Product Disclosure Document_V3

AKSHAYA VANAM 2011
AKSHAYA VANAM
INDIAN SANDALWOOD

PRODUCT DISCLOSURE DOCUMENT
INDIAN SANDALWOO D
2011
1

CORPORATE DIRECTORY
Plantation Promoter &
Manager

Siri Agri Group

Siri Agri Group
Door # 22/7, GF
Saptagiri Nilayam,
Kothapet,
Hyderabad – 500 035

Sales and Marketing

8am.in AKSHAYA VANAM 2011

Siri Agri Group
Door # 22/7, GF
Saptagiri Nilayam,
Kothapet,
Hyderabad – 500 035

Siri Agri Group

2

Important Notices
Electronic Product Disclosure Document

This PDD will be available for download on the following website: www.8am.in. Any person
accessing the electronic version of this PDD for the purpose of investing must be an Indian
resident.

Need Help?

If you have any questions about investing you should speak to your adviser. If you have questions
about the Project investment in particular, call us on 040-64640606 or visit our website

AKSHAYA VANAM 2011
www.8am.in.

Photographs

Unless 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 Project
Manager.

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Siri Agri Group engages a team
of Experts to carefully select land
suited for the growth of Indian
Sandalwood (Santalum album).

AKSHAYA VANAM 2011

Siri Agri Group

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CONTENTS
An overview of
Indian Sandalwood 6

Why Indian Sandalwood? 7

The Sandalwood Market 9
– Supply and Demand

What do we propose? 13

Project Details 17

Indian Sandalwood Plantation 21

Project Returns 22

Key Investment Features 23

Risks and Safeguards 24

Investment Options 29

An Ethical Investment 34

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– The Environment and Community

The Siri Agri Group 37

Plantation Management 37

Expert Sandalwood Marketing 41
Report

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An overview of Indian Sandalwood:

andalwood is the name of a class demand. Indian Sandalwood Cultivation in

S of fragrant woods from trees
the genus Santalum. The woods are
heavy, 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 fallen
many other aromatic woods they retain their steeply and the yield had come down from
fragrance for decades. As well as using the 3,000 to 4,000 tonnes a year to just 200 to 300
harvested 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 absurd
centuries. Consequently, the slow-growing position to import Indian Sandalwood from
trees 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 6
preservation and harassment of those on years and 9 years confirmed the oil content
whose land the plant grew were enough to and profitability.
make the royal wood vanish.
Sandalwood can be intercropped with fruit
Sandalwood 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 year
and Sri Lanka it is called Chandan and India to the farmer, to reduce the burden of
till recently was the world leader on the list of maintaining the long term crop.
exporters by supplying over 95% of the global

AKSHAYA VANAM 2011

Siri Agri Group

6

Why Indian Sandalwood?
Indian sandalwood is a small tropical tree, the
most commonly known source of sandalwood. What is heartwood?
This species has been utilized, cultivated and
traded for many years, Asian cultures placing Heartwood is found at the core of the tree and
great significance on its fragrant and medicinal has been sold at Indian auctions for an
qualities. average of over 50 lacs per tonne (September
2009). This aromatic wood is a popular
Indian Sandalwood has been the primary material for Asian carvings and handicrafts,
source of sandalwood and the derived oil. It particularly in Taiwan and China, where
has use as wood and oil in religious practices. demand is growing. It is also used
It also features as a construction material in extensively for religious and cultural
temples and elsewhere. purposes throughout India and the Middle
East.
The main source of true
sandalwood, Santalum. Album is a protected The renowned Sandalwood aroma comes
species, and demand for it cannot be met. from the oil found in the heartwood of the
Many 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 sold
commercial value and the Sandalwood Oil as a fragrance ingredient to the global
content in not as much as Indian Sandalwood beauty industry and flavoring agent in
or 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 oils
requires Sandal trees to be a minimum of The value of heartwood is largely
eight years old, but at least fourteen years is determined by the quantity and quality of the
preferred. Unlike most trees, sandalwood is oil it contains. Indian Sandalwood is
harvested by toppling the entire tree instead of considered to be the super premium species
sawing them down at the trunk close to ground of Sandalwood because it has the highest oil
level. 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

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alpha and beta Santalols.

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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 the
Australian or Indian Sandalwood? Australian Sandalwood variety. Heartwood
from mature Indian Sandalwood trees also
has around 2 times the oil content of wild
Indian Sandalwood (Santalum album) Australian Sandalwood trees.
heartwood was sold for more than 50 lacs per
tonne. The higher value heartwood, fast-growing
characteristics and supply-demand
The global supply of wild Indian Sandalwood imbalance are reasons why Siri Agri Group
is decreasing due to poaching and over- chooses to grow Indian Sandalwood.

AKSHAYA VANAM 2011

Siri Agri Group

8

The Sandalwood Market – supply and demand
There is a lot of detailed information about Established Demand
Sandalwood contained in the Expert
Marketing Reports contained in this PDD. The popularity of Sandalwood is seen in the
This report should be read completely to wide range of countries that import the wood
understand the scope of Sandalwood and oil. Sandalwood and Sandalwood oil is
Market. currently imported by the Middle East, Japan,
China, Taiwan, Hong Kong, Singapore,
Germany, Switzerland, France, Australia, the
For thousands of years Indian Sandalwood UK and the USA. Trade statistics show that
has been traded for use in perfumes, carvings, Taiwan alone imported over 2,400 tonnes of
medicines and worship around the globe. Sandalwood wood in 2010. The USA
Different parts of the Sandalwood tree are imported close to 28,900 kilograms of
used 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 and
carvings, medicines and to produce Indian Europe is driven by the fragrance industry,
Sandalwood oil, a valuable fragrance where Sandalwood oil remains an important
ingredient that features in many of the world’s ingredient in fragranced soaps, toiletries and
most 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) remain
popular ingredients in incense and joss stick India, Taiwan and China remain significant
production. 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.

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Dwindling domestic supplies of the species match these in a synthetic substitute. Despite
are also expected to drive India to import the availability of synthetics, commentators
significant volumes of wood. In 2005 alone estimate that the natural cosmetic market is
over 2,000 tonnes of Sandalwood was growing at a rate of 15% per annum, driven by
imported to supplement Indian demand. While consumer demand for natural ingredients. The
the import of Sandalwood is currently banned unique properties of the oil and the growing
in India, this is expected to be lifted as the trend towards natural products suggest that
domestic supply continues to drop. Demand demand for the natural oil will remain high.
for the heartwood of Indian Sandalwood is
often derived from the demand for Indian This trend, as well as the availability of a
Sandalwood oil, a valuable ingredient used in sustainable supply of Indian Sandalwood is
fragrances worldwide and chewing products in expected to stimulate demand in the global
India. soaps, perfumery and cosmetics industries,
alongside China and India where growing
As the oil is made up of a large number of wealth is expected to drive demand for this
different molecules, it is extremely difficult to culturally significant ingredient.

DWINDLING WILD SUPPLIES AND DEMAND CENTRED ON THE
INCREASINGLY PROSPEROUS ASIAN NATIONS PRODUCE EXCITING
MARKET DYNAMICS FOR THIS ANCIENT INGREDIENT WHICH FEATURES
IN INCENSE, PERFUME, CARVINGS, MEDICINES AND WORSHIP AROUND
THE GLOBE.

AKSHAYA VANAM 2011

Siri Agri Group

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Dwindling Supply
Supply of Indian Sandalwood has reached Even because of dwindling supply, Indian
critical levels in India (around 95% of the total Sandalwood still offers superior
annual Indian Sandalwood supply comes from characteristics, making other species
India); with the tree recognized as a vulnerable substitutes. It is expected that when a reliable
species 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 are
expected to be at very low level. Supply from Cultivation and harvest of Indian Sandalwood
Indonesia and East Timor has already virtually from India, is always expected to be better
ceased. There is now a growing demand for a than Indian species growing someplace else.
sustainable source of Indian Sandalwood, with
plantation-grown trees offering an important Even though supplies from Australia will bring
alternative 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.

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Auction Price
The price of Indian Sandalwood has continued supply of Indian Sandalwood in India, only
to increase at a compounded rate of 18% over small quantities of heartwood have been sold at
the last 18 years. At the auction held in recent auctions.
September 2009 small volumes of wild
heartwood were sold for an average price of Rs Consistent price growth has been the result
50 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.

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Siri Agri Group

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What do we propose?
1. Siri Agri Group engages a team of
Experts to carefully select land suited to the
growth of Indian Sandalwood (Santalum
album). We will plant Indian Sandalwood in
and around Hyderabad. The region’s high
levels of sunshine, suitable soil types and
access to ample water resources make this
the preferred area for cultivation. The land will
be 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 economic

2. Siri Agri Group, in association with
Acharya 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 2011
orchard designed to improve the genetics of aim of maximizing the growth of the
the seed stock to produce trees of the highest Sandalwood trees.
quality. Superior trees have been selected
based on growth characteristics and oil
content for the seeds. These are then control
pollinated to produce seed for use in the
project.

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ingredient Indian Sandalwood oil which is
used in perfumes worldwide.

4. At the end of the 4th year after
plantation, a tree count will be conducted to
7. Wood will be processed and sold as

assess survival rates of Sandalwood and host Cleaned Logs. It is anticipated that the major
trees and any necessary replanting will be buyers and end users in India of Cleaned
conducted. Logs will be Government of Karnataka,
Karnataka Soaps & Detergents Ltd.,

5. Wood will be processed and sold as
Cleaned Logs in the government auction in
Karnataka Handlooms etc.

Salem, Tamil Nadu. As per the prevailing law,
Sandalwood auction price would be decided
by the government.

6. It is anticipated that Harvests will be
conducted at the age of 15 years. Heartwood AKSHAYA VANAM 2011
– the most valuable oil bearing section of the
wood – is concentrated in the butt and lower
part of the tree. Advanced harvesting
techniques are being implemented to
maximize the recovery of this valuable
resource. Fragrance industry will distil the
wood to extract the valuable fragrance

Siri Agri Group

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Siri Agri Group
AKSHAYA VANAM 2011

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Project Details
What are we offering?

Siri Agri Group’s ‘Akshaya Vanam’ Sandalwood Project 2011 gives you the opportunity to grow your
own 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 have
risen from Rs 2 lacs per tonne in 1990/1991 to Rs 50 lacs per tonne in September 2009 (on small
volumes), 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 cultures
is expected to ensure that demand remains high and the upward price pressure continues. It
should be noted that the Siri Agri Group’s Chief Executive Scientist Dr. Anantha Padmanabha is
of the opinion that these prices will continue to rise at the rate of at least 5% per annum for the
foreseeable future.

AKSHAYA VANAM 2011

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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 Product
Disclosure Document (‘PDD’) and of interests • Siri Agri Group will manage the
in the Project (called ‘Sandalwood farms’ Sandalwood Farm as one collective and
within this PDD). commercially viable plantation. This relation
continues until all of the Indian Sandalwood
The Project consists of up to 250 Acres. There has been harvested.
is a minimum subscription to the Project of
one fourth of an acre. As a Grower you will • The Harvest is expected to take place
establish and maintain your own stand of during Year 15.
Indian Sandalwood by:

• Each land plot is one fourth of an acre. Each
Sandalwood 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 2011

Siri Agri Group

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How will the Sandalwood be How will the Sandalwood be harvested?
maintained?
The heartwood is contained within the larger
The Plantation will be maintained by Siri Agri branches, log, roots and butt of the
Group in accordance with a comprehensive Sandalwood Tree. The butt and roots contain
Management Plan. Annual maintenance will up to one-third of the heartwood. Harvest
include Weeding and Pruning, Nutrient methods are being developed to maximize the
Analysis to determine Fertilizer Requirements, recovery of this valuable resource. Siri Agri
Fire Control Management, Security Group intends to commence harvest of the
Management 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 Indian
Sandalwood tree will continue growing on a tertiary host tree.

How will the Sandalwood be

AKSHAYA VANAM 2011
sold?
deduction of the Costs of Harvesting and
At the time of Harvest, Siri Agri Group will Processing, and any additional costs
sell the harvest at the Government Auction in associated with the Selling and Marketing
Salem, Tamil Nadu, as per the current Fee. Updates will be communicated to
regulatory requirement or will find a optimal investors via a regular newsletter.
market if the sale of Sandalwood is allowed in
the open market. Proceeds of sale from the
wood will be distributed to you after a

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the Carbon Credits to which they are entitled to
What if there is damage to the the Siri Agri Group.
Plantation or Trees on
Sandalwood Farms?
Siri Agri Group will take up the Re-plantation
of the Sandalwood trees up till 4th year in
case there is any damage to the plantation or
if Siri Agri group feels the need for re-
plantation.

Carbon credits

Carbon Credits are not factored into the
forecast returns for this project as there is no
official carbon trading scheme in place at this
time. Under the Lease and Management
Agreement 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

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The Indian Sandalwood Plantation
pass through the projected farm. This land has
Growing considerations previously not been farmed making it nutrient
rich.
In order to grow Indian Sandalwood
successfully the following growing conditions Dr. H.S Anantha Padmanabha with over 40
must 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 to
topography and is not subject to water- confidently minimize any risk of termite or
logging; and pest attack on the crop.
• Freedom from termite attack.
Where will the Plantation be located?
The Plantation in and around Hyderabad
satisfies all of the above requirements. Siri Agri Group has acquired significant
land area (250 acres) suited to the growth of
Soils are selected on the advice of experts Indian Sandalwood. Siri Agri Group is
who assess soil depth, fertility and moisture currently engaged in further land acquisitions
characteristics by doing a detail soil test. Soil near the city of Hyderabad in Andhra
test confirm that it is a free water draining soil. Pradesh. Any land acquired or used will be
subject to the land acquisition due diligence
The land is flat with natural counter-bounding protocols Siri Agri Group currently has in
done by government officials to control soil place. Planting will take place after the dry
season (usually July and August) and the
erosion and has access to abundant irrigation land will be subject to an intensive
water resources both within the farm (wells) or preparation program during the preceding
water can be taken on Subsidy from dry season.

AKSHAYA VANAM 2011
government using the Godavari Canal that

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Project Returns
THE FOLLOWING SECTION PROVIDES GROWERS WITH INFORMATION ON
PROJECT 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 Executive
Scientist and Forestry and Sandalwood
• Forest Produce includes host trees (Teak
Marketing Expert from Bangalore who has
and Mango) and other parts of the
focused his expertise on the Indian
Sandalwood tree (Sap Wood) (other than the
Sandalwood Tree, has written an Expert
Seeds). These products will have
Marketing Report included in this document.
commercial value and the profits will be
Indian Sandalwood heartwood sold at an
shared on 50:50 Profit sharing ratio after the
average of over 50 lacs per tonne (on small
expenses for the plantation management have
volumes) at the State of Tamil Nadu Forestry been covered.
Department and Kerala auctions held in
September 2009. Average auction prices for • Dr. Padmanabha has indicated in his
heartwood have increased at a compounded Expert Marketing Report that he anticipates
annual 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 Nadu
auction is of a high quality, tending to contain
on average 4.0% to 5.5% oil. While it is
possible that wood grown in plantation

Siri Agri Group

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Key Investment Features
• This project aims to produce high quality • The project is expected to be completed in
Indian Sandalwood (Santalum album), a 15 years, with the Harvest expected to occur
commodity that has been traded for thousands when the Sandalwood trees are 15 years old.
of years. This aromatic wood is internationally
prized for use in religious worship, joss sticks
and to extract Indian Sandalwood oil, an
important ingredient used in fine fragrances.

• The average price of wild Indian Sandalwood
heartwood has had a compounded increase of
18% per annum over the last 18 years due to
strong demand and diminishing supply that
has seen the tree recognized on the World
Conservation Union’s (IUCN) Threatened
Species Red list.

• Auction prices for small volumes of
heartwood in India averaged over Rs 50 Lacs
per tonne in September 2009 - confirming
Indian Sandalwood’s status as one of the
world’s most valuable tropical hardwoods.

• Siri Agri Group is a specialist Indian
Sandalwood plantation manager, under the
guidance of Dr. H.S Anantha Padmanabha
with his over 40 years experience in the
cultivation of Indian Sandalwood.

• Siri Agri Group has an experienced team of
professional foresters, agronomists, research
officers and agricultural scientists who

AKSHAYA VANAM 2011
manage the Plantations. An ongoing program
of monitoring and research is used to maintain
good growth and survival rates.

• Siri Agri Group is committed to the long-
term development of Indian Sandalwood
industry.

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Risks and Safeguards

An investment in this Project is long term and we at Siri Agri Group work to safeguard our
investors with our expertise and experience. Below are some of the specific and general risks and
safeguards 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 thus
Fire normally happens in unattended
reducing the fast growth of fire in case
surroundings such as in wild forests. However, of one.
Siri Agri Group has understood the damage
capacity of such untoward incidents and has d) The drip system adopted by Siri Agri AKSHAYA VANAM 2011
planned 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 cultivation
Siri Agri Group

24

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.

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Mortality/Failure %: rate in our project is upto 18% which we try to
further bring down by following the below
Siri Agri Group considers this factor as the mentioned parameters:
most important factor in which the company
very well planned. Mortality/Failure % is very a) SIRI AGRI GROUP has an independent
common in an unorganized farming. seed orchard designed to improve the
Freelancers, individual farmers, non agro genetics of the seed stock to produce
based farmers like commercial real-estate trees of the highest quality. Superior
ventures etc fall prey to this loss. This is a long trees are selected based on growth
term project and people try to cut the cost at characteristics and oil content. These
the initial levels. I.E purchasing sapling at the are then control pollinated to produce
least cost possible without knowing the crop seed for use in the project.
genetics , not concentrating on soil fertility or
pre-planning for soil erosion, not spending on b) The saplings from this seeds are then
water harvesting or contingency planning, grown in nursery for a period of 12
compromising on security parameters, months before planting it into the
compromising on the cost to take expert cultivation area to further reduce the
assistance etc Let us give you an example of count of dead, week, infertile and
what we are trying to say : let say you have impotent trees etc) Further, the
been assigned a project in hand and as per hand pick saplings are planted in the
your analysis your target profit from that cultivation area and a back-up
project 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 trees
outcome ratio is huge when compared to the until the fourth year. Mr. S V L Prasad
cost then it doesn’t make sense to who is a member of Siri Agri Group
compromise 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 area
Agri Group we handle this factor professionally are supported with rod/bamboo sticks
without compromising as we are 50% share till the 4 year to help its roots gain
holders of the profit. The common mortality ground support.

FINANCIAL RISKS
Demand and Supply: India. Demand would never be affected as AKSHAYA VANAM 2011
right on date Sandalwood needs 80,000
With the GO being realized it is very obvious for hectares of cultivation to pull-back its demand
individuals to take up Sandalwood farming and and this demand is increasing at 18% per
we at Siri Agri Group invite healthy annum and increasing.
competitors as we are strongly working towards
the restoration of Indian Sandalwood within

Siri Agri Group

26

(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 of
Yield Estimates and Quality
Sandalwood and start selling
their plots with Sandalwood
If the forecast yield is reduced due to higher
trees, their quality would be
than anticipated fatality rates, or lower than
beyond the market acceptability
anticipated heartwood yields, the financial
and the outcome can only be
yields of this Project will be reduced. If the
used for the carving industry
quantity or the quality of the oil is lower than
which pays the least compared
expected this may also reduce the value of the to the oil content bearing trees.
Heartwood timber. Yield estimates given in this
PDD are based largely on the experimental
(iv) Small players and individual
plantation and on the extrapolation of growth
trying their hands would/might
rates and characteristics of other individual and
also face the same
small groups growing in the area. This is
consequences of ending up their
supported by scientific literature of Indian
yields for the carving industry
Sandalwood 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

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 to

Siri Agri Group

28

the next generation. We have a team of 12
interns from various agricultural universities Insolvency of Siri Agri Group:
who are full time employees of Siri Agri Group
and have undergone complete training in
(i) Siri Agri Group is a well planned
handling the crop module designed in case of establishment with strong financial
any unforeseen events. background. As a company we have
the financial capabilities of doing
Independent farming without external
Siri Agri Group abandoning the project in funding.
midterm:
(ii) The project is planned to be self
This is highly impossible as we do not get funded for all its maintenance costs
profits at the beginning by selling land/s as Sandalwood farming needs host
however get continuous and adequate profit plants at various levels which
right from the 3rd month of stating the project till manage continuous funding for
management.
the project ends. As a company Siri Agri Group
would continue doing Sandalwood Farming
(iii) The project design is so made that
year after year thus capturing the Sandalwood the funding for END to END farming
market from the fifteenth year and thereafter. is collected from the investors’ right
As income is shared on 50:50 Ratio the in the beginning to overcome any
company will continue to retain interest and cash delinquencies from the
monitor the farming process in the best possible investors.
manner. The profit volume increases as the
(iv) Experts’ involvement and
years pass and therefore reduces the risk of
compensation has been well
abandoning the project in midterm. planned so as to sustain their
continued interest in the project.

Investment Options

AKSHAYA VANAM 2011
We provide maximum security & Returns for your investments?

An investment involves your money being In general everyone only concentrates on
entrusted 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 tend
involves risk. We are no exception. However to forget while investing is:
what one needs to analyze is the amount of
risk involved compared to the reward
compensated for the risk taken.

29

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 the
Indian Sandalwood which is the 2 nd Highest investors.
Timber in demand in its kind world over and its
capacity to generate in Crores is beyond 4) This is a very important point to be
doubt. carefully examined before investing into any
source. An individual/company can never get
2) If anyone in this world can cultivate you profits for your investment unless they
Sandalwood we challenge that we would themselves are properly benefited. This
stand the top amongst them. Our Chief applies even at ones workplace.
Executive Scientist Dr. H S Anantha
Padmanabha has 40+ years of experience in WHAT: Siri Agri Group gets reasonably
Sandalwood cultivation and was/is the part of benefitted for the efforts which the company
the team (TFS : Tropical Forestry Services ) in & its team put in. We get rewarded 100% of
Australia which has done successful the benefits for the first four years thereafter
cultivation 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 do
Sandalwood Farming which proves that we do WHERE: We get the profits from the short
not 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 get
base price. benefitted from the mango yields till the end AKSHAYA VANAM 2011
of the project. Tenth year we get a bonus in
Land is the only unmovable instrument the form of the profits from Teak wood and
involved in farming. All other assets like, at the end of the project we get a huge share
saplings, bore-wells, drip, security walls, from the Sandalwood harvest.
sump, guesthouse including, the time, effort &
expertise of the team is invested on this
unmovable asset and this instrument called

Siri Agri Group

30

WHEN: We get this profits right from the 5) Absolutely, since the investment is done
beginning of the project till its end and only on the base price required to do farming the
when 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
Oct'2010 Dec'2010 Feb'2011 June'2011 Aug' 2011 Dec'2011 Mar'2012 Dec'2012

Price/Sqr. Yrd

AKSHAYA VANAM 2011
Sapling
Plantation
Borewells and Drip

Land clearence &
Land-pit filling
acquired Project
Plantation Current Status
idea
31

Siri Agri Group
AKSHAYA VANAM 2011

32

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

Reducing Pesticides their experience in Sandalwood Plantation and
reduce the dependency of fertilizers and
Siri Agri Group is using innovation to pesticides. The naturally occurring Santalols
continually minimize the use of pesticides. within the trees are also an effective
Having Dr. H.S Anantha Padmanabha, preventative against termites and other pests.
Acharya Muralidhar and others as part of the
team, helps Siri Agri to make complete use of

ETHICAL BEHAVIOUR
Indigenous Commitment
Siri Agri Group believes that it can be part of
a better world, starting with Hyderabad. Siri Agri Group is itself committed to many
Through an awareness and engagement of all training programs and information sharing
stakeholders, Siri Agri Group aims to programs between the local farmers and
promote community living and a culture of individuals educating them to reduce the use
respect within the community and the of harmful chemicals that endanger the very
environment. The company sees sustainable habitat that an Indian farmer is so dependent
development as a way of ensuring shared for his living.
long-term benefits for the community,
environment and investors.

Happy Workers

Siri Agri Group has a team of qualified staff
dedicated to the cultivation, management and
administration of Indian Sandalwood
plantations and production. Our workers
receive ongoing training to support a
productive and innovative work environment.

Community Development

Siri Agri Group intends to initiate a program
that would give employment to Physically

AKSHAYA VANAM 2011
Challenged individuals through the self sustain
agricultural employment model.

35

Our values
Respect
Reliability
Innovation

AKSHAYA VANAM 2011

Siri Agri Group

36

The Siri Agri Group
Our 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 a
pioneering 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 Sandalwood
Oil to Indian Market by the year 2026.

Plantation Management
manner designed to both address the
Siri Agri Group will manage the Project solely Project risks and maximize the growth and
from 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 made
experience of Indian Sandalwood Plantation up of people experienced in forestry, with
growth 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 2011
experience 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 the
Management plan plantation management team are outlined
below.
The Plantation will be maintained in
accordance with a Management Plan. The
Management Plan outlines the procedures to
be followed to ensure that the Project is
carried out in accordance with Government
directives for Sandalwood Plantations and in a

37

Dr. H.S. Anantha Padmanabha K Muralidhar Reddy (Acharya)
Chief Executive Scientist Executive Environmental Scientist

Dr. H S Anantha Padmanabha, the forestry Acharya Muralidhar, a Master of Science
consultant, is an expert on sandalwood cell (environmental science & engineering)
biology, who mastered the technology of University of Maryland College Park, MD, USA
artificial cultivation of sandalwood. A scientist has worked as consulting engineer for over 10
of 40 years experience in forestry in India, he years in USA. He has developed an innovative
had worked as a senior scientist at the low cost water disinfection technology, which
Institute of Wood Science and Technology in is in the final stage of product development
Bangalore (India) from 1964 to 1998 and was (Patent Pending, US Patent Office,
responsible for guiding research projects on Washington, DC).
sandalwood and other forestry species
including but not limited to techniques of Acharya has developed a simple & effective
growing sandalwood and decease and pests three step cow-based sustainable farming
affecting forestry tree species. technique. He is currently working in over
four districts of Andhra Pradesh conduction
Currently he is a Director of Karnataka training for farmers on cow-based
Research Foundation and Advance sustainable farming.
Technology Transfer, Bangalore, Consultant
to 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 skeletal
consultant to Department of Conservation and problems.
Land Development (CALM) and Forest
Product Commission (FPC) Government of Acharya also participated in core organizing
Western Australia from 1998 to 2002. He is team for several antipollution movements
honorary consultant to Karnataka Soaps and including a major Uranium mining project
Detergents Ltd, Bangalore, assisting and Nagarjuna Sagar area.
providing guidance to farmers, corporate
bodies and NGO’s in growing sandalwood in His varied interest in Vedic sciences
India. including Ayurvedha, Holistic Healing,
Astrology, Yoga, Meditation, Agni Hothra,
He has co-authored books on sandalwood and Traditional Knowledge Systems
have published over 150 publications in both
Indian and International journals. He was AKSHAYA VANAM 2011
designated as chief Technical Advisor for
sandalwood projects with the World Bank
FREE project (ICFRE) Government of India.

Siri Agri Group

38

S V L Prasad also Honorary Consultant for Urban
Executive Horticulture Scientist (Advisory team) Landscaping of Bangalore for BBMP & BET.

Mr. Prasad specializes in transplantation of
Post Graduate in Botany & Researcher in the very old (100+) years old Trees.
field of Cytogenetic & Plant Physiology.
He takes part in assisting the government in
He is an expert in Tissue Culture, Breeding transplanting Heritage trees instead of cutting
Resistant Mutants for Gama radiation & them during road widening program.
Environmental Pollutants, especially industrial
effluents. Kandalagunta Srinivas Rao,
Agriculture Execution (Full Time)
Mr. Prasad has had exposure since child hood
in the field of Landscaping from Father Dr. S. President, All India Sandalwood Growers
Rama Rao, The Corporate Director of Association (INDIA)
Landscaping & Horticulture, of IHCL (Taj
Group of Hotels) globally.
His prime intension is to encourage green
He has taken up Landscaping as profession environment, green income and therefore
since it is one of the prime hobbies. has worked for the past 7 years trying to
locate a suitable land for Sandalwood
Officially 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 Lateritic
Rocky Strata. Andhra Pradesh (Carry & Forwarder) for
GEE PEE Mobiles.
Then Joined Leela Venture ltd, taken up the
role of Project in charge and instrumental in A firm believer in green environment and
building up The Leela Goa & Landscaping @ plans to only Finance projects which cater to
Mobar Cavelosim, Goa, which became part of environment thus benefiting the believers.
the leading hotels of the world within 1 year.

AKSHAYA VANAM 2011
He spent 21 years within Taj Group of
Hotels developing landscape of prime
properties country wide.

Mr. Prasad has been instrumental for winning
the award for The Taj West End as ‘Best
Environmental Hotel of the year’ 08’. He is

39

Siri Agri Group
AKSHAYA VANAM 2011

40

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

SANDALWOOD and ground moisture; and generic factors
seem to play an important role.
– A VALUABLE COMMODITY
Dr. Padmanabha had considered the Siri Agri
Sandalwood and its oil has been one of the Group’s Plantation Management Plans, and
most valuable and wanted perfumery had reviewed the Siri Agri Groups’ plantations
materials in the world from the earliest times of recently. He is of the opinion that the forecast
civilization. Powder of Indian sandalwood of an average yield of around 27.5 Kg of
(Santalum album) heartwood, upon distillation, heartwood per Sandalwood tree is achievable
yields what is known as ‘East Indian
Sandalwood 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, it
will also bind other odour molecules to it and bitter, antipyretic, moderately hard, heavy,
impart its characteristic properties on them. durable, slow seasoning, pleasantly and
Indian sandalwood fetches the highest export strongly scented, yellow or brown in
price of any Indian forest product. appearance, even textured(straight, close
grains and uniform fibers) with an oily feel
HABITAT AND PROPERTIES and almost free from knots. Once harvested,
s Sandalwood tree will need to be seasoned
Apart from India, Santalum album can be – that is stored- for six months or greater to
found in Indonesia, Sri Lanka, New Caledonia,
provide for moisture loss.
Fiji Islands, Philippine Islands and the
Northern Territory of Australia. In India,
sandalwood is found throughout the length
and breadth of the country but particularly in
South India, where the states of Karnataka
and Tamil Nadu account for nearly 80 percent
of the total Indian resource.

HEARTWOOD FORMATION

The Indian Sandalwood tree is harvested for
its heartwood, which is rich in fragrant oil. The
heartwood is found in the center of the roots, AKSHAYA VANAM 2011
trunk and major branches and is surrounded
by sapwood. The formation ad development of
heartwood is dependent on age, growth, soil

Siri Agri Group

42

COLOUR OF HEARTWOOD AND OIL tree from which it is taken. Sandalwood’s
CONTENT heartwood ranges in colour from light yellow
to dark chestnut brown, with merchants
In trade, superiority of wood is generally preferring the light brown to yellow colour.
judged based on colour and the portion of the
Colour of wood Oil (%) Santalols* (%)
Colour of Wood Oil (%) Santanol*(%)
Yellow 2.7 – 3.5 90
Light brown 2.5 – 6.0 85 – 90
Brown About 2.5 Less than 85
Dark 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 would
normally be found in a natural environment in India.

Heartwood is contained within the trunk, butt, roots and major branches. The oil content in the butt
and roots is slightly more than in the trunk and the branches. It is said that one ton of good
sandalwood roots and butt will yield a lower percentage of oil. Within the tree, there will be slight
progressive reduction in the oil content from roots to butts to stem and ultimately to the branches.

43

DEMAND FOR SANDALWOOD
Demand for Sandalwood is centered on a conscious and demanding of the user of only
number of markets in India and around the natural ingredients.
world.
ATTARS
The majority of the wood is sold for the
extraction of Sandalwood Oil, however the The production of attars consumes around
heartwood is also used for carving and 60% of India’s annual supply of Indian
religious uses. Other products from the tree
Sandalwood Oil; this is a traditional Indian
are sold into a variety of markets in India and
internationally. Industry where by natural Sandalwood Oil and
Flower oil are blended through a process of
Sandalwood 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 attars
East Indian Sandalwood oil, which is a highly
produced being consumed by these
prices raw material in the perfume industry. In
industries. When greater volumes are
perfumery, it is valued for its non-varying
available from plantation sources the
composition and fixative properties and for its
demand for natural fragrances and growing
persistent heavy sweet, woody scent.
wealth of Indian consumers may again
Due to limited supply of Indian Sandalwood, stimulate the use of attars as a personal
the demand for oil is higher than the current fragrance.
levels of consumption in the global fragrance,
cosmetics and aromatherapy industries.
BETEL NUT (PAN MASALA, MOUTH
Current exports of Indian Sandalwood oil are FRESHENERS)
very limited. It achieves a premium price of
Chewing Tobacco also emails a major
approx. Rs 55 Lacs per ton. Sandalwood
market for Sandalwood Oil in India, Southern
production has drastically gone down from
Asia and the Middle East. Chewing tobacco
1400 tons in 2003 to 400 tons in 2009.
is consumed by up to 20% of the population AKSHAYA VANAM 2011
It is expected that if greater supply of Indian in these regions. Due to shortages in supply
Sandalwood oil is available from plantation some attar, pan masala and chewing
sources for the global fragrance, cosmetic and tobacco companies are forced to use the oil
aromatherapy markets will use more Indian from inferior Sandalwood species or fragrant
sandalwood Oil, driven by consumers in Asia woods to make up to the estimated 120
and Europe who are becoming increasingly Tonnes of Sandalwood oil used by the

Siri Agri Group

44

chewing tobacco and pan Masala industries. It is estimated that around 800 tonnes of
Many of these companies report that they heartwood can be consumed by India’s
would buy Indian sandalwood oil if available carving industry. Demand for Sandalwood
due to its higher quality and more effective carvings is increasing in India and
properties. internationally. It is expected that china will be
major market for finished Sandalwood
Due to the short supply of natural oil, some
Carvings and for heartwood suitable for
industries making incense sticks and pan
carvings. Heartwood logs suitable for carving
masala (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 the
SOAPS AND TOILETRIES
forehead during puja (prayer), and used as
cleansing agent for ‘Sins’ and used in funeral
The good fixative properties of Sandalwood oil
pyre by Hindus. Muslim countries use
are due to its high boiling fragrant constituents
Sandalwood during the burial in order to
and 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 religious
cosmetics industry in the manufacture of
ceremonies, the Japanese use Sandalwood
soaps, face creams, toilet powders and air
to honor Buddha and so on.
fresheners.

Between 10 and 15 percent of the total Indian INCENSE STICKS
Sandalwood oil produced is used in the
Powdered heartwood from which the oil has
manufacture 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 incense
concentrations from ‘spent powder’. Is also a
sticks, which are burned during religious
valuable ingredient values at approx 35, 00,
ceremonies and for meditation. Incense has
000/- 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 2011
CARVING AND RELIGIOUS USES of sticks burned each year.

Sandalwood is one of the finest woods for The spent powder is further grained in to fine
carving and turning to intricate workmanship. powder and with other additives a value
Sandalwood 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 Asian
panels, chess boards, pen holders, paper countries.
weights, picture frames, caskets, wall plaques It is estimated that more than 10,000 tonnes
and other curios. of spent charge and sapwood (white chips)

45

that is removed from heartwood and dead However, it is estimated that the annual
tress is currently within the Indian incense harvest of Sandalwood is currently
market alone, with the demand for spent approximately 2,000 tonnes per annum. The
charge exceeding the current supply. Spent difference between the government harvest
charge is a highly saleable commodity, valued and the estimated annual harvest is that which
at approx. INR 70,000/- per ton, while is illegally harvested of approximately 1,600
Sapwood achieves about approx. INR 1, tonnes.
00,000/- per ton.
During 1958 to 1970 India was officially
MEDICINAL 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 90
antiseptic, antipyretic, diuretic and expectorant percent of the world demand. Official
stimulant ad for treatment of bronchitis, production of Indian Sandalwood oil has
gonorrhea and urinary infections. Sandalwood fallen over the years and since 2004 has
is an important ingredient in Indian Ayurvedic remained at a low level of 25 tonnes per
medicine and Traditional Chinese Medicine; annum.
both of which are gaining popularity in western
cultures. Pure Sandalwood Oil is used in The size of the illegal harvest is difficult to
Aroma Therapy. prove. However newspapers reports
describe harvest of this size, and greater.
Further, there are some 10-15 Sandalwood
HARVEST OF SANDALWOOD IN oil distilleries throughout India, including
INDIA areas where Sandalwood trees are not
found. The State Government of Kerala and
In India, the proportion of wood harvested Maharashtra have recently closed private
officially is small in proportion to that illegally Sandalwood distilleries. Dr. Padmanabha
harvested. As the wood has become also visited many of these distilleries and
increasingly 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 greater
turn 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 of
sustainability.
current Sandalwood harvests unless the
Unfortunately, in the period since 1970 when illegal harvesting can be restricted. AKSHAYA VANAM 2011
the official government harvest was around Sandalwood is on the endangered list in
5,000 tonnes per annum, the harvest has India, but there has been little effort to
dwindled to a current level of a mere 400 encourage further growth.
tonnes per annum.

Siri Agri Group

46

Efforts have increased to raise new
RATE OF DEPLETION OF plantations, with the State Government
amending ownership laws to vest ownership
WORLD RESOURCE with the plantation owner. However, the
Government has retained control of when
Apart from India, Santalum album is found in the tress can be harvested and to whom to
Indonesia, Australia Philippines Islands and sell, and as sandalwood offences are non-
Sri Lanka. Indian contribution to world market bailable, the general public remains
is around 95 percent, Indonesia contributes cautious. General public is yet to come
about 2-3 percent and the rest would barely forward to grow sandalwood plantations to
contribute 2 percent. meet the demand. If they were to commence

AKSHAYA VANAM 2011
it, it will take atleast another 20 years to reap
The rate of depletion of India’s Sandalwood the harvest.
resource is very rapid and is because of illicit
felling, biotic interferences (such as fire, In Indonesia, there has been a sharp decline
grazing, browsing and hacking) and spike in in the production of Sandalwood over the
diseases. past 12 years and it is estimated that there
may not be any production in the current
The level of annual government harvest year because of a logging ban. To prevent
illustrates the depletion of the resource, which
has been in decline over the past 13 years.

47

collapse of the established industries, India EXPORT OF SANDALWOOD
may have to import wood from Australia.
FROM INDIA
Due to high domestic demand and less
supply, merchants have compromised with The Government of India controls the export of
alternate material from Australia, Africa, West Sandalwood and oil. Increasing domestic
Indies and other countries. The import of consumption of Sandalwood in India has
substitutes was more than 3000 tonnes up to reduced the quantity of Oil and Wood
mid 2006. By adding Indian and Imported available for export.
Sandalwood the quantity of wood must have
crossed over 6000 to 7000 tonnes however At present Sandalwood material comes from
the superior qualities of Indian sandalwood Tamil Nadu, Karnataka and Kerala state in
(Santalum Album) make it the preferred India. The quantity of wood auctioned every
ingredient. year depends on the extracted stock
position. The sale of Sandalwood in 2009
Already the long-term supply of one substitute, was reduced to 400 tonnes from 1400
Osyris from Tanzania and Kenya, is tonnes in 2003. The concerned Forest
threatened and government regulations have Departments has negligible stock of
been implemented in these countries to low unfinished wood with which to hold regular
the 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

MARKETING TRENDS
From 1990 to 2010, the sale price of
Sandalwood in India has increased from
approx. INR 1, 75,000/- per ton to approx. INR
55, 00,000/- per ton. This rise is sale price,
which has become a trend over the past few
years, is due to increased demand for
Sandalwood and its Oil. It is likely that this
trend will continue due to the dwindling
supplies.

PRICE TREND (AVERAGE)

Dr. Padmanabha is of the opinion that price
rises we have seen in recent years are
unsustainable in the long term, taking a very
conservative approach to the price trend, an
annual 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

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