This presentation contains all information about Teak investments as an alternative investment for HNI investors.

1. Chitransh Varshney

2. INVESTMENT
• Investment implies the production of new capital goods, plants and
equipments. Investment is a conscious act of an individual or any entity
that involves deployment of money (cash) in securities or assets issued by
any financial institution with a view to obtain the target returns over a
specified period of time.
• Target returns on an investment include:
-Increase in the value of the securities or asset, and/or
-Regular income must be available from the securities or asset.

3. TYPES OF INVESTMENT
• Here are the major asset classes, in ascending order of risk, on the
investment risk ladder :-
-Bonds
-Equity
-Mutual funds
-Exchange traded funds (ETF’s)
• Alternative Investment :-
-Real Estate
-Commodities
-Teak Investment

4. ALTERNATIVE INVESTMENT
FUNDS
• Privately pooled investment vehicle which collects
funds from investors.
• Most alternative investments are unregulated by the
SEC.
• Alternative investments tend to be somewhat illiquid.
• Help people diversify their portfolios.
• Transaction costs are typically lower than those of
conventional assets.

5. CATEGORIES OF AIFS
• Category I :Focuses on investing in start-ups, SME's
• Category II :Fund options such as private equity funds or
debt funds.
• Category III :Options such as hedge funds or funds
which trade with a view to make short-term returns.

6. TEAK INVESTMENT -MEANING
• An investment is an investment into a tree which means that you will own
your very own plot of land, complete with the valuable teak trees that grow
on it.
• Teak is a prime tropical hardwood and requires 20 – 25 years to grow in a
commercial plantation.
• Teak is highly in demand.
• Teak trees go from small seedlings in a nursery to massive, powerful trees,
reaching heights of 40ft. tall.

7. BENEFITS OF TEAK INVESTMENT
• Lucrative investment .
• Stability of teak.
• Generational wealth stewardship.
• Access to some of the easiest, fastest and cheapest permanent foreign
residency programs in the world.
• Resistant to fungus and termites.

8. HOW THE GLOBAL TEAK
INDUSTRY IS CHANGING ?
• Traditionally, the majority of the world’s teak came from
natural teak forests located in a few specific countries in
south east Asia.
• Myanmar alone has traditionally supplied 75% of the
world’s teak.
• Myanmar’s ban on the exportation of teak logs and
decreased logging quotas went into effect on the 1st of
April of 2014.
• The Rise of African and Latin American Teak
Plantations.

9. Share of global teak round wood
imports: 1.07 million m3/year (average for
2005–2014)
Share of imports from Myanmar in
major teak-importing countries
FACTS AND FIGURES

10. Highest imports to India (> 10,000 m3
on average/year), 2005–2014

11. EMERGING AFRICAN TRADERS

12. EMERGING LATIN AMERICAN TRADERS

13. SECURED INVESTMENT
• Purchases secured by “Timber Deed”
• Number of trees purchased / guaranteed at final
harvest
• Assignment to customer of complete and
unencumbered ownership of trees purchased
• Location of trees (via GPS coordinates)
GPS
Coordinates

14. RETURNS OF TEAK
INVESTMENTS
Trees guaranteed to grow… With complete life cycle
management….
• Clients purchase and retain 1 hectare (2.5 acres) segregated “Parcels” of planted and fully
managed Teak trees with a guaranteed minimum yield / number of trees at final harvest.
• Complete land preparation, planting, care and maintenance of Teak trees purchased throughout
the entire growth cycle (Twenty-years for new seedlings)
• Sale of marketable timber in the wholesale Teak market on behalf of the client, obtaining fair
and available wholesale pricing (or preparation for delivery to the client upon request)
• The Purchase Price is the only out of pocket cost to the client… A one-time % fee is deducted
from all timber sale proceeds to compensate the cutting, management and selling services
provided.

15. CALCULATION OF RETURNS
• 1 Hectare =2.5 acres
• Since this is long term Investment have patience let it grow.
• 1 Hectare you can plant 1100-1500 trees.
• Period Considered – 10 years
• 1 Matured Teak tree gives approx. 12.5 cubic metre wood.
• So , Cost to plant Per plant nearly Rs.300 including every fees total cost
would be @300*1100=3,30,000
• When all teak trees will be matured by 10 years then, 12 cubic metre per
tree wood *1100 trees =13,200 cubic metre would be matured wood.
• Indian market selling price is currently Rs.3000/cubic metre.
• Simply Multiply 13200cubic metre * 3000= Rs.3,96,00,000
• Generating a return of 16.5% CAGR in 10 years time frame. Almost beating
all the S&P 500
• If you calculate yearly you will get approx. Rs.39 lakhs per year , monthly it
would be Rs.3,27,250

16. RISK ASSESSMENT
With such high returns… What are the risks?
Teak Investment as attractive as it sounds there are a lot
of risks associated to it. They are as follows:
• Physical and Environmental Risks.
• Government Regulations.
• Agricultural Risk
• Time.. State of Future markets
• Impact of Inflation

17. PHYSICAL AND ENVIRONMENTAL
RISK
Hurricane and Floods - Hurricanes are non-existent in the region. Trees / farms
receive sufficient rainfall eight months of the year and excess flooding is easy managed by
topography grading and properly planned irrigation
Fire - Forest fires highly unlikely in the tropics and the trees high oil content make them
impervious to fire once they are a few years of age. Fire ditches are maintained during the
dry season to reduce accidental fire risks
Theft - Logistically impossible as workers live onsite and work the plantation daily. UTMG
staff and foresters provide regular oversight and inspection. Site is fully protected with a
security fence with no hidden or concealed access points
Unforeseen destruction and catastrophe

18. AGRICULTURAL RISK
• Insects - Indigenous harmful pests. Only exposure is to roots within first year or
avoided by proper preparation and bio-sensitive insecticides
• Fungus / biological – Cases of mass fungus or biological destruction
Plantation. If present, it can be fixed by implementing an effective spraying program
• Growth - Inferior growth usually results from neglect, poor soil or unsuitable clim
• Pesticides/ Fertilizers – Too much of pesticides or fertilizers are harmful fo

19. TIME/MARKET RISK
Teak has always been in high demand and will remain desirable due to
the unique properties and qualities it possesses:
–The quality of plantation Teak wood has greatly increased due to
improved planting and maintenance practices, resulting in increased
demand for the precious natural resource
–Supply is becoming increasingly limited due to the high demand
–Worldwide legislative trend toward rainforest preservation and laws
prohibiting the cutting of indigenous Teak trees and other tropical species

20. CONCLUSION
• Since inception and when this asset class came into the existence
it has generated highest returns of over 11000% beating all asset class
Compared to US STOCK MARKET S&P 500 by almost 112 times in
the time frame of 32 years with a very low risk except the
environmental and regulatory issues.
This Asset class is suggested for all type of investors in long term
investment products.