Your SlideShare is downloading. ×
Product Disclosure Document_V3
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Introducing the official SlideShare app

Stunning, full-screen experience for iPhone and Android

Text the download link to your phone

Standard text messaging rates apply

Product Disclosure Document_V3

2,132
views

Published on

sandal,sandalwood,sandalwood,farming,sandalwood Farming in india,sandalwood farming in hyderabad,sandalwood farms for sale,sandalwood uses benefits,sandalwood agro business,sandalwood …

sandal,sandalwood,sandalwood,farming,sandalwood Farming in india,sandalwood farming in hyderabad,sandalwood farms for sale,sandalwood uses benefits,sandalwood agro business,sandalwood investment
sandalwood oil,sandalwood diseases,hybrid sandalwood,organic sandalwood,sandalwood cost,sandalwood nurcery,sandalwood price
sandalwood market,sandalwood seeds,sandalwood plants,sandalwood plantation,sandal tree,sandalwood uses,sandalwood powder,sandalwood for acne
sandalwood incence,sandalwood incence Sticks,sandalwood industry,sandalwood information,sandalwood items,sandalwood images,sandalwood paste,sandalwood price
sandalwood products,sandalwood paste for face,sandalwood plants wanted,sandalwood plants needed,sandalwood plants nurseruy,sandalwood plants information
sandalwood plants sale,sandalwood plants assistance,sandalwood plants information,sandalwood oil India,sandalwood oil hyderabad,sandalwood oil uses,sandalwood oil benefits,sandalwood oil sale
sandalwood oil for skin,sandalwood oil for face,sandalwood oil for hair,sandalwood oil in Bangalore,sandalwood oil smell,sandalwood seeds wanted,sandalwood seeds sale,sandalwood seeds oil
sandalwood seeds in india,sandalwood seeds in Andhra Pradesh,sandalwood seeds in Hyderabad,sandalwood seeds in facial,sandalwood seeds gemination,sandalwood seeds cultivation,sandalwood seeds growth,organic sandalwood plantation
organic sandal,organic sandalwood,organic sandal powder,organic sandal plant,organic sandal seed,organic sandalwood oil,hybrid sandals,sandalwood clearence,sandalwood club,sandalwood essential


0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
2,132
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
56
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. AKSHAYA VANAM 2011AKSHAYA VANAM INDIAN SANDALWOOD PRODUCT DISCLOSURE DOCUMENT INDIAN SANDALWOO D 2011 1
  • 2. CORPORATE DIRECTORY Plantation Promoter & Manager Siri Agri Group Siri Agri Group Door # 22/7, GF Saptagiri Nilayam, Kothapet, Hyderabad – 500 035Sales and Marketing8am.in AKSHAYA VANAM 2011Siri Agri GroupDoor # 22/7, GFSaptagiri Nilayam,Kothapet,Hyderabad – 500 035Siri Agri Group 2
  • 3. Important NoticesElectronic Product Disclosure DocumentThis PDD will be available for download on the following website: www.8am.in. Any personaccessing the electronic version of this PDD for the purpose of investing must be an Indianresident.Need Help?If you have any questions about investing you should speak to your adviser. If you have questionsabout the Project investment in particular, call us on 040-64640606 or visit our website AKSHAYA VANAM 2011www.8am.in.PhotographsUnless otherwise stated, the photographs contained in this PDD are for illustrative purposes only.They do not represent, or purport to represent assets of the Siri Agri Group or the ProjectManager. 3
  • 4. Siri Agri Group engages a team of Experts to carefully select land suited for the growth of Indian Sandalwood (Santalum album). AKSHAYA VANAM 2011Siri Agri Group 4
  • 5. CONTENTSAn overview of Indian Sandalwood 6Why Indian Sandalwood? 7The Sandalwood Market 9– Supply and DemandWhat do we propose? 13Project Details 17Indian Sandalwood Plantation 21Project Returns 22Key Investment Features 23Risks and Safeguards 24Investment Options 29An Ethical Investment 34 AKSHAYA VANAM 2011– The Environment and CommunityThe Siri Agri Group 37Plantation Management 37Expert Sandalwood Marketing 41Report 5
  • 6. An overview of Indian Sandalwood: andalwood is the name of a class demand. Indian Sandalwood Cultivation inS of fragrant woods from trees the genus Santalum. The woods areheavy, yellow, and fine-grained, and unlike in India area has reduced from 5,400 square km in Karnataka and 3,500 square km in Tamil Nadu a few years ago, the acreage had fallenmany other aromatic woods they retain their steeply and the yield had come down fromfragrance for decades. As well as using the 3,000 to 4,000 tonnes a year to just 200 to 300harvested and cut wood in-situ, essential tonnes now.oils are also extracted from the woods for use.Both the wood and the oil produce a distinctive Due to overharvesting and lack of re-fragrance that has been highly valued for forestation, India will soon be in an absurdcenturies. Consequently, the slow-growing position to import Indian Sandalwood fromtrees have been overharvested in many areas. Australia, who would be world leaders in Indian sandalwood in the years to come.Two hundred years of public monopoly and Samples collected from Australian trees of 6preservation and harassment of those on years and 9 years confirmed the oil contentwhose land the plant grew were enough to and profitability.make the royal wood vanish. Sandalwood can be intercropped with fruitSandalwood species are found in India, bearing trees like Grafted tamarind, Amla,Bangladesh, Sri Lanka, Australia, Indonesia, Pomegranate, Drum stick, Karivepillai, etc,and the Pacific Islands. In India, Bangladesh these give quick returns from 2nd to 3rd yearand Sri Lanka it is called Chandan and India to the farmer, to reduce the burden oftill recently was the world leader on the list of maintaining the long term crop.exporters by supplying over 95% of the global AKSHAYA VANAM 2011Siri Agri Group 6
  • 7. Why Indian Sandalwood?Indian sandalwood is a small tropical tree, themost commonly known source of sandalwood. What is heartwood?This species has been utilized, cultivated andtraded for many years, Asian cultures placing Heartwood is found at the core of the tree andgreat significance on its fragrant and medicinal has been sold at Indian auctions for anqualities. average of over 50 lacs per tonne (September 2009). This aromatic wood is a popularIndian Sandalwood has been the primary material for Asian carvings and handicrafts,source of sandalwood and the derived oil. It particularly in Taiwan and China, wherehas use as wood and oil in religious practices. demand is growing. It is also usedIt also features as a construction material in extensively for religious and culturaltemples and elsewhere. purposes throughout India and the Middle East.The main source of truesandalwood, Santalum. Album is a protected The renowned Sandalwood aroma comesspecies, and demand for it cannot be met. from the oil found in the heartwood of theMany species of plants are traded as tree. Through a process of distillation the oil"sandalwood". Other species have low is extracted from the heartwood and is soldcommercial value and the Sandalwood Oil as a fragrance ingredient to the globalcontent in not as much as Indian Sandalwood beauty industry and flavoring agent inor Santalum Album. chewing products. This highly valued oil trades for around INR 7 Crores per tonne –Producing commercially valuable sandalwood that’s Rs 70,000 per kilogram.with high levels of fragrance oilsrequires Sandal trees to be a minimum of The value of heartwood is largelyeight years old, but at least fourteen years is determined by the quantity and quality of thepreferred. Unlike most trees, sandalwood is oil it contains. Indian Sandalwood isharvested by toppling the entire tree instead of considered to be the super premium speciessawing them down at the trunk close to ground of Sandalwood because it has the highest oillevel. This way, wood from the stump yield and the oil has the greatest(heartwood) and root can also be used. concentration of the valuable constituent AKSHAYA VANAM 2011 alpha and beta Santalols. 7
  • 8. harvest. In contrast large reserves of wild Australian Sandalwood are found throughout Western Australia. A difference in growth rate makes Indian Sandalwood the preferred species for private commercial cultivation. As a tropical hardwood Indian Sandalwood will grow to Harvest in 14 years under irrigation, whereas the Australian species is a slow- growing tree suited to an arid/desert climate. Indian Sandalwood oil has an established global demand and has been in use in perfumery since the Persian times. Indian Sandalwood oil has more than twice the Sandalwood Oil content compared to theAustralian or Indian Sandalwood? Australian Sandalwood variety. Heartwood from mature Indian Sandalwood trees also has around 2 times the oil content of wildIndian Sandalwood (Santalum album) Australian Sandalwood trees.heartwood was sold for more than 50 lacs pertonne. The higher value heartwood, fast-growing characteristics and supply-demandThe global supply of wild Indian Sandalwood imbalance are reasons why Siri Agri Groupis decreasing due to poaching and over- chooses to grow Indian Sandalwood. AKSHAYA VANAM 2011Siri Agri Group 8
  • 9. The Sandalwood Market – supply and demandThere is a lot of detailed information about Established DemandSandalwood contained in the ExpertMarketing Reports contained in this PDD. The popularity of Sandalwood is seen in theThis report should be read completely to wide range of countries that import the woodunderstand the scope of Sandalwood and oil. Sandalwood and Sandalwood oil isMarket. currently imported by the Middle East, Japan, China, Taiwan, Hong Kong, Singapore, Germany, Switzerland, France, Australia, theFor thousands of years Indian Sandalwood UK and the USA. Trade statistics show thathas been traded for use in perfumes, carvings, Taiwan alone imported over 2,400 tonnes ofmedicines and worship around the globe. Sandalwood wood in 2010. The USADifferent parts of the Sandalwood tree are imported close to 28,900 kilograms ofused to produce this variety of products. Sandalwood oil in the same year.Sandalwoods’ heartwood is used in religious Strong demand for oil in the USA andcarvings, medicines and to produce Indian Europe is driven by the fragrance industry,Sandalwood oil, a valuable fragrance where Sandalwood oil remains an importantingredient that features in many of the world’s ingredient in fragranced soaps, toiletries andmost famous perfumes. The outer part of the perfumes. It is in the Asian markets,tree known as sapwood and the spent charge however, that Sandalwood has the most(the wood by-product created once oil has cultural significance.been distilled from the heartwood) remainpopular ingredients in incense and joss stick India, Taiwan and China remain significantproduction. consumers of Sandalwood globally. China was historically a major importer of Sandalwood. Since the end of import restrictions in 1999 Chinese demand for Sandalwood is reported to have grown significantly. It is expected that these changed regulations and the increasing AKSHAYA VANAM 2011 wealth of China (population 1.34-billion people – 2011 est.) could continue to increase the Chinese import of Sandalwood. 9
  • 10. Dwindling domestic supplies of the species match these in a synthetic substitute. Despiteare also expected to drive India to import the availability of synthetics, commentatorssignificant volumes of wood. In 2005 alone estimate that the natural cosmetic market isover 2,000 tonnes of Sandalwood was growing at a rate of 15% per annum, driven byimported to supplement Indian demand. While consumer demand for natural ingredients. Thethe import of Sandalwood is currently banned unique properties of the oil and the growingin India, this is expected to be lifted as the trend towards natural products suggest thatdomestic supply continues to drop. Demand demand for the natural oil will remain high.for the heartwood of Indian Sandalwood isoften derived from the demand for Indian This trend, as well as the availability of aSandalwood oil, a valuable ingredient used in sustainable supply of Indian Sandalwood isfragrances worldwide and chewing products in expected to stimulate demand in the globalIndia. soaps, perfumery and cosmetics industries, alongside China and India where growingAs the oil is made up of a large number of wealth is expected to drive demand for thisdifferent molecules, it is extremely difficult to culturally significant ingredient.DWINDLING WILD SUPPLIES AND DEMAND CENTRED ON THEINCREASINGLY PROSPEROUS ASIAN NATIONS PRODUCE EXCITINGMARKET DYNAMICS FOR THIS ANCIENT INGREDIENT WHICH FEATURESIN INCENSE, PERFUME, CARVINGS, MEDICINES AND WORSHIP AROUNDTHE GLOBE. AKSHAYA VANAM 2011Siri Agri Group 10
  • 11. Dwindling SupplySupply of Indian Sandalwood has reached Even because of dwindling supply, Indiancritical levels in India (around 95% of the total Sandalwood still offers superiorannual Indian Sandalwood supply comes from characteristics, making other speciesIndia); with the tree recognized as a vulnerable substitutes. It is expected that when a reliablespecies on the World Conservation Union’s supply of Indian Sandalwood is available,(IUCN) Threatened Species Red list. consumption of Indian Sandalwood will increase further.Wild sources and government stockpiles areexpected to be at very low level. Supply from Cultivation and harvest of Indian SandalwoodIndonesia and East Timor has already virtually from India, is always expected to be betterceased. There is now a growing demand for a than Indian species growing someplace else.sustainable source of Indian Sandalwood, withplantation-grown trees offering an important Even though supplies from Australia will bringalternative to the traditional wild sources. some relief for few years, the quality of oil from Siri Agri Group’s (India) plantation is expected to be of much higher value. AKSHAYA VANAM 2011 11
  • 12. Auction PriceThe price of Indian Sandalwood has continued supply of Indian Sandalwood in India, onlyto increase at a compounded rate of 18% over small quantities of heartwood have been sold atthe last 18 years. At the auction held in recent auctions.September 2009 small volumes of wildheartwood were sold for an average price of Rs Consistent price growth has been the result50 lacs per tonne*. Due to the decline in the of the growing imbalance between the supply and demand for Indian Sandalwood that characterizes this market. AKSHAYA VANAM 2011Siri Agri Group 12
  • 13. What do we propose?1. Siri Agri Group engages a team ofExperts to carefully select land suited to thegrowth of Indian Sandalwood (Santalumalbum). We will plant Indian Sandalwood inand around Hyderabad. The region’s highlevels of sunshine, suitable soil types andaccess to ample water resources make thisthe preferred area for cultivation. The land willbe conditioned and prepared prior to planting. 3. Sandalwood is a parasite and needs to tap nutrients and water from other trees to survive. Watermelon and Raggi, have been selected as short-term host, Teakwood has been selected as mid-term host and Mango has been selected as a long-term host considering their genetic value for Sandalwood and there economic2. Siri Agri Group, in association withAcharya Muralidhar, has developed a seed value, which will help project sustain as a self-financed project after 4th year of plantation. These are planted in careful configuration with the Sandalwood with the AKSHAYA VANAM 2011orchard designed to improve the genetics of aim of maximizing the growth of thethe seed stock to produce trees of the highest Sandalwood trees.quality. Superior trees have been selectedbased on growth characteristics and oilcontent for the seeds. These are then controlpollinated to produce seed for use in theproject. 13
  • 14. ingredient Indian Sandalwood oil which is used in perfumes worldwide.4. At the end of the 4th year afterplantation, a tree count will be conducted to 7. Wood will be processed and sold asassess survival rates of Sandalwood and host Cleaned Logs. It is anticipated that the majortrees and any necessary replanting will be buyers and end users in India of Cleanedconducted. Logs will be Government of Karnataka, Karnataka Soaps & Detergents Ltd.,5. Wood will be processed and sold asCleaned Logs in the government auction in Karnataka Handlooms etc.Salem, Tamil Nadu. As per the prevailing law,Sandalwood auction price would be decidedby the government.6. It is anticipated that Harvests will beconducted at the age of 15 years. Heartwood AKSHAYA VANAM 2011– the most valuable oil bearing section of thewood – is concentrated in the butt and lowerpart of the tree. Advanced harvestingtechniques are being implemented tomaximize the recovery of this valuableresource. Fragrance industry will distil thewood to extract the valuable fragranceSiri Agri Group 14
  • 15. AKSHAYA VANAM 201115
  • 16. Siri Agri Group AKSHAYA VANAM 201116
  • 17. Project DetailsWhat are we offering?Siri Agri Group’s ‘Akshaya Vanam’ Sandalwood Project 2011 gives you the opportunity to grow yourown Indian Sandalwood, a wood with strong demand and diminishing supply.The average auction price for wild heartwood in the Indian auctions of Tamil Nadu and Kerala haverisen from Rs 2 lacs per tonne in 1990/1991 to Rs 50 lacs per tonne in September 2009 (on smallvolumes), representing an annual compounded growth rate of 18% over 18 years.A diminishing supply, coupled with Sandalwood’s important role in Indian and other Asian culturesis expected to ensure that demand remains high and the upward price pressure continues. Itshould be noted that the Siri Agri Group’s Chief Executive Scientist Dr. Anantha Padmanabha isof the opinion that these prices will continue to rise at the rate of at least 5% per annum for theforeseeable future. AKSHAYA VANAM 2011 17
  • 18. How does the project work?Siri Agri Group invites you to invest in the reference numbers on a plan of the Plantation.‘Akshaya Vanam’ Sandalwood Project 2011 This plan will be forwarded to you once your(the ‘Project’). Sandalwood Farm is booked/registered on your name.Siri Agri Group is the issuer of this ProductDisclosure Document (‘PDD’) and of interests • Siri Agri Group will manage thein the Project (called ‘Sandalwood farms’ Sandalwood Farm as one collective andwithin this PDD). commercially viable plantation. This relation continues until all of the Indian SandalwoodThe Project consists of up to 250 Acres. There has been harvested.is a minimum subscription to the Project ofone fourth of an acre. As a Grower you will • The Harvest is expected to take placeestablish and maintain your own stand of during Year 15.Indian Sandalwood by:• Each land plot is one fourth of an acre. EachSandalwood Farm will be identifiable by How will the Sandalwood be planted? Sandalwood needs host trees to help it to grow. As a hemi-parasitic tree, the roots of the Sandalwood tree attach to the roots of the host to draw nutrients and water. Over the course of its life each Sandalwood tree needs a selection of host trees. Host trees are planted in configuration with the Sandalwood seedlings. Tree counts are conducted regularly. The project has a targeted survival rate of at least 85% Sandalwood trees per acre at Harvest. AKSHAYA VANAM 2011Siri Agri Group 18
  • 19. How will the Sandalwood be How will the Sandalwood be harvested?maintained? The heartwood is contained within the largerThe Plantation will be maintained by Siri Agri branches, log, roots and butt of theGroup in accordance with a comprehensive Sandalwood Tree. The butt and roots containManagement Plan. Annual maintenance will up to one-third of the heartwood. Harvestinclude Weeding and Pruning, Nutrient methods are being developed to maximize theAnalysis to determine Fertilizer Requirements, recovery of this valuable resource. Siri AgriFire Control Management, Security Group intends to commence harvest of theManagement and Regulatory Requirements. Sandalwood in Year 15 after plantation. The precise timing of the Harvest will be determined by forestry management criteria, the aim being to maximize the revenue generated by the Project.*As shown above Indian Sandalwood is a hemi-parasitic species. The secondary host will naturally die after several years and the IndianSandalwood tree will continue growing on a tertiary host tree.How will the Sandalwood be AKSHAYA VANAM 2011sold? deduction of the Costs of Harvesting andAt the time of Harvest, Siri Agri Group will Processing, and any additional costssell the harvest at the Government Auction in associated with the Selling and MarketingSalem, Tamil Nadu, as per the current Fee. Updates will be communicated toregulatory requirement or will find a optimal investors via a regular newsletter.market if the sale of Sandalwood is allowed inthe open market. Proceeds of sale from thewood will be distributed to you after a 19
  • 20. the Carbon Credits to which they are entitled toWhat if there is damage to the the Siri Agri Group.Plantation or Trees onSandalwood Farms?Siri Agri Group will take up the Re-plantationof the Sandalwood trees up till 4th year incase there is any damage to the plantation orif Siri Agri group feels the need for re-plantation.Carbon creditsCarbon Credits are not factored into theforecast returns for this project as there is noofficial carbon trading scheme in place at thistime. Under the Lease and ManagementAgreement the Grower agrees to transfer all of AKSHAYA VANAM 2011*Regular maintenance such as weeding is undertaken in accordance with the Plantation Management Plan.Siri Agri Group 20
  • 21. The Indian Sandalwood Plantation pass through the projected farm. This land hasGrowing considerations previously not been farmed making it nutrient rich.In order to grow Indian Sandalwoodsuccessfully the following growing conditions Dr. H.S Anantha Padmanabha with over 40must be met: years of experience in Sandalwood Plantation and his active association with• A Tropical Climate; Australian Sandalwood industry (TPS:• Regular Watering; tropical Forestry Services) and Acharya• Free-Draining Soils; Muralidhar extensive research on Seed• Land which has a flat to undulating genetics, has enabled Siri Agri Group totopography and is not subject to water- confidently minimize any risk of termite orlogging; and pest attack on the crop.• Freedom from termite attack. Where will the Plantation be located?The Plantation in and around Hyderabadsatisfies all of the above requirements. Siri Agri Group has acquired significant land area (250 acres) suited to the growth ofSoils are selected on the advice of experts Indian Sandalwood. Siri Agri Group iswho assess soil depth, fertility and moisture currently engaged in further land acquisitionscharacteristics by doing a detail soil test. Soil near the city of Hyderabad in Andhratest confirm that it is a free water draining soil. Pradesh. Any land acquired or used will be subject to the land acquisition due diligenceThe land is flat with natural counter-bounding protocols Siri Agri Group currently has indone by government officials to control soil place. Planting will take place after the dry season (usually July and August) and theerosion and has access to abundant irrigation land will be subject to an intensivewater resources both within the farm (wells) or preparation program during the precedingwater can be taken on Subsidy from dry season. AKSHAYA VANAM 2011government using the Godavari Canal that 21
  • 22. Project ReturnsTHE FOLLOWING SECTION PROVIDES GROWERS WITH INFORMATION ONPROJECT RETURNS.Price conditions might achieve this oil content, it is more likely that a lower average figure of perhaps 3.15% oil content may be achieved.Dr. Anantha Padmanabha, Chief ExecutiveScientist and Forestry and Sandalwood • Forest Produce includes host trees (TeakMarketing Expert from Bangalore who has and Mango) and other parts of thefocused his expertise on the Indian Sandalwood tree (Sap Wood) (other than theSandalwood Tree, has written an Expert Seeds). These products will haveMarketing Report included in this document. commercial value and the profits will beIndian Sandalwood heartwood sold at an shared on 50:50 Profit sharing ratio after theaverage of over 50 lacs per tonne (on small expenses for the plantation management havevolumes) at the State of Tamil Nadu Forestry been covered.Department and Kerala auctions held inSeptember 2009. Average auction prices for • Dr. Padmanabha has indicated in hisheartwood have increased at a compounded Expert Marketing Report that he anticipatesannual rate of 18% over 18 years. ongoing price increases for heartwood of at least 5% per annum for the life of the Project. AKSHAYA VANAM 2011• The wood currently sold at the Tamil Naduauction is of a high quality, tending to containon average 4.0% to 5.5% oil. While it ispossible that wood grown in plantationSiri Agri Group 22
  • 23. Key Investment Features• This project aims to produce high quality • The project is expected to be completed inIndian Sandalwood (Santalum album), a 15 years, with the Harvest expected to occurcommodity that has been traded for thousands when the Sandalwood trees are 15 years old.of years. This aromatic wood is internationallyprized for use in religious worship, joss sticksand to extract Indian Sandalwood oil, animportant ingredient used in fine fragrances.• The average price of wild Indian Sandalwoodheartwood has had a compounded increase of18% per annum over the last 18 years due tostrong demand and diminishing supply thathas seen the tree recognized on the WorldConservation Union’s (IUCN) ThreatenedSpecies Red list.• Auction prices for small volumes ofheartwood in India averaged over Rs 50 Lacsper tonne in September 2009 - confirmingIndian Sandalwood’s status as one of theworld’s most valuable tropical hardwoods.• Siri Agri Group is a specialist IndianSandalwood plantation manager, under theguidance of Dr. H.S Anantha Padmanabhawith his over 40 years experience in thecultivation of Indian Sandalwood.• Siri Agri Group has an experienced team ofprofessional foresters, agronomists, researchofficers and agricultural scientists who AKSHAYA VANAM 2011manage the Plantations. An ongoing programof monitoring and research is used to maintaingood growth and survival rates.• Siri Agri Group is committed to the long-term development of Indian Sandalwoodindustry. 23
  • 24. Risks and SafeguardsAn investment in this Project is long term and we at Siri Agri Group work to safeguard ourinvestors with our expertise and experience. Below are some of the specific and general risks andsafeguards against such risk by Siri Agri Group.AGRICULTURAL RISKS area wherein the staff/guests are frisked for security reasons.Fire: c) The farmland undergoes regular process of weeding wild grass thusFire normally happens in unattended reducing the fast growth of fire in casesurroundings such as in wild forests. However, of one.Siri Agri Group has understood the damagecapacity of such untoward incidents and has d) The drip system adopted by Siri Agri AKSHAYA VANAM 2011planned well in advance. Group are equipped with heat sensors which automatically start sprinkling at a) The first step of security planning is the top capacity when there is a done by constructing a boundary wall sudden change in the temperature. thus reducing the risk of intentional These act like fire extinguishers in planned fire outbreaks. case any untoward incident happens. b) The entire farm is sealed with single point entry system into the cultivationSiri Agri Group 24
  • 25. e) The entire farm is well planned with approach roads for a fire- brigade b) The current project involves plantation vehicle to reach any point without of 1,12,500 trees which naturally hindrance. decreases the environmental temperature upto 9 degree Celsius f) The permanent staff stationed at the compared to the natural temperature project is trained /equipped to handle thus ensuring that even in peak summer minor fire outbreaks. the temperature in the farms never exceed 40 degree Celsius.Climate c) The project area selected has never a) Andhra Pradesh, especially Hyderabad experienced extreme wind or cyclone; and surroundings are known to however Saplings are planted with a experience moderate climate. 6ft Rod/Bamboo for support till Sandalwood Farming survival need of saplings are strong enough to support climate varies from 5 degree Celsius to themselves. 50 degree Celsius.Water / drought: a) Sandalwood trees consume minimal water for its growth when compared d) As the last resort, in case of failure of all to its counterparts. The trees need the above planning, water can be availed on watering only 5 months in a year and subsidy from the Godavari canal which runs at the intervals of 14 days each. within our project. Soil: b) The current project has water availability from 9 ft onwards. Bore- The land selected for plantation goes wells dug in the farm are done after through proper soil test for their PH value. a firm geological survey and are dug The current project at Aleru has been almost 10 times more than the selected post this tests. Even in scenarios current water availability. where the ph value reduces interim, out AKSHAYA VANAM 2011 scientists have identified artificial means of c) As a contingency planning Ground substituting it. Water Recharging Module is implemented wherein water beds a) The initial test have proved Aleru and are prepared within the entire farm surroundings to be very fertile for by digging wells upto 30 feet and Sandalwood cultivation specially filling them with layers of rocks and (Santalum album) sand beds. b) The surrounding has living sandalwood trees aged 4-6 years in the surroundings proving its capability. 25
  • 26. Mortality/Failure %: rate in our project is upto 18% which we try to further bring down by following the belowSiri Agri Group considers this factor as the mentioned parameters:most important factor in which the companyvery well planned. Mortality/Failure % is very a) SIRI AGRI GROUP has an independentcommon in an unorganized farming. seed orchard designed to improve theFreelancers, individual farmers, non agro genetics of the seed stock to producebased farmers like commercial real-estate trees of the highest quality. Superiorventures etc fall prey to this loss. This is a long trees are selected based on growthterm project and people try to cut the cost at characteristics and oil content. Thesethe initial levels. I.E purchasing sapling at the are then control pollinated to produceleast cost possible without knowing the crop seed for use in the project.genetics , not concentrating on soil fertility orpre-planning for soil erosion, not spending on b) The saplings from this seeds are thenwater harvesting or contingency planning, grown in nursery for a period of 12compromising on security parameters, months before planting it into thecompromising on the cost to take expert cultivation area to further reduce theassistance etc Let us give you an example of count of dead, week, infertile andwhat we are trying to say : let say you have impotent trees etc) Further, thebeen assigned a project in hand and as per hand pick saplings are planted in theyour analysis your target profit from that cultivation area and a back-upproject is Rs 1000 and the cost to do the saplings are still maintained on a 100:project is Rs 100. When you know the 3 ratio to further replant dead treesoutcome ratio is huge when compared to the until the fourth year. Mr. S V L Prasadcost then it doesn’t make sense to who is a member of Siri Agri Groupcompromise on the quality or cost which the specializes in re-plantation of trees)project needs to complete successfully. At Siri Trees planted in the cultivation areaAgri Group we handle this factor professionally are supported with rod/bamboo stickswithout compromising as we are 50% share till the 4 year to help its roots gainholders of the profit. The common mortality ground support.FINANCIAL RISKSDemand and Supply: India. Demand would never be affected as AKSHAYA VANAM 2011 right on date Sandalwood needs 80,000With the GO being realized it is very obvious for hectares of cultivation to pull-back its demandindividuals to take up Sandalwood farming and and this demand is increasing at 18% perwe at Siri Agri Group invite healthy annum and increasing.competitors as we are strongly working towardsthe restoration of Indian Sandalwood withinSiri Agri Group 26
  • 27. (i) The average per capita operational size of land holding in India is 1.33 ha, which is far below the world average of 3.7 ha per person. Further, land holdings have shown a marginal decrease from the holding size of that of a decade ago (1.41 ha) (ii) Financial capabilities of Indian Farmers which is no hidden secret. (iii) Even if our real-estate giants realize the potential ofYield Estimates and Quality Sandalwood and start selling their plots with SandalwoodIf the forecast yield is reduced due to higher trees, their quality would bethan anticipated fatality rates, or lower than beyond the market acceptabilityanticipated heartwood yields, the financial and the outcome can only beyields of this Project will be reduced. If the used for the carving industryquantity or the quality of the oil is lower than which pays the least comparedexpected this may also reduce the value of the to the oil content bearing trees.Heartwood timber. Yield estimates given in thisPDD are based largely on the experimental (iv) Small players and individualplantation and on the extrapolation of growth trying their hands would/mightrates and characteristics of other individual and also face the samesmall groups growing in the area. This is consequences of ending up theirsupported by scientific literature of Indian yields for the carving industrySandalwood which is largely based on trees due to poor crop management,growing in natural forests. Security management, skills & expertise managements.Competitor Risk: AKSHAYA VANAM 2011 (a) Indian government passing the GO for (v) Even if we get proper & healthy Indian citizens to cultivate/hold and competitors Sandalwood enjoy Sandalwood has already make Industry current demand needs experts in Australia to draw back from re- about 80,000 acres of cultivation cultivation of Indian Sandalwood as they each year to meet their current realize the risk and competition with demands. Indians counterparts growing Indian Sandalwood within India. (b) Competition within India is very minimal due to various reasons like 27
  • 28. security making it a single point entry and a secured gated farming module. d) The entire inner layer within the boundary walls are once again sealed with a security software which has been specially designed for Siri Agri Group (Security software companies name and details will not be disclosed for security reasons). (i) This software security walls are designed to alert and changes in the continuity of the security chain I.E in case of any breakage at any point of the wall the security software senses the breakage and alerts,MANAGEMENT RISKS (ii) Sensing of human penetration by sensing heat.Theft: a) Physical theft of Sandalwood starts from e) Resident Full time security personal are available in the farm in case need the 6th year onwards and we have made arises. Also trained Dogs will be kept at adequate precautions for the same. Siri the farm for monitoring of the boundary Agri Group spends upto 43 % of the wall and the cultivation area. expenditure on security. f) Inserting of RF Ids (Radio Frequency b) A very important point to be noted is the Ids) in the stem of all Sandalwood trees GO passed by Govt. of India. As per the at the age of four which is invisible to GO, the individual/company naked eyes however can trace the possessing/farming Sandalwood trees transportation of logs in worst to worst is/are the absolute owners of the same scenarios. and can enjoy the outcome of AKSHAYA VANAM 2011 Sandalwood without restrictions. Earlier Loss of key role personal: smuggling/theft prevailed as Sandalwood was considered as govt property and Siri Agri Group’s management team realizes individuals possessing it were that a long team project need proper planning prosecuted. this includes back-up planning for the key role personals. Our projects are carefully planned c) 7ft walls for the entire farm with 2ft of reducing the dependency on single Solar fencing form the 1st level of individual/s by transferring the knowledge toSiri Agri Group 28
  • 29. the next generation. We have a team of 12interns from various agricultural universities Insolvency of Siri Agri Group:who are full time employees of Siri Agri Groupand have undergone complete training in (i) Siri Agri Group is a well plannedhandling the crop module designed in case of establishment with strong financialany unforeseen events. background. As a company we have the financial capabilities of doing Independent farming without externalSiri Agri Group abandoning the project in funding.midterm: (ii) The project is planned to be selfThis is highly impossible as we do not get funded for all its maintenance costsprofits at the beginning by selling land/s as Sandalwood farming needs hosthowever get continuous and adequate profit plants at various levels whichright from the 3rd month of stating the project till manage continuous funding for management.the project ends. As a company Siri Agri Groupwould continue doing Sandalwood Farming (iii) The project design is so made thatyear after year thus capturing the Sandalwood the funding for END to END farmingmarket from the fifteenth year and thereafter. is collected from the investors’ rightAs income is shared on 50:50 Ratio the in the beginning to overcome anycompany will continue to retain interest and cash delinquencies from themonitor the farming process in the best possible investors.manner. The profit volume increases as the (iv) Experts’ involvement andyears pass and therefore reduces the risk of compensation has been wellabandoning the project in midterm. planned so as to sustain their continued interest in the project.Investment Options AKSHAYA VANAM 2011We provide maximum security & Returns for your investments?An investment involves your money being In general everyone only concentrates onentrusted into someone else’s hand for which the outcome projected for an investment.you expect some returns and it always The very important point which people tendinvolves risk. We are no exception. However to forget while investing is:what one needs to analyze is the amount ofrisk involved compared to the rewardcompensated for the risk taken. 29
  • 30. ii. Does the instrument/person/company, who does the project, has the capacity & expertise to generate income from your investments iii. What is the security being provided for your investments and is it justified. iv. What, where and when is the benefit for the person who handles your i. Where is your money being invested? investment. Does that source have the capacity to achieve profits as projected? v. Does the investment plan provide a profitable & anytime exit plan for you.We at Siri Agri Group have an answer for the above questions.1) We are investing your money to cultivate land is being registered in the name of theIndian Sandalwood which is the 2 nd Highest investors.Timber in demand in its kind world over and itscapacity to generate in Crores is beyond 4) This is a very important point to bedoubt. carefully examined before investing into any source. An individual/company can never get2) If anyone in this world can cultivate you profits for your investment unless theySandalwood we challenge that we would themselves are properly benefited. Thisstand the top amongst them. Our Chief applies even at ones workplace.Executive Scientist Dr. H S AnanthaPadmanabha has 40+ years of experience in WHAT: Siri Agri Group gets reasonablySandalwood cultivation and was/is the part of benefitted for the efforts which the companythe team (TFS : Tropical Forestry Services ) in & its team put in. We get rewarded 100% ofAustralia which has done successful the benefits for the first four years thereaftercultivation in over 35000 acres of land. we have a 50% share from the profits till the end of the project.3) We have shown the cost inquired to doSandalwood Farming which proves that we do WHERE: We get the profits from the shortnot profit from land sales. Therefore we are term crops like Raggi, Watermelon,able to provide the land to the investors at the vegetables etc. From the fifth year we getbase price. benefitted from the mango yields till the end AKSHAYA VANAM 2011 of the project. Tenth year we get a bonus inLand is the only unmovable instrument the form of the profits from Teak wood andinvolved in farming. All other assets like, at the end of the project we get a huge sharesaplings, bore-wells, drip, security walls, from the Sandalwood harvest.sump, guesthouse including, the time, effort &expertise of the team is invested on thisunmovable asset and this instrument calledSiri Agri Group 30
  • 31. WHEN: We get this profits right from the 5) Absolutely, since the investment is donebeginning of the project till its end and only on the base price required to do farming thewhen we do our work. investor has every option to exit anytime, with a benefit of course, Siri Agri Group adopts the Step-Up Pricing model.We at Siri Agri Group follow Step-Up Pricing Strategy. INR 285 INR 300 INR 235 INR 250 INR 210 INR 185 INR 165 INR 200 INR 150 INR 125 INR 150 INR 116 INR 100 INR 50 INR 0 Oct2010 Dec2010 Feb2011 June2011 Aug 2011 Dec2011 Mar2012 Dec2012 Price/Sqr. Yrd AKSHAYA VANAM 2011 Sapling Plantation Borewells and Drip Land clearence & Land-pit filling acquired Project Plantation Current Status idea 31
  • 32. Siri Agri Group AKSHAYA VANAM 201132
  • 33. AKSHAYA VANAM 201133
  • 34. An Ethical Investment– The Environment and Community ENVIRONMENT SIRI AGRI GROUP believes in thinking of tomorrow by adopting a proactive strategy to environmental management. Reducing exploitation Plantations provide an alternative source of Indian Sandalwood, helping to limit the rapid deforestation of wild Indian Sandalwood. Siri Agri Group s’ policy of acquiring lands in the Semi-Forestry Belt helps reduce the Food Cultivation Farms turning into commercial plantations. Lowering the Watertable Sandalwood is a deep-rooted tree that assists in lowering the watertable. This helps to combat the problem of salinity, where excessive salt in the land and water exists as a result of human activity such as crop farming. Reforestation AKSHAYA VANAM 2011 SIRI AGRI GROUP supports the protection of the locations natural ecosystems and unique environment which provides an important habitat for local bird and wildlife.Siri Agri Group 34
  • 35. Reducing Pesticides their experience in Sandalwood Plantation and reduce the dependency of fertilizers andSiri Agri Group is using innovation to pesticides. The naturally occurring Santalolscontinually minimize the use of pesticides. within the trees are also an effectiveHaving Dr. H.S Anantha Padmanabha, preventative against termites and other pests.Acharya Muralidhar and others as part of theteam, helps Siri Agri to make complete use ofETHICAL BEHAVIOUR Indigenous CommitmentSiri Agri Group believes that it can be part ofa better world, starting with Hyderabad. Siri Agri Group is itself committed to manyThrough an awareness and engagement of all training programs and information sharingstakeholders, Siri Agri Group aims to programs between the local farmers andpromote community living and a culture of individuals educating them to reduce the userespect within the community and the of harmful chemicals that endanger the veryenvironment. The company sees sustainable habitat that an Indian farmer is so dependentdevelopment as a way of ensuring shared for his living.long-term benefits for the community,environment and investors.Happy WorkersSiri Agri Group has a team of qualified staffdedicated to the cultivation, management andadministration of Indian Sandalwoodplantations and production. Our workersreceive ongoing training to support aproductive and innovative work environment.Community DevelopmentSiri Agri Group intends to initiate a programthat would give employment to Physically AKSHAYA VANAM 2011Challenged individuals through the self sustainagricultural employment model. 35
  • 36. Our values Respect Reliability Innovation AKSHAYA VANAM 2011Siri Agri Group 36
  • 37. The Siri Agri GroupOur Values: • Best Practice Management. • Ongoing Research and Development into Indian Sandalwood to protect and benefit individual investments. • Assess project risks and maintain and develop processes to limit these risks.Siri Agri Group uses research, innovation and expertise to minimize the risks inherent in apioneering project, with the aim of achieving the best possible outcome for Growers.Siri Agri Group is committed to becoming a single largest supplier of Heartwood and SandalwoodOil to Indian Market by the year 2026.Plantation Management manner designed to both address theSiri Agri Group will manage the Project solely Project risks and maximize the growth andfrom Plantation to Harvest and Sale. yield of the Plantation.Siri Agri Group: Key personnel• Is a group of an experienced Scientist,Agriculturist and Biologists with hands on The plantation management team is madeexperience of Indian Sandalwood Plantation up of people experienced in forestry, withgrowth and maintenance; significant experience in Indian Sandalwood and horticulture in India. Siri Agri Group• Has qualified professional staff with plantation management team now has over AKSHAYA VANAM 2011experience in all relevant disciplines. 15 full-time employees, with about one third of these holding tertiary qualifications. More details about the skills and experience of theManagement plan plantation management team are outlined below.The Plantation will be maintained inaccordance with a Management Plan. TheManagement Plan outlines the procedures tobe followed to ensure that the Project iscarried out in accordance with Governmentdirectives for Sandalwood Plantations and in a 37
  • 38. Dr. H.S. Anantha Padmanabha K Muralidhar Reddy (Acharya)Chief Executive Scientist Executive Environmental ScientistDr. H S Anantha Padmanabha, the forestry Acharya Muralidhar, a Master of Scienceconsultant, is an expert on sandalwood cell (environmental science & engineering)biology, who mastered the technology of University of Maryland College Park, MD, USAartificial cultivation of sandalwood. A scientist has worked as consulting engineer for over 10of 40 years experience in forestry in India, he years in USA. He has developed an innovativehad worked as a senior scientist at the low cost water disinfection technology, whichInstitute of Wood Science and Technology in is in the final stage of product developmentBangalore (India) from 1964 to 1998 and was (Patent Pending, US Patent Office,responsible for guiding research projects on Washington, DC).sandalwood and other forestry speciesincluding but not limited to techniques of Acharya has developed a simple & effectivegrowing sandalwood and decease and pests three step cow-based sustainable farmingaffecting forestry tree species. technique. He is currently working in over four districts of Andhra Pradesh conductionCurrently he is a Director of Karnataka training for farmers on cow-basedResearch Foundation and Advance sustainable farming.Technology Transfer, Bangalore, Consultantto Tropical Forestry Services Western Developed a rice cooking (traditional)Australia, consultant to Forest Rewards, process to enhance and promote health,Western Australia, and had served as especially for diabetes and musculo skeletalconsultant to Department of Conservation and problems.Land Development (CALM) and ForestProduct Commission (FPC) Government of Acharya also participated in core organizingWestern Australia from 1998 to 2002. He is team for several antipollution movementshonorary consultant to Karnataka Soaps and including a major Uranium mining projectDetergents Ltd, Bangalore, assisting and Nagarjuna Sagar area.providing guidance to farmers, corporatebodies and NGO’s in growing sandalwood in His varied interest in Vedic sciencesIndia. including Ayurvedha, Holistic Healing, Astrology, Yoga, Meditation, Agni Hothra,He has co-authored books on sandalwood and Traditional Knowledge Systemshave published over 150 publications in bothIndian and International journals. He was AKSHAYA VANAM 2011designated as chief Technical Advisor forsandalwood projects with the World BankFREE project (ICFRE) Government of India.Siri Agri Group 38
  • 39. S V L Prasad also Honorary Consultant for UrbanExecutive Horticulture Scientist (Advisory team) Landscaping of Bangalore for BBMP & BET. Mr. Prasad specializes in transplantation ofPost Graduate in Botany & Researcher in the very old (100+) years old Trees.field of Cytogenetic & Plant Physiology. He takes part in assisting the government inHe is an expert in Tissue Culture, Breeding transplanting Heritage trees instead of cuttingResistant Mutants for Gama radiation & them during road widening program.Environmental Pollutants, especially industrialeffluents. Kandalagunta Srinivas Rao, Agriculture Execution (Full Time)Mr. Prasad has had exposure since child hoodin the field of Landscaping from Father Dr. S. President, All India Sandalwood GrowersRama Rao, The Corporate Director of Association (INDIA)Landscaping & Horticulture, of IHCL (TajGroup of Hotels) globally. His prime intension is to encourage greenHe has taken up Landscaping as profession environment, green income and thereforesince it is one of the prime hobbies. has worked for the past 7 years trying to locate a suitable land for SandalwoodOfficially Having 23 years of Experience in plantation in Andhra Pradesh.the Landscaping & Horticulture field, Nagaraju Prodduturi,Initial 14 months focused in Landscaping of Prime Financer, Pre Project Requirements.Goa University premises, which is of LateriticRocky Strata. Andhra Pradesh (Carry & Forwarder) for GEE PEE Mobiles.Then Joined Leela Venture ltd, taken up therole of Project in charge and instrumental in A firm believer in green environment andbuilding up The Leela Goa & Landscaping @ plans to only Finance projects which cater toMobar Cavelosim, Goa, which became part of environment thus benefiting the believers.the leading hotels of the world within 1 year. AKSHAYA VANAM 2011He spent 21 years within Taj Group ofHotels developing landscape of primeproperties country wide.Mr. Prasad has been instrumental for winningthe award for The Taj West End as ‘BestEnvironmental Hotel of the year’ 08’. He is 39
  • 40. Siri Agri Group AKSHAYA VANAM 201140
  • 41. Expert Sandalwood - Marketing Report Dr. H.S. Anantha Padmanabha Forestry Consultant #31, AMBIKA, BSK 3rd Stage Bangalore-560085, INDIA Dr. H.S Anantha Padmanabha is a qualified scientist with over 35 years experience in forestry in India. He was a senior scientist at the Institute of Wood Science and Technology in Bangalore (India) from 1964 to 1998, responsible for guiding research projects on Sandalwood, including but not limited to techniques of growing Sandalwood, diseases and pests affecting Sandalwood. He has also co-authored books on Sandalwood and have published over 150 publications in both Indian and international Journals. Dr. Padmanabha was also designated as the Chief Technical Advisor for Sandalwood Projects as part of World Bank Free Project (ICFRE) in India between 1994-1998. He is a consultant to Karnataka Soaps and Detergents Ltd, Bangalore, a major long-term buyer of Sandalwood who manufactures sandalwood oil, billets and Mysore Sandal Soap. He has also been attending auctions to assess and AKSHAYA VANAM 2011 buy quality Sandalwood for 10 years. Dr. H.S Anantha Padmanabha is a suitably qualified person to provide information on Sandalwood Markets and Prices, both past and present, whilst being well placed to consider trends in future. 41
  • 42. SANDALWOOD and ground moisture; and generic factors seem to play an important role.– A VALUABLE COMMODITY Dr. Padmanabha had considered the Siri AgriSandalwood and its oil has been one of the Group’s Plantation Management Plans, andmost valuable and wanted perfumery had reviewed the Siri Agri Groups’ plantationsmaterials in the world from the earliest times of recently. He is of the opinion that the forecastcivilization. Powder of Indian sandalwood of an average yield of around 27.5 Kg of(Santalum album) heartwood, upon distillation, heartwood per Sandalwood tree is achievableyields what is known as ‘East IndianSandalwood Oil’ which is highly rated for its in the plantation time frame.fixative properties and for its persistent, heavy, The heartwood is described as astringent,sweet, woody scents. A good fixative agent, itwill also bind other odour molecules to it and bitter, antipyretic, moderately hard, heavy,impart its characteristic properties on them. durable, slow seasoning, pleasantly andIndian sandalwood fetches the highest export strongly scented, yellow or brown inprice of any Indian forest product. appearance, even textured(straight, close grains and uniform fibers) with an oily feelHABITAT AND PROPERTIES and almost free from knots. Once harvested, s Sandalwood tree will need to be seasonedApart from India, Santalum album can be – that is stored- for six months or greater tofound in Indonesia, Sri Lanka, New Caledonia, provide for moisture loss.Fiji Islands, Philippine Islands and theNorthern Territory of Australia. In India,sandalwood is found throughout the lengthand breadth of the country but particularly inSouth India, where the states of Karnatakaand Tamil Nadu account for nearly 80 percentof the total Indian resource.HEARTWOOD FORMATIONThe Indian Sandalwood tree is harvested forits heartwood, which is rich in fragrant oil. Theheartwood is found in the center of the roots, AKSHAYA VANAM 2011trunk and major branches and is surroundedby sapwood. The formation ad development ofheartwood is dependent on age, growth, soilSiri Agri Group 42
  • 43. COLOUR OF HEARTWOOD AND OIL tree from which it is taken. Sandalwood’sCONTENT heartwood ranges in colour from light yellow to dark chestnut brown, with merchantsIn trade, superiority of wood is generally preferring the light brown to yellow colour.judged based on colour and the portion of theColour of wood Oil (%) Santalols* (%)Colour of Wood Oil (%) Santanol*(%)Yellow 2.7 – 3.5 90Light brown 2.5 – 6.0 85 – 90Brown About 2.5 Less than 85Dark Brown less than 2.5 75 – 85*Alcohol contained within sandalwood oil.W ood with higher oil content will receive a greater sale price than that with lower oil AKSHAYA VANAM 2011 content. Dr. Padmanabha analyzed the plantation site and the plans and can confirm that analyses have proven the presence of oil within those trees – earlier than wouldnormally be found in a natural environment in India.Heartwood is contained within the trunk, butt, roots and major branches. The oil content in the buttand roots is slightly more than in the trunk and the branches. It is said that one ton of goodsandalwood roots and butt will yield a lower percentage of oil. Within the tree, there will be slightprogressive reduction in the oil content from roots to butts to stem and ultimately to the branches. 43
  • 44. DEMAND FOR SANDALWOODDemand for Sandalwood is centered on a conscious and demanding of the user of onlynumber of markets in India and around the natural ingredients.world. ATTARSThe majority of the wood is sold for theextraction of Sandalwood Oil, however the The production of attars consumes aroundheartwood is also used for carving and 60% of India’s annual supply of Indianreligious uses. Other products from the tree Sandalwood Oil; this is a traditional Indianare sold into a variety of markets in India andinternationally. Industry where by natural Sandalwood Oil and Flower oil are blended through a process ofSandalwood Usage distillation. The strong demand for Sandalwood oil-FINE FRAGRANCE based fragrances in the chewing tobacco and pan masala (mouth fresheners)Powered heartwood upon distillation yields industries has resulted in 90% of the attarsEast Indian Sandalwood oil, which is a highly produced being consumed by theseprices raw material in the perfume industry. In industries. When greater volumes areperfumery, it is valued for its non-varying available from plantation sources thecomposition and fixative properties and for its demand for natural fragrances and growingpersistent heavy sweet, woody scent. wealth of Indian consumers may againDue to limited supply of Indian Sandalwood, stimulate the use of attars as a personalthe demand for oil is higher than the current fragrance.levels of consumption in the global fragrance,cosmetics and aromatherapy industries. BETEL NUT (PAN MASALA, MOUTHCurrent exports of Indian Sandalwood oil are FRESHENERS)very limited. It achieves a premium price of Chewing Tobacco also emails a majorapprox. Rs 55 Lacs per ton. Sandalwood market for Sandalwood Oil in India, Southernproduction has drastically gone down from Asia and the Middle East. Chewing tobacco1400 tons in 2003 to 400 tons in 2009. is consumed by up to 20% of the population AKSHAYA VANAM 2011It is expected that if greater supply of Indian in these regions. Due to shortages in supplySandalwood oil is available from plantation some attar, pan masala and chewingsources for the global fragrance, cosmetic and tobacco companies are forced to use the oilaromatherapy markets will use more Indian from inferior Sandalwood species or fragrantsandalwood Oil, driven by consumers in Asia woods to make up to the estimated 120and Europe who are becoming increasingly Tonnes of Sandalwood oil used by theSiri Agri Group 44
  • 45. chewing tobacco and pan Masala industries. It is estimated that around 800 tonnes ofMany of these companies report that they heartwood can be consumed by India’swould buy Indian sandalwood oil if available carving industry. Demand for Sandalwooddue to its higher quality and more effective carvings is increasing in India andproperties. internationally. It is expected that china will be major market for finished SandalwoodDue to the short supply of natural oil, some Carvings and for heartwood suitable forindustries making incense sticks and pan carvings. Heartwood logs suitable for carvingmasala (scented chewing tobacco) hive also achieve premium prices of approx. INR 55,switched over to synthetics, unmindful of the 00,000/- per ton.harmful effects to human beings. Sandalwood has many important cultural used. Sandalwood paste is smeared on theSOAPS AND TOILETRIES forehead during puja (prayer), and used as cleansing agent for ‘Sins’ and used in funeralThe good fixative properties of Sandalwood oil pyre by Hindus. Muslim countries useare due to its high boiling fragrant constituents Sandalwood during the burial in order toand Santalols (which have a high boiling ensure a quick ascent of the soul to heaven,range). The oil is used extensively in the the Chinese use Sandalwood in religiouscosmetics industry in the manufacture of ceremonies, the Japanese use Sandalwoodsoaps, face creams, toilet powders and air to honor Buddha and so on.fresheners.Between 10 and 15 percent of the total Indian INCENSE STICKSSandalwood oil produced is used in the Powdered heartwood from which the oil hasmanufacture of soaps and toiletry products. been extracted is known as ‘spent charge’Resiniod, a product extracted in low and is used in the manufacture of incenseconcentrations from ‘spent powder’. Is also a sticks, which are burned during religiousvaluable ingredient values at approx 35, 00, ceremonies and for meditation. Incense has000/- per ton in the international market and is cultural and religious significance in Asia,used in the production of soaps and toiletries. where it is burnt by millions of people as part of daily religious ritual, amounting to billions AKSHAYA VANAM 2011CARVING AND RELIGIOUS USES of sticks burned each year.Sandalwood is one of the finest woods for The spent powder is further grained in to finecarving and turning to intricate workmanship. powder and with other additives a valueSandalwood is used for carving idols and added product ‘Doop’ is made for burning,utility items like furniture, jewel boxes, cabinet which is gaining popularity in Asianpanels, chess boards, pen holders, paper countries.weights, picture frames, caskets, wall plaques It is estimated that more than 10,000 tonnesand other curios. of spent charge and sapwood (white chips) 45
  • 46. that is removed from heartwood and dead However, it is estimated that the annualtress is currently within the Indian incense harvest of Sandalwood is currentlymarket alone, with the demand for spent approximately 2,000 tonnes per annum. Thecharge exceeding the current supply. Spent difference between the government harvestcharge is a highly saleable commodity, valued and the estimated annual harvest is that whichat approx. INR 70,000/- per ton, while is illegally harvested of approximately 1,600Sapwood achieves about approx. INR 1, tonnes.00,000/- per ton. During 1958 to 1970 India was officiallyMEDICINAL AND THERAPEUTIC USE producing nearly 180 to 200 tonnes of oil, with the total production (legal and illegal) oil)Medicinally, Sandalwood is used as an estimated to be much higher, meeting 90antiseptic, antipyretic, diuretic and expectorant percent of the world demand. Officialstimulant ad for treatment of bronchitis, production of Indian Sandalwood oil hasgonorrhea and urinary infections. Sandalwood fallen over the years and since 2004 hasis an important ingredient in Indian Ayurvedic remained at a low level of 25 tonnes permedicine and Traditional Chinese Medicine; annum.both of which are gaining popularity in westerncultures. Pure Sandalwood Oil is used in The size of the illegal harvest is difficult toAroma Therapy. prove. However newspapers reports describe harvest of this size, and greater. Further, there are some 10-15 SandalwoodHARVEST OF SANDALWOOD IN oil distilleries throughout India, includingINDIA areas where Sandalwood trees are not found. The State Government of Kerala andIn India, the proportion of wood harvested Maharashtra have recently closed privateofficially is small in proportion to that illegally Sandalwood distilleries. Dr. Padmanabhaharvested. As the wood has become also visited many of these distilleries andincreasingly valuable, the amount of would has checked their capacity and production.illegally harvested has grown and this has in He confirms the figures total much greaterturn necessitated a reduction by government than the quantity of official wood harvest.of its annual harvest, due to concerns over Concerns are held over the sustainability ofsustainability. current Sandalwood harvests unless theUnfortunately, in the period since 1970 when illegal harvesting can be restricted. AKSHAYA VANAM 2011the official government harvest was around Sandalwood is on the endangered list in5,000 tonnes per annum, the harvest has India, but there has been little effort todwindled to a current level of a mere 400 encourage further growth.tonnes per annum.Siri Agri Group 46
  • 47. Efforts have increased to raise newRATE OF DEPLETION OF plantations, with the State Government amending ownership laws to vest ownershipWORLD RESOURCE with the plantation owner. However, the Government has retained control of whenApart from India, Santalum album is found in the tress can be harvested and to whom toIndonesia, Australia Philippines Islands and sell, and as sandalwood offences are non-Sri Lanka. Indian contribution to world market bailable, the general public remainsis around 95 percent, Indonesia contributes cautious. General public is yet to comeabout 2-3 percent and the rest would barely forward to grow sandalwood plantations tocontribute 2 percent. meet the demand. If they were to commence AKSHAYA VANAM 2011 it, it will take atleast another 20 years to reapThe rate of depletion of India’s Sandalwood the harvest.resource is very rapid and is because of illicitfelling, biotic interferences (such as fire, In Indonesia, there has been a sharp declinegrazing, browsing and hacking) and spike in in the production of Sandalwood over thediseases. past 12 years and it is estimated that there may not be any production in the currentThe level of annual government harvest year because of a logging ban. To preventillustrates the depletion of the resource, whichhas been in decline over the past 13 years. 47
  • 48. collapse of the established industries, India EXPORT OF SANDALWOODmay have to import wood from Australia. FROM INDIADue to high domestic demand and lesssupply, merchants have compromised with The Government of India controls the export ofalternate material from Australia, Africa, West Sandalwood and oil. Increasing domesticIndies and other countries. The import of consumption of Sandalwood in India hassubstitutes was more than 3000 tonnes up to reduced the quantity of Oil and Woodmid 2006. By adding Indian and Imported available for export.Sandalwood the quantity of wood must havecrossed over 6000 to 7000 tonnes however At present Sandalwood material comes fromthe superior qualities of Indian sandalwood Tamil Nadu, Karnataka and Kerala state in(Santalum Album) make it the preferred India. The quantity of wood auctioned everyingredient. year depends on the extracted stock position. The sale of Sandalwood in 2009Already the long-term supply of one substitute, was reduced to 400 tonnes from 1400Osyris from Tanzania and Kenya, is tonnes in 2003. The concerned Forestthreatened and government regulations have Departments has negligible stock ofbeen implemented in these countries to low unfinished wood with which to hold regularthe deforestation. auctions. The Indian buyers either use it for the distillation of oil or export oil to different countries after obtaining permits. India is currently not in a position to regularly produce these quantities of wood annually. The major export markets for Indian Sandalwood Oil are France, Taiwan, Hong Kong, Japan, Malaysia, Singapore, Dubai, South Africa, the UK and the USA. The demand for Indian Sandalwood oil is predicted to be much higher than the current levels of consumption in export markets. International demand for Sandalwood Oil is growing as an ingredient in the traditional AKSHAYA VANAM 2011 markets of perfume, Soaps and toiletries, but also within new markets such as pharmaceutical applications, aromatherapy and natural cosmetics.Siri Agri Group 48
  • 49. MARKETING TRENDSFrom 1990 to 2010, the sale price ofSandalwood in India has increased fromapprox. INR 1, 75,000/- per ton to approx. INR55, 00,000/- per ton. This rise is sale price,which has become a trend over the past fewyears, is due to increased demand forSandalwood and its Oil. It is likely that thistrend will continue due to the dwindlingsupplies.PRICE TREND (AVERAGE)Dr. Padmanabha is of the opinion that pricerises we have seen in recent years areunsustainable in the long term, taking a veryconservative approach to the price trend, anannual price increase of at least 5 percent per Year Price* (INR) annum 1990-1991 178,500 is 1991-1992 266,000 achieva 1993 - 1995 332,500 ble and sustaina 1996-1997 612,500 ble into 1998-1999 777,000 the near 1999-2000 770,000 future. 2000-2001 1,081,500 2001-2002 1,288,000 AKSHAYA VANAM 2011 2001-2003 1,911,000 2003-2004 2,054,500 Jan-2005 2,985,500 July-2005 3,262,000 April-2006 3,690,785 May-2007 3,443,650 Dec-2007 3,779,475 Nov-2008 3,850,000 Sep-2009 4,025,000 49
  • 50. INTERNATIONAL PRICE TRENDS The supply is declining and the demand is increasing in both domestic and internationalPrices in the regulated Indian market are lower markets for wood and oil. This gap betweenthan the prices achieved in the international the supply and demand is expected to continue to cause ongoing price increases.market. Currently Sandalwood has to be soldto other countries above the domestic auction It may be possible to meet the growingprice. Similarly, the price of Indian demand of this natural, essential oil if newSandalwood Oil is around INR 87,500/- per plantations with suitable managementkilogram on the international market. practices are not raised elsewhere.INFORMATION ON THE EFFECT OF WOODCURRENT DEMAND PRODUCTION FROM INDIAN PLANTATION PRODUCERSEvidence suggests that the current demandfor Indian Sandalwood is much higher than the Dr. Padmanabha had been asked tocurrent consumption levels due to declining consider the issue as to the ability ofsupply from India. It is estimated that the Plantation producers to enter the marketglobal demand for Indian Sandalwood is well place for Sandalwood, and the potentialin excess of 8000 tonnes per annum impact on prices with their entry.supported by growth in demand in the globalcosmetics, fragrance and toiletries market, It is important to note that due to the lowerplus prosperity in India, Taiwan and China. oil content of plantation grown wood (due to reduction in harvesting period). There is aDue to the lower oil content of plantation- greater requirement of plantation growngrown trees at age 15 years, a larger quantity Heartwood than heartwood grow in the wild.of plantation grown heartwood may be For Example, 2,400 tonnes of Heartwoodrequired to satisfy the global demand for oil, grown in the wild would be required toperhaps in the order of 12000 to 13000 tonnes produce 120 tonnes of Oil. Around 4,000of Plantation grow heartwood. tonnes of plantation grown heartwood wouldIn India, alone the demand for Sandalwood is be required to produce the same amount ofestimated to be 5,000 tonnes per annum to oil. Dr. Padmanabha considers that perhaps AKSHAYA VANAM 2011satisfy the multitude of domestic Sandalwood there might be 2200 Acres per annummarkets. Consumption of Indian Sandalwood harvested, which would equal approximately(Santalum Album) in India has fallen below 9,000 – 10,000 tonnes of heartwood per5000 tonnes due to decreasing supply, annum.deforestation and lack of a sustainableplantation industry.Siri Agri Group 50
  • 51. As noted throughout this report, He estimates include the potential demand from the westernthat the current market supply of 2000 Tonnes pharmaceutical market for Sandalwood oil forper annum and diminishing, with the global therapeutic use in dermatology products.demand estimated to be 8,000 tones(equal to It is his opinion that this supply will not affectaround 13,000 tonnes of plantation grown the long term pricing of Sandalwood thoughheartwood) or more, and increasing annually. there will need to be marketing efforts madeAs mentioned by Dr. Padmanbha’s future by Siri Agri Group to maximize theirdemand predictions, in my opinion the 9000 – realizable sale. Siri Agri Group has been very10000 tonnes per annum of Sandalwood proactive in its marketing efforts to date,production from Siri Agri Group ’s plantation which has already led to considerablewill be easily absorbed into the market at that interest from buyers for Siri Agri Group’stime. grown Santalum Album.Dr. Padmanabha assessment of the demandfor Indian Sandalwood does not include the H.S. Anantha Padmanabhademand in the Indian cremation and worshipmarket for artificial or fake sandalwood that is October 2010marketed as genuine sandalwood. Or does it AKSHAYA VANAM 2011 51
  • 52. Siri Agri Group AKSHAYA VANAM 201152