What are the risks involved in Sandalwood plantation and how does Siri Agri Group take care of these risks?

We grow sandalwood on 1000 acres in and around Hyderabad Visit www.8am.in or call 040-64640606.

This is a very important Question we request investors to read it thoroughly
Climate:

K Muralidhar Reddy (Acharya) Designation with Siri Agri Group: Executive Environmental Scientist who is a Master of Science (environmental science & engineering) from University of Maryland College Park, MD,USA handles the needs of environmental changes and its effects in our projects.
a) Andhara Pradesh, specially Hyderabad and surroundings are known to experience moderate climate. Sandalwood Farming survival need of climate varies between 5 degree Celsius to 50 degree Celsius.
b) The current project involves plantation of 1,12,500 trees which naturally decreases the environmental temperature upto 9 degree Celsius compared to the natural temperature thus ensuring that even in peak summer the temperature in the farms never exceed 40 degree Celsius.
c) The selected project area and its surroundings has never experienced extreme wind or cyclones however as a contingency planning the initial saplings are planted with the support of 6 ft rods/bamboo sticks to avoid getting uprooted.
Diseases:

Siri Agri Group stands incomparable from the other on this very important risk factor. There are about 150 diseases/insects effecting Sandalwood saplings (If you want a complete description of the diseases and their cure click here ) however 99% of them are eradicated in the one year’s duration in the nursery specially maintained for our group. Post one year of nursery maintenance saplings are handpicked for farm cultivation. During the growth tenure one has to take special care of insects like defoliators, sapsuckers, stem borers and termites. The role of sap sucking pests belonging to the family Coccidae is very deleterious to the normal health, growth and reproduction of sandalwood plants specially as this are invisible to human naked eye and cannot be identified easily.
Our expertise team is specially trained to handle this occurrence by regular monitoring of the crop and its health.
Water availability/ drought :

Mr S V L Prasad who is currently working as Manager Horticulture of the Taj West End (Taj Group Hotels) Bangalore handles the horticulture department of Siri Agri Group.
a) Sandalwood trees consume minimal water for its growth when compared to its counterparts. The trees need watering only 5 months in a year and at the intervals of 14 days each.
b) The current project has water availability from 9 ft onwards. Bore-wells dug in the farm are done after a firm geological survey and are dug almost 10 times more than the current water availability.
c) As a contingency planning ground water recharging module is implemented wherein water beds are prepared within the entire farm by digging wells upto 30 feet and filling them with layers of rocks and sand beds.
d) As the last resort, in case of failure of all the above planning, water can be availed on subsidy from the Government canal which runs within our project.
Soil fertility :

a) The land selected for plantation go through proper soil test for their PH value. The current project at Aleru has been selected post these tests. Even in scenarios where the ph value reduces interim , our scientists have identified artificial means of substituting it.
b) The initial test have proved Aleru and surroundings to be very fertile for Sandalwood cultivation specially (santalum album)
c) The surrounding have living sandalwood trees aged 4-6 years in the surroundings proving its capability to cultivate Sandalwood.
Mortality/Failure % :

Siri Agri Group considers this factor as the most important factor in which the company expertises. Mortality/Failure % is very common in an unorganized farming done by freelancers, individual farmers, non agro based farmers like commercial real-estate ventures etc who fall prey to this loss. This is a long term project and people try to cut the cost at the initial levels. I.E purchasing sapling at the least cost possible without knowing the crop genetics , not concentrating on soil fertility or pre-planning for soil erosion, not spending on water harvesting or contingency planning, compromising on security parameters, compromising on the cost to take expert assistance etc

Let us give you an example of what we are trying to say : let's say you have been assigned a project in hand and as per your analysis your target profit from that project is Rs 1000 and the cost to do the project is Rs 100. When you know the outcome ratio is huge when compared to the cost then it doesn’t make sense to compromise on the quality or cost which the project needs to complete successfully and risk/reduce the output.

At Siri Agri Group we handle this factor professionally without compromising as we are 50% share holders of the profit. The common mortality rate in our project is upto 18% which we try to further bring down by following the below mentioned parameters :
a) Siri Agri Group has a independent seed orchard designed to improve the genetics of the seed stock to produce trees of the highest quality. Superior trees are selected based on growth characteristics and oil content. These are then control pollinated to produce seed for use in the project.
b) The saplings from this seeds are then grown in nursery for a period of 12 months before planting it into the cultivation area to further reduce the count of dead, week, infertile and impotent trees.
c) Further, the hand pick saplings are planted in the cultivation area and back-up saplings are still maintained on a 100 : 3 ratio to further replace dead trees by replanting until the fourth year. Mr S V L Prasad who is a member of Siri Agri Group specializes in re-plantation of trees.
d) Trees planted in the cultivation area are supported with rod/bamboo sticks till the 4 year to help its roots gain ground support.
Labour :

With the growing economy the labour availability is shrinking day by day. With easier means to earn more even farm labourers in villages are fast moving towards metros causing huge shortage of availability in farming sector.
Siri Agri Group handles this sensitive issue with adopting an combination of technology & ethical traditional means. Our projects adopts latest Hi-Tech equipments which reduces the manual labour by 68%. All major farm activities starting from digging holes for plantation, regular weeding of dry grass, watering the plants etc are managed by machinery reducing labour dependency. Even the drip irrigation adopted by our company can self detect and pin point any faults within it thus reducing supervision..
The rest of the requirement of human labour needed to do the farming is select from villages following a stern recruitment process and the selected candidates are taken on permanent payrolls of Siri Agri Group with all facilities like, PF, pension, bonus and a small share in the profits.
Fire:

Fire normally happens in an unattended surroundings such as in wild forests. However, Siri Agri Group has understood the damage capacity of such untoward incidents and has planned well in advance.
a) The first contingency planning is done by constructing an boundary thus reducing the risk of intentional planned fire outages done on purpose.
b) The entire farms are sealed with single point entry system into the cultivation area wherein the staff/guest are frisked for security check.
c) The farms undergo regular process of weeding wild grass thus reducing the fast growth of fire in case of one.
d) The drip system adopted by Siri Agri Group are equipped with heat sensors which automatically start sprinkling at their top capacity when there is a sudden change in the temperature. This acts like a fire extinguisher.
e) The entire farm is well planned with approach roads for a fire- brigade vehicle to reach any point without hindrance.
f) The permanent staff stationed at the project are trained/equipped to handle minor fire hazards.

Theft:

Sandalwood theft starts from the 6th year as the tree starts showing traces of oil content and therefore we have made adequate precautions for the same. Siri Agri Group spends upto 36 % of the entire project budget on security.
a) A very important point to be noted is the GO passed by Govt of India. As per the GO, the individual/company possessing/farming Sandalwood trees is/are the absolute owners of the same and can enjoy the outcome of Sandalwood without restrictions. Earlier smuggling/theft prevailed as Sandalwood was considered as govt property and individuals possessing it were under illegal possession.
b) 7ft walls for the entire farm with 2ft of Solar fencing form the 1st level of security making it a single point entry and a secured gated farming module.
c) 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 any 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.
• (ii) Sensing of human penetration by sensing heat.

d) 24x7 security personnel staff which would be increased as per requirement and the growing age of the plant.
e) The security staff stationed at the project is shuffled every 11 months as to avoid any local contact.
f) Full time dog squad management from the 7th year as a contingency planning.
i) Installation of vigilance cameras at key points with 24x7 recording facility.
j) All above mentioned security activities to be outsourced to different vendors for a maximum period of 24 months without any scope of agreement renewals.
k) Inserting of RF Ids (Radio Frequency Ids ) in the stem of all Sandalwood trees at the age of four which is invisible to naked eyes however can trace the transportation of logs in worst to worst scenarios.
Loss of key role personnel:

Siri Agri Group's management team realizes that a long term project needs proper planning this includes back-up planning for the key role personnel. Our projects are carefully planned reducing the dependency on single individual/s by transferring knowledge to the next generation. We have a team of 12 interns from various agricultural universities who are full time employees of Siri Agri Group and have undergone complete training in handling the crop module designed in case of any unforeseen events.
Competitor Risk:

a) Indian govt passing the GO for Indian citizens to cultivate/hold and enjoy Sandalwood has already made experts in Australia to draw back from re-cultivation of Indian Sandalwood as they realize the risk and competition with Indian counterparts growing Indian Sandalwood within India.
b) Competition within India is very minimal due to various reasons like .

• 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 Sandalwood and start selling their plots with Sandalwood trees, their quality would be beyond the market acceptability and the outcome can only be used for the carving industry which pays the least compared to the oil content bearing trees.
• iv) Small players and individual trying their hands would/might also face the same consequences of ending up their yields for the carving industry due to poor crop management , Security management, skills & expertise managements.
• (v) Even if we get proper & healthy competitors Sandalwood Industry's current demand needs about 80,000 hectares of cultivation each year to meet their current demands.

Demand and Supply :

With the GO being realized its very obvious for individuals to take up Sandalwood farming and we at Siri Agri Group invite healthy competitors as we are strongly working towards the restoration of Indian Sandalwood within India. Demand would never be effected as right on date Sandalwood needs 80,000 hectares of cultivation to effect its current demand and this demand is increasing at 18% per annum.
Siri Agri Group abandoning the project in midterm :

This is highly impossible as we do not get profits at the beginning by selling land/s however get continuous and adequate profit right from the 3rd month of stating the project till the project ends. As a company Siri Agri Group would continue doing Sandalwood Farming year after year thus capturing the Sandalwood market from the fifteenth year and thereafter. As income is shared on 50:50 ratio the company will continue to retain interest and monitor the farming process in the best possible manner. The profit volume increases as the years pass and therefore reduces the risk of abandoning the project in midterm.
Insolvency of Siri Agri Group:

a) Siri Agri Group is a well planned establishment with strong financial background. As a company we have the financial capabilities of doing Independent farming without external funding.
b) The project is planned to be self funded for all its maintenance costs as Sandalwood farming needs host plants at various levels which manage continuous funding for management.
c) The project design is so made that the funding for END to END farming is collected from the investors right in the beginning to overcome any cash delinquencies from the investors.
d) Experts involvement and their compensation has been well planned so as to sustain their continued interest in the project.