Tara Inc.

Tara Inc.

Tara – A Buddhist savior-goddess with numerous forms, widely popular in Nepal and Tibet.

Tara Inc.

Agenda

• Company

• Current Situation

• Shoe Industry

• Country

• Risks

• Analysis

• Conclusion

Tara Inc.

Company

• New business model and idea– For Profit company with non profit

characteristics– Tara’s Shareholders are impoverished people– Sources from plant located in Gabon

• Current situation – Need Financing

Tara Inc.

The Shoe Industry

• Competitive Landscape (3 major players)

• Extremely labor intensive

• High gross margins– Profit margins are eroded through high R&D

and marketing costs

• Susceptible to niche players

Tara Inc.

Company Strategy

• Competitive advantage – quality shoes at value prices and world stewardship

• Pricing Advantages– R&D– Marketing– Sales Force

• Internet will play a key role• Maximize shareholder value• Focused on niche shoe market (running and cross

trainers)

Tara Inc.

Republique Gabonaise (Gabon)

• Population: 1.14 MM

• GDP Growth: 1.9%

• GDP/Capita: $3,915 US

• Inflation Rate: 2.9%

• Short Term Interest Rates: 22%

• Unemployment Rate: 22%

• Exchange Rate: US$1: 647CFAF

Macroeconomic Data (1995)

Tara Inc.

Gabon

• Favorable country specifics– Relatively stable government republic; multiparty

presidential regime (opposition parties legalized in 1990)

– Active FDI growth over past 5 yrs

– Well established distribution infrastructure

– Macroeconomic policy move towards diversity

– US economic aid outpost

– High unemployment – Higher worker quality

Tara Inc.

Country Risk Measures

Tara Inc.

Project Risks

Project Risks Mitigating FactorsTechnology The technologies are known and well established

Abiltiy to convince IFC to invest Project coincides with their mission statement

IMF relations deteriorate As long as government continues its macroeconomic policy reforms, relationship should continue to grow

Completion Risks Well established industry (and US outpost)

Electricity Same sourcing as oil companies

Labor High unemployment rate. Company mission to assist local population will attract employees

Information Cost Experiences managers both external and in Gabon will operate plant

Labor Skills Mandatory employee training workshops

US risk premium for Shoe project Includes risks of operating in an average shoe manufacturer in the US

Tara Inc.

Sovereign Risks

Soverign Risk Mitigating FactorsCurrency Only labor cost is affected

Hyper Inflation To the extent Tara will need local currency, this will not affect company much as long as purchasing parity holds

Creeping/Complete Expropriation A Majority of after tax profits are returned to the country.

Capital Control Again, majority of A.T. profits are held within country

War Slight chance for this occurance and location next to US Outpost

Corruption Most likely in small amounts. IFC offsets large corruption factors

Tara Inc.

Analysis – Economic Return - Conclusions

See Excel Spreadsheet

Tara Inc.

Q&A