CASE BOOK

GUESSTIMATES

Things to master for guesstimates:

1) Structured Approach
2) General Data to remember
3) Maths
4) Handy Formulae
5) Misc.

Structured Approach
• Ask all the relevant questions to understand exactly what is asked (what is required to be calculated)
• Don’t go for sunken cost fallacy (change your approach, if you think in mid-way, it’s not going where it is
required to go)
• Make tree diagram for showing calculation and flow in the structured and legible way

General Data
India

GDP $2.46 trillion (nominal); $8.72 trillion (PPP)

Population 1.32 billion (~1.2B) (70% Rural & 30% Urban)
Land Area 3 million square km
GDP Growth 7.6%
Number of Households 350 million
Average Family Size 3.6 to 4
Population Growth 1.25%
Sex Ratio 944/1000 ~ 1:1

Population Distribution of India

Age Group Population Percentage*
0-15 30%
15-25 20%
25-50 30%
50+ 20%
*these numbers are just the approximate ones which can be used for guesstimates purpose

Population Distribution by Income

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Income Group Population Percentages*
Upper Middle Class (>32k per month) 10%
Middle Class (16k to 32k per month) 30%
Lower Middle Class (8k to 16k per month) 40%
BPL Class (<8k per month) 20%
*these numbers are just the approximate ones which can be used for guesstimates purpose

Population Distribution in India (Gender and Urban-Rural)

Total Population 1200

Males 620
Females 580
Sex Ratio 0.95*
Urban Population 350 (30%)
Rural Population 850 (70%)
Figures are in millions
* 950 females for 1000 males

Life Expectancy and Population Growth Statistics
Overall Expectancy 69 Years
Male Expectancy 67 Years
Female Expectancy 73 Years
Birth Rate 22*
Death Rate 7.5*
Pop. Growth Rate 1.25%
*Figures are for every 1000 individuals

Age-Wise Break-up of Population
Age Spread Population (%)
0-14 Years 350 (30%)
15-24 Years 250 (20%)
25-34 Years 200 (15%)
35-44 Years 150 (10%)
45-54 Years 150 (10%)
55+ Years 150 (10%)
Figures are in millions
Note: Median age for India is 25 (50% of Indians are below 25, 65% are below 35)

Income and Expenditure
Data Head India Urban Rural
Size of Household 5 5 5
Annual Household Income 75,000 1,00,000 50,000
% Savings - 30% 20%

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Expenses (Food) 50% 45% 55%
Expenses (Travel) 10% 10% 10%
Expenses (Others) 40% 45% 35%
Poverty: Approx. 25% of the population lives below the poverty line ($1.25 or Rs.75

Class Distribution by Annual Household Income
Annual Income of Household Percentage
Low Income (Household Income < 45,000) 20%
Middle Income (45,000 to 1,80,000) 60%
High Income (Household Income> 1,80,000) 20%

Demographics by Religion
Religion Hindu Muslim Christian Others
Populatio 80% 15% 2% 3%
n

Population of Major Cities

Area Population
Mumbai 20 million
Delhi 18.6 million
NCR 24 million
Bangalore 11.5 million
Chennai 8.2 million
Kolkata 5 million
Maharashtra 122 million

NOTE: In Addition to this, note the population of your native state and city

• Population of top 10 Cities: 66 Million

• Population of next 50 Cities: 66 Million
• Population of next 100 Cities: 45 Million

Complete details: https://en.wikipedia.org/wiki/Demographics_of_India

Sector-wise Employment Distribution
Sector India (%) Urban (%) Rural (%)
Agriculture 40% 5% 60%
Industries 10% 20% 5%
Services 50% 75% 35%

Literacy Rate of India

India 74%

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Male 82%
Female 65%
Rural 69%
Urban 85%

MATHS (order of magnitude)

Lakh 105
Million 106
Crore 107
Billion 109
Trillion 1012
Formula for total Product Requirement
Product Required = Existing Product that get obsolete + New Product required

= Q/n + Q*r

Q = Existing number of product

n = Average age of product
r = Average rate of growth (which can be taken as GDP growth rate)

For E.g.: For calculating the market of Automobile tyres: we are required to take care of both new tyre
consumed by new cars and the replacement of old tyres.

Approaches
Demand Side:
1) We can start the guesstimates from the demand side, if we are sure that demand = supply
2) In this approach, we can start with the overall number and along the process, we can go on eliminating the
numbers/fraction which are not relevant to the subject at hand
3) In this approach, it’s important to think of all the factors which are to be eliminated.
4) This approach approximately gives a larger number than Supply side as it depends on how many eliminations
have been made

Supply Side
1) We can start the guesstimates from supply side, if we are not sure of supply and there is possibility of supply
being unequal to demand
2) In this approach, we have to take into consideration all the sources that can contribute to the required
subject into consideration
3) MECE (Mutually Exclusive & Collectively Exhaustive) is very important in this case. There should not be
overlapping among the sources considered and collectively all the sources must add to represent almost
entire sample space
4) This approach approximately gives a smaller number than Demand side as it depends on how many sources
have been considered, since it’s practically impossible to take into account all the sources, therefore it gives,
in general, a lesser number.

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IMPORTANT NOTES
1) In most other consulting firms you will be having around 7-8 minutes to solve the guesstimate, so segregate
the questions only in 4-5 (max) sections, so that at the end, a final answer can be attained. They will be
interested in the approach rather than the number of segregations, moreover too many segregations will
make your calculations complex.
2) Guesstimates can be of any type. Consulting companies like to ask guesstimates based on personal profile of
the student, so it is recommended that the candidate is well versed with the data and some useful
information about the following thing:
a. Home State & Home City
b. Current State & Current City
c. Industry & Company where he/she has worked in past
d. Hobbies and Interests (imp)
e. UG & PG College
3) Guesstimates can be based on recent events in political, economic, political and sports fields (e.g.: Calculate
the ticket revenue of the Rio Olympic)
4) While doing calculation approx. the number to the nearest 10's, so that the calculation is simplified
5) For all the number that is being assumed during the course of the guesstimate, its highly recommended to
give the justification to the interviewer for why that value has been taken. This is very important step in
creating a positive image before interviewer as this will show that the candidate has idea of how to use data
already known

Start BIG vs Start Small Approaches to solve guesstimates
Problem: Find the volume of white paints sold in India per year?
Start Big Approach:

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India's population-> Family Size -> No. of House holds

Frequency of Painting each house -> Yearly rate of houses

painted

Sq meterof painted by a leter of paint -> total square meter

of walls in a house -> Liter of paints per house

Total volume for India = Liters of paint per house * No. of

Houses painter per year


Start Small Approach:

City's population-> Family Size -> No. of House holds

Frequency of Painting each house -> Yearly rate of houses painted

Sq meter of painted by a leter of paint -> total square meter of walls in

a house -> Liter of paints per house

Total volume per City= Liters of paint per house * No. of Houses painter
per year

Total volume per year = Total volume per city * No. of City

Sample Guesstimates
1) Estimate the market for bicycles India.
2) Estimate the litres of cola sold in Delhi per day
3) Estimate the number of denims sold in India in a year.
4) Estimate the amount of petrol used in Delhi per day
5) Estimate the market size of paint industry in India
6) Estimate the amount of water that can fill an aircraft

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