1. A Pure Touch Of Nature and Intellect
Agarwood Oil (Oud) Production in Thailand
Business Approach and Projections
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2. What is Agarwood?
Agarwood are also known as Agarwood from
Aquilaria genus.
Agarwood is a kind of resin which forms a natural
consequence of the reaction to the attacks agarwood
tree fungus / bacteria (disease). Plants attacked by
spreading a smell of oil to protect the injured body
part (either the root, stem, branch, etc.) where the oil
will eventually become hard (resin). Resin material
that is produced consists of a sari or the diffusion of
aromatic resin known as agarwood.
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3. Why Agarwood?
 Agarwood is the most expensive resinous wood
in the world;
 Agarwood consumption has increased 25 times
over the last 40 years;
 Global demand for agarwood exceeds supply;
 We have access to trees in Thailand and to the
most advanced technology for production of
100% natural agarwood oil / oud with
extraordinary high efficiency.
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4. Use of Agarwood
Agarwood is used in various ways, including traditional
medicine, art and artifacts, artifacts essential oil. Agarwood
burned to produce a fragrant odor since time immemorial
by the Chinese, Arab, India, Japan and Korea which are
widely used in festivals, customs and religion. Starch is
extracted from agarwood oil was used as a perfume
ingredient. For example, oil "Attar", which is water-based
perfume containing agarwood oil extract. Perfumes are
widely used by Muslims and other religion.
Based on quality agarwood divided on grades of between
$1,000 to $60,000 per kg. Starch extracted oil is also sold on
the quality according to certain grades of between $100 -
$400 per tola (12 ml). Pieces of wood based on the quality
agarwood sold according to grade from $1.5 - $10 per kg.
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5. Agarwood Oil Production
Production Cycle
1. Buy 7-8 years old trees
2. Inoculate using proprietary fungal formula
3. Wait 9-10 months
4. Harvest trees – 1 week
5. Separate inoculated pieces
6. Produce powder / dust
7. Soaking
8. Distillation of oil
The whole cycle is 1 year
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6. Agarwood Oil Production
Our Concept
1. Produce oil of medium quality
 Less than $10k per kg
 Easier to sell
 Wider market
2. Produce 40 kg oil per month
3. Sub-contract powder preparation for 1st year
 To start production immediately
 May be consider continue 2nd year, at least partly
4. Target all markets:
 Far East
 Arab world
 Western world
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7. Capital Investment
Equipment Price/unit Units Cost
Distillation system $55,000 1 $55,000
Grider $2,667 0 $0
Owen $6,667 0 $0
Steenless tanks $100 300 $30,000
General equipment $13,333 1 $13,333
Pick-up car $28,333 1 $28,333
Motocycles $2,000 2 $4,000
Misc $25,000 1 $25,000
Total capital investment $155,667
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8. COGS
Ingredients Price/unit Units Total cost Time
Trees $67 160 $10,667
Inoculate $17 160 $2,667 2 weeks
Harvest and deliver $333 1 $333 40 weeks
Total $417 $13,667 52 weeks
COGS per kg oil $341.67
Produce podwer, kg 4,000
COGS per 1 kg powder $3.42
During 1st year of operation we will purchase ready powder.
For Business Plan considered cost of powder as THB 400 / USD13.3
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9. Income Projections
Profit & Loss Years ---> 1 2 3 4 5 6 7 8 9 10
1. Sales
A. Agarwood oil grade A kg 360 480 480 480 480 480 480 480 480 480
Sales $7,000 $2,520,000 $3,360,000 $3,360,000 $3,360,000 $3,360,000 $3,360,000 $3,360,000 $3,360,000 $3,360,000 $3,360,000
B. Treated Powder kg 36,000 48,000 48,000 48,000 48,000 48,000 48,000 48,000 48,000 48,000
Sales $10 $360,000 $480,000 $480,000 $480,000 $480,000 $480,000 $480,000 $480,000 $480,000 $480,000
Total sales $2,880,000 $3,840,000 $3,840,000 $3,840,000 $3,840,000 $3,840,000 $3,840,000 $3,840,000 $3,840,000 $3,840,000
COGS 400 ($53,333) ($53,333) ($53,333) ($53,333) ($53,333) ($53,333) ($53,333) ($53,333) ($53,333) ($53,333)
Gross Sales $2,826,667 $3,786,667 $3,786,667 $3,786,667 $3,786,667 $3,786,667 $3,786,667 $3,786,667 $3,786,667 $3,786,667
% Gross Profit 98% 99% 99% 99% 99% 99% 99% 99% 99% 99%
2. Operation expenses
Production $70,000 $74,000 $74,000 $74,000 $74,000 $74,000 $74,000 $74,000 $74,000 $74,000
Operation and Admin $88,000 $118,000 $118,000 $118,000 $118,000 $118,000 $118,000 $118,000 $118,000 $118,000
M&S $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000
Total Expenses $196,000 $230,000 $230,000 $230,000 $230,000 $230,000 $230,000 $230,000 $230,000 $230,000
3 Operation Profit Before Tax
Operation profit before
tax $2,630,667 $3,556,667 $3,556,667 $3,556,667 $3,556,667 $3,556,667 $3,556,667 $3,556,667 $3,556,667 $3,556,667
% Operation Profit 91% 93% 93% 93% 93% 93% 93% 93% 93% 93%
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10. Cash-Flow Projection
Cash-Flow Statements Years ---> 1 2 3 4 5 6 7 8 9 10
A. Investment Oultay
Fixed capital investment (155,667)
Net working capital (53,333) (53,333) (53,333) (53,333) (53,333) (53,333) (53,333) (53,333) (53,333) (53,333)
Total investment (155,667) (53,333) (53,333) (53,333) (53,333) (53,333) (53,333) (53,333) (53,333) (53,333) (53,333)
B. Annual After-Tax operating cash-flow
Gross Sales 2,880,000 3,840,000 3,840,000 3,840,000 3,840,000 3,840,000 3,840,000 3,840,000 3,840,000 3,840,000
Cash operating expenses (196,000) (230,000) (230,000) (230,000) (230,000) (230,000) (230,000) (230,000) (230,000) (230,000)
Depreciation 10% (15,567) (15,567) (15,567) (15,567) (15,567) (15,567) (15,567) (15,567) (15,567) (15,567)
Operating Income before taxes 2,615,100 3,541,100 3,541,100 3,541,100 3,541,100 3,541,100 3,541,100 3,541,100 3,541,100 3,541,100
Taxes on operating income 23% 601,473 814,453 814,453 814,453 814,453 814,453 814,453 814,453 814,453 814,453
Operating income after tax 2,013,627 2,726,647 2,726,647 2,726,647 2,726,647 2,726,647 2,726,647 2,726,647 2,726,647 2,726,647
Add-back - depreciation 15,567 15,567 15,567 15,567 15,567 15,567 15,567 15,567 15,567 15,567
After tax operating cash-flow 2,029,194 2,742,214 2,742,214 2,742,214 2,742,214 2,742,214 2,742,214 2,742,214 2,742,214 2,742,214
C. Loan & Dividends
Loan 250,000
Loan Repayment (83,333) (83,333) (83,333)
Dividends 100% (1,521,895) (2,742,214) (2,742,214) (2,742,214) (2,742,214) (2,742,214) (2,742,214) (2,742,214) (2,742,214) (2,742,214)
Total 250,000 (1,605,229) (2,825,547) (2,825,547) (2,742,214) (2,742,214) (2,742,214) (2,742,214) (2,742,214) (2,742,214) (2,742,214)
D. TOTAL AFTER-TAX CASH-FLOW
TOTAL AFTER-TAX CASH-FLOW 94,333 423,965 (83,333) (83,333)
Cumulative 94,333 518,298 434,965 351,632 351,632 351,632 351,632 351,632 351,632 351,632 351,632
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11. Investment Analysis
Investment Analysis
Years ---> 1 2 3 4 5 6 7 8 9 10
RRR 10%
Lender's shareholding 15%
Loan $250,000
Lender's Loan repayment 83,333 83,333 83,333
Lender's Dividend $228,284 $411,332 $411,332 $411,332 $411,332 $411,332 $411,332 $411,332 $411,332 $411,332
Lender's Cash-Flow ($250,000) $311,618 $494,665 $494,665 $411,332 $411,332 $411,332 $411,332 $411,332 $411,332 $411,332
NPV annual ($250,000) $283,289 $408,814 $371,649 $280,945 $255,405 $232,186 $211,078 $191,889 $174,445 $158,586
1 year 2 years 3 years 4 years 5 years 10 years
Net Present Value
$33K $442K $813K $1,094K $1,350K $2,318K
Based on:
1. Loan repayment (3 years) + shareholding (15%)
2. Required Return Rate – 10%
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12. Contact
www.agaroud.com
tn@agaroud.com
+66 8 9204-1953
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