Found out all by myself. Sharing here for benefit of others. Works for both Version 11 SP11 and SP12 too.
Although this instruction is part of installation notes, it was not explicit.
Go to variables and set values for the following:
tGridCfg cFolder
Client/Solutions/ItemFolders/xml/cFolderStructureConfig.xml
tGridCfg cFolder Template
Client/Solutions/ItemFolders/xml/cFolderStructureConfig.xml
tGridCfg Project
Client/Solutions/ItemFolders/xml/cFolderStructureConfig.xml
tGridCfg Root Folders TOC
Client/Solutions/ItemFolders/xml/cFolderStructureConfig.xml
tGridCfg User Folders TOC
Client/Solutions/ItemFolders/xml/cFolderStructureConfig.xml