From its wood to its oils, sandalwood is a highly-valued commodity used in a variety of applications. High demand for sandalwood over the years has led to overharvesting, threatening the supply and demand equilibrium of the many industries involved in the trade of its by-products. Striving to be the world's leading sustainable sandalwood supplier, TFS implements best practices in climate, community and biodiversity to deliver long-term benefits to investors, the company and the environment. TFS manages its plantations on behalf of retail and institutional investors. TFS has established about 5,000 hectares of Indian sandalwood (Santalum Album). Sandalwood is widely used in fragrance, incense, herbal medicine, worship and carving products. It is challenging to grow the plant due to its parasitic nature and 14- to 15-year growth cycle. It takes a specialist such as TFS to successfully nurture sandalwood and overcome high-entry barriers. Australian Securities Exchange-listed TFS is the first company to grow Indian sandalwood commercially in Australia. It planted its first Indian sandalwood seedlings a year after its establishment in 1998. When TFS first started planting Indian sandalwood, the survival rate of trees was 30 to 40 per cent. TFS now boasts a 90 per cent survival rate. TFS' plantation is considered among the most sustainable in the world. Ensuring species preservation and a continuous supply cycle, TFS planted more than 600,000 sandalwood seedlings last year. "It has taken time to get everything right, from soil preparation to the amount of water needed. Forestry investors have cited our forestry project as probably one of the best worldwide because of the difficulty," says Quentin Megson, chief financial officer at TFS. "We have a niche, a specific intellectual property on how to grow sandalwood. It is very difficult to replicate on a commercial scale." Through its subsidiary, distiller Mount Romance, TFS buys Australian sandalwood (Santalum Spicatum) that is indigenous to Western Australia. Mount Romance incorporates sandalwood oil in cosmetics, aromatherapy fragrance and therapeutic products. The company is the leading producer of Australian sandalwood and sandalwood beauty products. Mount Romance distils oil from the heartwood, the oil-bearing part of sandalwood, through a steam distillation process. The extracted oil is an important base component for fragrances because it slows down the evaporation of the perfume compounds, making scents last longer on the body. Sandalwood is a natural alternative to petroleum products sometimes used in perfume formulations. Top perfume houses such as Chanel and Bulgari use sandalwood in their fragrances. TFS also works with cosmetics companies such as Estée Lauder and L'Oréal. While waiting for the harvest slated for 2013, clients are assured of a stable supply as TFS signs forward-supply agreements. As the repopulation of Indian sandalwood requires collective action, the company has developed the TFS Sandalwood project to reach out to investors wanting to join the initiative and to grow their own sandalwood. TFS' Indian Sandalwood forestry project offers stable investments in an alternative asset class with potential for excellent returns. TFS settled a transaction in 2010 with an AAA-rated United States investor that is a global forestry investment leader. Aside from its Kununurra plantation, TFS has settled two other land acquisitions in Dalbeg, northern Queensland to support its institutional plantation investment programme. Aligned with its vision to be a vertically-integrated producer of sandalwood products, TFS explores partnership opportunities, particularly in China and India, to maximise sandalwood's commercial potential and to develop new applications for its wood and oils. The pharmaceutical market is an area for new applications. TFS has an agreement with ViroXis to supply up to three tonnes of Indian sandalwood oil annually for the development of its botanical drug, albuterpenoids. The ViroXis agreement marks TFS' first commercial-scale contract within the pharmaceutical industry. TFS also seeks to explore sandalwood's applications in Asia, where sandalwood had been an important part in the traditional medicine and religious segments. Strongly driven to discover new uses for sandalwood, TFS is confident that it can provide the Asian market with a sustainable supply for its current and future sandalwood demand.