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CORPORATE DIRECTORYPlantation Promoter & Manager Siri Agri GroupSiri Agri Group Door # 22/7, GF Saptagiri Nilayam, Kothapet, Hyderabad 500 035

Sales and Marketing 8am.inSiri Agri Group Door # 22/7, GF Saptagiri Nilayam, Kothapet, Hyderabad 500 035

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Important NoticesElectronic Product Disclosure Document

This PDD will be available for download on the following website: 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

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 Project Manager.



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

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CONTENTSAn overview of Indian Sandalwood Why Indian Sandalwood? The Sandalwood Market Supply and Demand What do we propose? Project Details Indian Sandalwood Plantation Project Returns Key Investment Features Risks and Safeguards Investment Options 6 7 9 13 17 21 22 23 24 29AKSHAYA VANAM 2011

An Ethical Investment 34 The Environment and Community The Siri Agri Group Plantation Management Expert Sandalwood Marketing Report 37 37 41


An overview of Indian Sandalwood:andalwood is the name of a class of fragrant woods from trees in the genus Santalum. The woods are heavy, yellow, and fine-grained, and unlike many other aromatic woods they retain their fragrance for decades. As well as using the harvested and cut wood in-situ, essential oils are also extracted from the woods for use. Both the wood and the oil produce a distinctive fragrance that has been highly valued for centuries. Consequently, the slow-growing trees have been overharvested in many areas.


demand. Indian Sandalwood Cultivation 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 steeply and the yield had come down from 3,000 to 4,000 tonnes a year to just 200 to 300 tonnes now. Due to overharvesting and lack of reforestation, India will soon be in an absurd position to import Indian Sandalwood from Australia, who would be world leaders in Indian sandalwood in the years to come. Samples collected from Australian trees of 6 years and 9 years confirmed the oil content and profitability. Sandalwood can be intercropped with fruit bearing trees like Grafted tamarind, Amla, Pomegranate, Drum stick, Karivepillai, etc, these give quick returns from 2nd to 3rd year to the farmer, to reduce the burden of maintaining the long term crop.

Two hundred years of public monopoly and preservation and harassment of those on whose land the plant grew were enough to make the royal wood vanish. Sandalwood species are found in India, Bangladesh, Sri Lanka, Australia, Indonesia, and the Pacific Islands. In India, Bangladesh and Sri Lanka it is called Chandan and India till recently was the world leader on the list of exporters by supplying over 95% of the global

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Why Indian Sandalwood?Indian sandalwood is a small tropical tree, the most commonly known source of sandalwood. This species has been utilized, cultivated and traded for many years, Asian cultures placing great significance on its fragrant and medicinal qualities. Indian Sandalwood has been the primary source of sandalwood and the derived oil. It has use as wood and oil in religious practices. It also features as a construction material in temples and elsewhere. The main source of true sandalwood, Santalum. Album is a protected species, and demand for it cannot be met. Many species of plants are traded as "sandalwood". Other species have low commercial value and the Sandalwood Oil content in not as much as Indian Sandalwood or Santalum Album. Producing commercially valuable sandalwood with high levels of fragrance oils requires Sandal trees to be a minimum of eight years old, but at least fourteen years is preferred. Unlike most trees, sandalwood is harvested by toppling the entire tree instead of sawing them down at the trunk close to ground level. This way, wood from the stump (heartwood) and root can also be used.

What is heartwood?Heartwood is found at the core of the tree and has been sold at Indian auctions for an average of over 50 lacs per tonne (September 2009). This aromatic wood is a popular material for Asian carvings and handicrafts, particularly in Taiwan and China, where demand is growing. It is also used extensively for religious and cultural purposes throughout India and the Middle East. The renowned Sandalwood aroma comes from the oil found in the heartwood of the tree. Through a process of distillation the oil is extracted from the heartwood and is sold as a fragrance ingredient to the global beauty industry and flavoring agent in chewing products. This highly valued oil trades for around INR 7 Crores per tonne thats Rs 70,000 per kilogram. The value of heartwood is largely determined by the quantity and quality of the oil it contains. Indian Sandalwood is considered to be the super premium species of Sandalwood because it has the highest oil yield and the oil has the greatest concentration of the valuable constituent alpha and beta Santalols.



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 slowgrowing 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 Sandalwood variety. Heartwood from mature Indian Sandalwood trees also has around 2 times the oil content of wild Australian Sandalwood trees. The higher value heartwood, fast-growing characteristics and supply-demand imbalance are reasons why Siri Agri Group chooses to grow Indian Sandalwood.

Australian or Indian Sandalwood?Indian Sandalwood (Santalum album) heartwood was sold for more than 50 lacs per tonne. The global supply of wild Indian Sandalwood is decreasing due to poaching and over-

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The Sandalwood Market supply and demandThere is a lot of detailed information about Sandalwood contained in the Expert Marketing Reports contained in this PDD. This report should be read completely to understand the scope of Sandalwood Market. For thousands of years Indian Sandalwood has been traded for use in perfumes, carvings, medicines and worship around the globe. Different parts of the Sandalwood tree are used to produce this variety of products. Sandalwoods heartwood is used in religious carvings, medicines and to produce Indian Sandalwood oil, a valuable fragrance ingredient that features in many of the worlds most famous perfumes. The outer part of the tree known as sapwood and the spent charge (the wood by-product created once oil has been distilled from the heartwood) remain popular ingredients in incense and joss stick production.

Established DemandThe popularity of Sandalwood is seen in the wide range of countries that import the wood and oil. Sandalwood and Sandalwood oil is currently imported by the Middle East, Japan, China, Taiwan, Hong Kong, Singapore, Germany, Switzerland, France, Australia, the UK and the USA. Trade statistics show that Taiwan alone imported over 2,400 tonnes of Sandalwood wood in 2010. The USA imported close to 28,900 kilograms of Sandalwood oil in the same year. Strong demand for oil in the USA and Europe is driven by the fragrance industry, where Sandalwood oil remains an important ingredient in fragranced soaps, toiletries and perfumes. It is in the Asian markets, however, that Sandalwood has the most cultural significance. India, Taiwan and China remain significant 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 wealth of China (population 1.34-billion people 2011 est.) could continue to increase the Chinese import of Sandalwood.



Dwindling domestic supplies of the species are also expected to drive India to import significant volumes of wood. In 2005 alone over 2,000 tonnes of Sandalwood was imported to supplement Indian demand. While the import of Sandalwood is currently banned in India, this is expected to be lifted as the domestic supply continues to drop. Demand for the heartwood of Indian Sandalwood is often derived from the demand for Indian Sandalwood oil, a valuable ingredient used in fragrances worldwide and chewing products in India. As the oil is made up of a large number of different molecules, it is extremely difficult to

match these in a synthetic substitute. Despite the availability of synthetics, commentators estimate that the natural co