What are the risks involved in Sandalwood plantation?

What are the risks involved in Sandalwood plantation and how does Goldentrees Agro Farming take care of these risks…?

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

1

Climate

a) In Karnataka, specially Kolar District 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 12,000 trees, which include both sandalwwod & Host trees in 25 Acres & which naturally decreases the environmental temperature up to 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.

2

Diseases

Goldentrees Agro Farming stands incomparable from the other on this very important risk factor. There are about 150 diseases/insects effecting Sandalwood saplings, 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 must 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.

3

Water availability/ drought

A team of expertise from Horticulture department Bangalore handles the horticulture sector of goldentrees agro farming.

a) Sandalwood trees consume minimal water for its growth when compared to its counterparts. The trees need watering only 5 to 6 months in a year and at the intervals of 14 days each, based on the soli type.

b) The current project has adequate amount of water with 5 Bore-wells dug in the farm, and are done after a firm geological survey and are dug almost 3 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 up to 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 rain water canal which runs within our project.

4

Soil fertility

a) The land selected for plantation go through proper soil test for their PH value. The current project at Nagalapura, Kolar District, 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 Nagalapura, Kolar District and surroundings to be very fertile for Sandalwood cultivation specially (santalum album), wherein it has complete RED Soli in it.

c) The complete farm is surrounded by various forestry trees like Teak, Melia Dubai, Silver wood, Neem etc.. aged 10-12 years and within the farm we have almost 600 Mango trees aged 8-10 proving its capability to cultivate Sandalwood.

5

Mortality/Failure %

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 Goldentrees Agro Farming we handle this factor professionally without compromising as we are 40% shareholders of the profit. The common mortality rate in our project is up to 18% which we try to further bring down by following the below mentioned parameters :

a) Goldentrees Agro Farming 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) 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 Ravi who is a member of Goldentress agro farming specializes in re-plantation of trees.

c) Trees planted in the cultivation area are supported with rod/bamboo sticks till the 4 year to help its roots gain ground support.

6

Fire

Fire normally happens in unattended surroundings such as in wild forests. However, goldentrees agro farming 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 goldentrees agro farming 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.

7

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. Goldentrees agro farming spends up to 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 goldentrees agro farming ( 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 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) 24×7 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.

g) Installation of vigilance cameras at key points with 24×7 recording facility.

h) All above mentioned security activities to be outsourced to different vendors for a maximum period of 24 months without any scope of agreement renewals.

i) 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.

8

Loss of key role personnel

Goldentrees agro farming 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 to reduce the dependency on single individual/s by transferring knowledge to the next generation. We have a team of 8 interns from various agricultural universities who are full time employees of goldentrees agro farming and have undergone complete training in handling the crop module designed in case of any unforeseen events.

9

Demand and Supply

With the GO being realized its very obvious for individuals to take up Sandalwood farming and we at goldentrees agro farming invite healthy competitors as we are strongly working towards the restoration of Indian Sandalwood within India. Demand would never be affected as right on date Sandalwood needs 80,000 hectares of cultivation to affect its current demand and this demand is increasing at 18% per annum.

10

Insolvency of Goldentrees Agro Farming

a) Goldentrees Agro Farming is a well-planned establishment with strong financial background. As a company we have the financial capabilities of doing Independent farming without expecting any external funding for project maintenance.

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 handled by goldentrees agro farming itself right in the beginning to overcome any cash delinquencies from the investors.