rural areas). This is happening in spite of the poor infrastructure (on an average) and less educated (in terms of academic degree) teachers of the private schools. It has always been felt that the education imparted through government schools are more of a nominal quality. Co-curricular and extra-curricular knowledge imparted is almost negligible. In view of the long run benefits of quality class room education has to be complemented by good quality library facilities (which the students can use often to get accustomed to the process of learning on their own), sports facilities (which will enable the children to attain an overall growth rather than just book-based-educational growth.

Public Private Partnerships for Quality Education in India , Karthik Muralidharan, Harvard University, 2006

-7-

BUSINESS MODEL CEM The business is envisioned to be set up in Tamil Nadu, India, where there is a lot of textile manufacturing currently happening. FIGURE 1 VALUE CHAIN OF TEXTILE BUSINESS AND CENTRE OF EXCELLENCE MODEL

Function: R&D, Design, Material Order Location: CHO in Chennai

Function: Material Reception Location: correspondi ng RO/PO

Function: Manufactu ring: Prestitching Location: CoE

Function: Manufactu ring: Stitching Location: TH

Function: Manufactu ring: PostStitching Location: CoE

Function: Marketing, Sales Location: CHO, RO (partly)

Apparel Manufacturing Market Research, Design and Procurement Cost Saving: Social Benefits: Marketing/Sales

-8-

Team House (TH) Stitching Machines 3 Employees 3 Centre of Excellence (CoE) Geographic coverage 5000 sq km Total adjoining population 100,000 Target population (working age women in bottom 5%, prospective employees) 750 Apparel manufacturing capacity - 1,000,000 units per year Beneficiary school children coverage 750

FIGURE 2 VARIOUS COMPONENTS OF CEM

TH

Regional Office / Product Office Shirts (RO/POShirts) HR: 1 Product manager 2 Office staff Corporate Head Office (CHO) HR: Design and R&D 10 Fashion technologists Procurement of raw materials 10 people

HR: One Fashion technologists (apparel manufacturing) One assistant (localite)

CoE

CoE

(RO/PO Pants)

Sales and marketing 10 people Staff 10 people

(RO/PO Sarees)

-9-

The important physical components of the CEM are 1. One central Corporate Head Office (CHO), located in Chennai (Tamil Nadu) 2. One Regional Office / Product Office (RO/PO) in a district (Unique PO- ProductDistrict combination) coordinating the efforts of the Centres of Excellence of that district. Typically a district has enough target employees population to produce one product (say a shirt or pair of pants etc) and satisfy around 5% of demand in the regional market (Tamil Nadu) 3. One Centre of Excellence (CoE) in each panchayat union, just near the panchayat union primary school (Each district of Tamil Nadu typically has around 10-20 panchayat unions) (CoE helps move closer towards the natural habitat of the villagers) 4. Designated Team Houses (THs, which are nothing but houses of some employees i.e. villagers). Typically around 200-250 Team Houses come under the purview of one CoE. Corporate Head Office (CHO) The Corporate Head Office (CHO) will be located in Chennai. This will be the hub, and will perform the main upstream activities such as sensing the pulse of the market and fashion, making designs to meet the trends, R&D and Ordering of required apparels from the manufacturing locations. Regional Offices/Product Offices (ROs/POs) There would also be several Regional Offices (or) Product Offices (PO). Each RO will basically cater to one particular product such as trousers, jeans, shirts, leather sandals, etc. They would receive orders from the CHO, and pass it on downstream, and also serve as point of receiving raw materials (cloth, etc) from supplier as well as the finished product from production units. These would be split upon geographies within Tamil Nadu, such that production for one particular product will be clustered into one or more neighboring districts. This will also help generating economies of scale, and improve coordination activities.

- 10 Centre Of Excellence (CoE) The crucial elements in the chain are the proposed Centres of Excellence (CoE). These will basically be located in the panchayat union headquarters (normally there will be around 10-20 panchayat unions in a district and consequently 10-20 CoEs), which serve as the hub for a number of adjoining villages surrounding it. The orders from POs would be received for production. The CoE would house the machinery for the initial cutting of the cloth based on the product. For example, for Shirts, the cloth would be cut into several bits for the sleeves, the main body, collar, etc. This is a highly mechanized process, and hence output is envisioned to be of the tune of around 1,500,000 units a year from one CoE. These cut pieces of cloth are then distributed to the Team Houses for stitching. Also, the CoE would house the facilites for packaging of the finished products. This would also be a low process time job. One CoE is targeted to cover a geographic area of around 5000 sq. km or a population of around 100,000 people. Of this, the targeted number of workers is around 750. These workers are mainly targeted to be women, as it is well accepted that women in general hold superior skills for this type of activity, and also this would help additionally serve the social cause of womens empowerment. Team Houses (THs) The stitching will be done in what are termed as Team Houses (TH). These are basically houses where a group of 3 workers jointly work, i.e, the 3 sewing machines, etc will be kept in one persons house and a group of workers collaborate to produce the required output. The dynamics of Team Houses are very similar to SHGs. THs are ultimately used to ensure quality of labour even when the labour is happening in employees houses. The group would come to the CoE at specific frequency of days, and take the order and the cut pieces of cloth. They would also take the required quantities of thread, needles, etc if they need replacement.

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BUSINESS MODEL DYNAMICS Corporate Head Office The Corporate Head Office will function like a normal corporate entity. There will be an R&D team which conducts research into materials, manufacturing technology, etc. This team would have about 10 fashion technologists recruited from institutions like NIFT, etc. There would also be a subteam which conducts Marketing Research, into the current and expected fashion trends. This team will then forecast demand. There will be a separate team of around 10 people taking care of placing orders for different products with the downstream offices and with supplier, for raw materials by doing Materials Requirement Planning (MRP), etc.

Once the finished products are received from the Pos, there will be a dedicated team of about 10 people for Sales & Marketing, who will handle distribution efforts to various big retailers and export units. In addition, there will be an administrative staff of about 10 people who will handle general and admisnistrative duties. Overall, the functioning will be similar to any normal business, and we will not dwell to much over here, as the key differentiating factor is in the CoEs. Centre of Excellence The Tayagam Centre of Excellence model is distinctly different from the vertically integrated model that players like Arvind Mills are using in one key respect. In the vertically integrated model, there is a central location usually in a semi-urban area at least (for easier access to various facililties), where the most of the activity is concentrated. In this model however, the activity is carried out in the rural areas. The main advantage is that families and workers do not have to be relocated. They essentially work from home. Also, in a semi-urban area, the cost of living would be higher and hence wages would have to be higher. Over here, since the workers are staying in their own places in rural areas. Another key aspect of the model is in targeting the lower most economic strata of people for workers. Thus wages can be considerably lower. Significantly, this ensures the self-sustainability of the competitive advantage of the model, as there will always be strata of people who are relatively at the bottom of the economic ladder. Thus, their labour would always be cheaper than for the other players.

- 12 The social benefit of this model is that it serves to generate employment for the economically backward and helps them come up. It also equips them with new skills which would make them independent and give them confidence.

Another main advantage is that the infrastructure needed is much lesser, since they work from homes. Hence, much lesser number of people have to be housed in the Centres of Excellence. Therefore, the space required and consequently the capital investment is considerably reduced. This would make it easier to obtain a higher return on investment. Why Team Houses? As explained earlier, having workers work from their homes would reduce physical infrastructure needed. Stitching is a fairly routine job, the necessity of having to be in one location for constant monitoring is lesser. However, this is also tackled to an extent by making the workers work in groups through the concept of Team House. Thus, they get to interact, help out and learn from each other (especially in terms of learning curve effect where more experienced employees can help out less experienced ones).

The more significant utility of the Team House concept is however that of having quality control built in to an extent. The team would take the cut pieces of cloth together, and would have to deliver the output as a team. In case the output is not of sufficient quality, the entire team s compensation would suffer. Hence, this leads to a positive incentive within the team to conduct a quality check within them to ensure that poor performance of one of the members does not jeopardize the pay of the rest of the team. It would also help increase output. This would happen by a variable compensation component to the pay, linked to output over a benchmark quantity, for the team as a whole. Thus, again the incentive is to perform to get the maximum possible as a group. Thus, there will be peer pressure to perform from amongst other group members, which will help in obtaining a good production output. Why Centre of Excellence? The CoE will be a building which houses about 200-300 people inclusive of the workers involved in cutting and packaging activities. Thus, there will be a fair amount of space which would lie waste in the evenings after working hours (which is envisioned to be upto about 4 p.m). Thus, the

- 13 CoE can be used a small library-cum-activity area for school children to come and indulge in enriching activities. The library would house a number of elementary picture books, magazines, news papers in Tamil (vernacular language) and English. A large number of children in rural areas and small towns are extremely eager to learn contrary to popular opinions. The objective is to help the children also increase their awareness, and gain general knowledge. The manager of the CoE would be in regular touch with the teachers of the local school so as to be able to provide material which supplements the school education and so that the CoE becomes, not a competitor, but as a partner to the school. Activities like encouraging one child at a time to read aloud a magazine/ newspaper to the rest of the group, make posters/charts about certain topics, etc can be initiated.

In this manner, by helping more children discover their innate talents and shine, it would truly serve as a Centre of Excellence. From the apparel manufacturing business point of view, CoEs help Tayagam reach out to the rural areas (after ensuring economies of scale) and therefore tap the cheapest available labour pool.

MARKET SIZE/ESTIMATION Segmentation The market for apparel could be broadly classified into 3 categories: Segment 1 2 3 Unbranded Apparel Branded Apparel Premium Apparel Customer expectations Cost conscious Value for money Branded Prestige conscious Brand loyalty None Little High

In the Unbranded Apparel segment, there are a multitude of suppliers. There is seldom significant importance laid on retaining customer loyalty. There may not be much choice for the customers to select from in terms of design and colour. For the customer, cost overrides all other considerations.

- 14 In the Premium Branded Apparel segment, the players present are huge and have significant marketing depth and command high levels of brand loyalty. It is very difficult to wean away customers from these brands. It is the Branded Apparel segment, where the customer does not mind experimenting between products of similar quality if he could get a price saving, that we would be targeting. Targeting Rationale for choosing the Branded Apparel segment: The chief competitive advantage of our business model is going to be the fact that apparel of similar quality to that being offered by competitors would be produced at a much lower price. The quality of apparel to be produced will be much higher than those being produced in the Unbranded Apparel segment. Also, building a sustainable brand image is extremely difficult in the Unbranded Apparel segment. On the other hand, we lack the marketing muscle to take on the players in the Premium Branded Apparel market. The growth expected to occur in the Indian middle class is likely to shift customers from segment 1 to segment 2 and not so much from segment 2 and segment 3. This is also one reason for choosing segment 2 to target. Positioning Our value proposition would be to offer the best quality shirts at a highly competitive price compared to those of our competitors. ROLL OUT PLAN Marketing Strategy Promotional campaign: The promotional strategy would be conducted on broadly two fronts: 1. Advertising through mass media like newspapers and regional language television channels, primarily with a view to create brand awareness. 2. Paying the retailers in order to acquire shelf space which is of utmost importance in attracting the customers who visit the shops to our brand. 70% of the resources would be expended in the quest for shelf space and the remaining 30% would be used for advertising via the media.

- 15 -

Distribution Footprint Also, the areas that we expect to cover would amount to 40% of the Indian market. While we would primarily have our footprint in the Southern States, in the long run, our aim would be to establish a pan Indian presence by tying up with major retail stores all over the country.

ORGANISATIONAL STRUCTURE Figure 3: ORGANISATION STRUCTURE

CEO

President Finance

President Marketing

COO

Accouning / Payroll

R&D

Sales Team

Brand Manager

Product Manager 1 (Shirts) Office

Product 2 (Trousers)

Market Research

Fashion Design

CoE 1

CoE 2

TH1

TH 2

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Roles And Responsibilites / Operations Strategy Demand Forecasting is done by Market Research by studying fashion trends Fashion Design team makes the designs Based on these, orders are given to Operations department Materials Requirement Planning is done by using data of inventory, capacity, planned increases, etc from Product Offices Based on MRP, orders are given for cloth to suppliers from CHO from the COOs office Supply is made straight to the Product Office Cloth is distributed to CoEs based on labour capacity available, and consumable such as thread, needles, etc are also sent Production is carried out in CoEs and THs as described earlier Finished Products are again transported from CoEs to PO Sales Team will meanwhile approach various dealers and retailers, and obtain orders from them Once the order is available, shipping of finished product will be made straight from PO to the retailers address through contracted transportation Implementation The roll out will be carried out a district at a time. A separate dedicated team will be out in place for this purpose. Initially the towns within the district where the Centres of Excellence are to be located are chosen. One person will be deputed toward setting up of each CoE. The building can be either bought completely, or expanded upon a purchased building or constructed. During the time for renovation, setting up of the CoE, the in-charge will try to accumulate information regarding the target population of workers. This can be obtained from the details of the houses, and families from Panchayat Office. This data however, will not be complete, and will have to be supplemented by field visits to the neighbouring villages to ascertain the number of families, the economic status of them, no. of working members, and of possible their identities.

- 17 This is important since the recruitment of the workers should be such that, only one from a family is given employment. This is so that the broadest base of families can be reached, for employment generation. The data is also important to ensure that the workers should also be from the lowest economic strata. Reasons: Social Angle - This is for the social objective of reducing the economic disparity levels. Business Angle - Only by continually selecting from lowest economic strata, can the model become self-sustaining, due to use of lowest cost labour available Meanwhile, sewing machines are ordered and purchased. This is initially given to the workers as their own, and a small monthly instalment deducted from salary. In this way, the workers can own the sewing machine, and thus will feel enabled and empowered. All the workers will be put through training in the near most Industrial Training Institute (ITI). This will impart the necessary skills to them, but the training period is not extremely time consuming If the building is being constructed, the CoE should be ready to start production within 3 months Once, the CoE is going to start production, a regular crew will be sent there, and the cutting machines and equipment for packaging, etc will be set up. Contracts would also be simulatenously be fixed with Transport Operators for transportation of the finished product to various cities. Once the CoE is up and running, the dedicated team will be assigned towards setting up of Product Office and CoEs in another district/ geographical cluster. TEAM Arul V is Trustee and Director of Tayagam Charitable Trust. A second year student from IIM Bangalore, he is keen on starting new ventures which shall be sustained by Tayagam. Vignesh Kumar M is a PGP 2nd year student at the Indian Institute of Bangalore. He is working with Vikasana, the social service initiative of IIM Bangalore. He has had experience of conducting English classes and sports campus for children of a neighbouring school.

- 18 Hemant Chandrasekaran is PGP 2nd year student at the Indian Institute of Bangalore. He is the founder member of a student run organization called Diya and has prior experience of conducting activities like blood donation camps and cultural activities. He is also a volunteer with AID INDIA. FINANCE Table 1: Annual expenses of Corporate Head Office (CHO)
Annual expenses Office space Office supplies R&D spend Marketing spend IT spend Procurement overheads Salaries Design, R&D employees Sales and marketing Raw material procurement Staff Management salary PO and below (4 no) Total expenses Expense/output (output = 22,500,000 * 4) INR 480,000 INR 50,000 INR 120,000,000 INR 10,000,000 INR 1,000,000 INR 1,000,000 INR 5,000,000 INR 5,000,000 INR 4,000,000 INR 2,000,000 INR 2,000,000 INR 7,512,232,500 INR 7,662,762,500 85.14180556 $10,667 $1,111 $2,666,667 $222,222 $22,222 $22,222 $111,111 $111,111 $88,889 $44,444 $44,444 $166,938,500 $170,283,611 $1.9

Table - 2: Annual Expenses of Product Office (PO)

Annual expenses Number Office space Office supplies CoE level expenses Product manager salary Staff salary Transport Expenses Total expenses Output Expense / year Expense / year INR 240,000 $5,333 INR 50,000 $1,111 15 INR 1,706,243,750 $37,916,528 1 INR 500,000 $11,111 2 INR 400,000 $8,889 INR 170,624,375 $3,791,653 INR 1,878,058,125 $41,734,625 22,500,000

- 19 Table 3: Startup Costs

Start up costs CoE setup (15) Office supplies IT Salaries for 1 year Working capital Total

Rs. 79410000 250000 1000000 19600000 1000000 1.01E+08

$ 1764667 5555.556 22222.22 435555.6 22222.22 2250222

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Table 4: Annual Expenses of Centre of Excellence (COE)

Centre of Excellence (CoE) Number of Employees per CoE Number of student beneficiaries per CoE Output Initial Working Capital Common Cap-ex Head Land Building Computer Telephone connection 750 500 1,500,000 $1,000 Quantity 0.1 2000 2 1 Units acre sq. feet number number PER YEAR COST Cost (in INR) Cost (in USD) Life in INR in USD INR 300,000 $6,667 20 years life INR 15,000 INR 1,000,000 $22,222 20 years life INR 50,000 INR 70,000 $1,556 3 years life INR 23,333 INR 3,000 $67

$333 $1,111 $519

Apparel manufacturing related Cap-ex Machinery Sundry equipments CoE related Cap-ex Books Sports equipments Stationery TOTAL Cap-ex

750 number 750 number

INR 3,750,000 INR 75,000

$83,333 10 years life $1,667 10 years life

INR 375,000 INR 7,500

$8,333 $167

300 number 10 number 10 number

INR 90,000 INR 5,000 INR 1,000 INR 5,294,000

$2,000 1 year life $111 2 years life $22 1 year $117,644

INR 90,000 INR 2,500 INR 1,000 INR 564,333

$2,000 $56 $22 $12,541

Common On-Going Cost Electricity consumption Phone bill CoE manager Local assistant Sundry Apparel manufacturing related On-Going Cost Salaries Raw materials Sundry Training cost CoE related On-Going Cost News papers, magazines Awards Intra district events coordination costs Sundry TOTAL On-Going Cost TOTAL PER ANNUM COSTS

1 number 1 number

INR 100,000 INR 12,000 INR 300,000 INR 25,000 INR 100,000

$2,222 $267 $6,667 $556 $2,222

INR 100,000 INR 12,000 INR 300,000 INR 25,000 INR 100,000

$2,222 $267 $6,667 $556 $2,222

750 number of staff

750

INR 37,500,000 INR 75,000,000 INR 10,000 INR 75,000

$833,333 $1,666,667 $222 $1,667

INR 37,500,000 INR 75,000,000 INR 10,000 INR 1,667

$833,333 $1,666,667 $222 $37

10 per day 10

INR 18,250 INR 10,000 INR 100,000 INR 10,000 INR 113,260,250

$406 $222 $2,222 $222 $2,516,894

INR 18,250 INR 10,000 INR 100,000 INR 10,000 INR 113,185,250 INR 113,749,583

$406 $222 $2,222 $222 $2,515,228 $2,527,769

- 21 Table 5: Roll Out Plan We are expecting to have to have the following roll out plan
Roll out strategy Month 1 Month 4 Month 7 Month 10 Product office 1 2 3 4 Product Shirts Shirts Trousers Kurtas Per product cost INR 90 INR 87 INR 86 INR 85 Per product cost $2.00 $1.93 $1.90 $1.89

- 22 -

Table 6: Cost Structure Corresponding to the roll out strategy

Total cost PO costs - (1 PO) PO costs - (2 PO) PO costs (3PO) PO costs (4PO) CHO costs INR 1,878,058,125 INR 3,756,116,250 INR 5,634,174,375 INR 7,512,232,500 INR 150,530,000 $41,734,625.0 $83,469,250.0 $125,203,875.0 $166,938,500.0 $3,345,111.1 INR 2,028,588,125 INR 3,906,646,250 INR 5,784,704,375 INR 7,662,762,500 Total cost $45,079,736.1 $86,814,361.1 $128,548,986.1 $170,283,611.1 Output 22,500,000 45,000,000 67,500,000 90,000,000 Cost/Output INR 90.16 INR 86.81 INR 85.70 INR 85.14 Cost/Output $2.00 $1.93 $1.90 $1.89

Costs for fabrication of a shirt come to around USD 2 during the initial few months and USD 1.89 during month 10. Price of INR 300 INR 500 (USD 6.7 USD 11) is possible and gives a profit margin 251% - 485% which can be ploughed in for the expansion of operations.

- 23 Table 7: SRoI calculation The very tangible social benefits are 2 fold 1. The increased wage for people at their village itself (Villagers would get a maximum of USD 1 per day, otherwise; with Tayagam CEM coming to their village, the apparel fabricators can earn USD 2 per day, with a very minimal labour efficiency) 2. The complementation to school education which essentially makes the effectiveness of school education pass a minimum threshold. The private return to school education in Asia is 64% (314 for primary education, 15 for secondary education and 18 for higher education). Our venture can at least add 10 more percentage return and make the numbers close to Latin Americas returns (32 for primary, 23 for secondary and 23 for higher education)

Excess wage to apparel fabricators Excess return to education due to Tayagam Initial coverage Employees Student beneficiaries Investment in CoEs Social value - imparted towards employees Social value - imparted towards students Total social value (First year) Growth rate expected Risky rate of return Social rate of return (Total social value / Invetsment in CoEs)

INR 45.00 10% 4 POs 45000 45000 INR 90,000,000.00 INR 2,025,000.00 INR 9,000,000.00 INR 11,025,000.00 15% 15% 12%

$1.0

$1,000.0 $1,000.0 $2,000,000.0 $45,000.0 $200,000.0 $245,000.0

Returns to Education: A Further International Update and Implications, George Psacharopoulos, Journal of Human Resources, 1985

- 24 -

EXHIBITS EXHIBIT 1 RETURN ON EDUCATION

Source: Returns to Education: A Further International Update and Implications, George Psacharopoulos, Journal of Human Resources, 1985 EXHIBIT 2 PUBLIC VS PRIVATE SCHOOLS IN RURAL INDIA

Source: Public Private Partnerships for Quality Education in India, Karthik Muralidharan, Harvard University, 2006