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Tuesday, June 17, 2008

Southern Online Bio Technologies:-Perform or perish

Scripscan:Southern Online Bio Technologies Ltd
Cmp:28
Bse code:532669


[Southern Online Bio Technologies Ltd news,views and analysis/small internet and biodiesel player/results/future prospects/bagged orders/Analsyt buy call/high valuations/ fundamentals and technicals of southern online bio/can be a great buy if performs/Target price/What should be done with Southern Online Bio Technologies Ltd]


Story:They say, more than a tonne of dirt needs to be shifted to find every single carat of diamond. The same applies to the vast universe of small companies.It is a daunting proposition to sift through an endless list of sectors and industries in the hope of hitting on some gems.The stock which am gonna discuss today has been hyped immensely as the next star performer.So lets check it out buddies:-

Company:Southern online biotech has been providing a wide spectrum of services, which includes basic services like Internet access, E-mail and value added services such as Add on hours.The Company presently provides Internet Services as a Licensed ISP by connecting through Bharti Broadband Backbone,.The Company's services include the following:

* Dial up Services through PSTN
* Web Hosting
* Server Co-Location
* VOIP Services
* Leased Line services (Terrestrial and RE links)
* Dedicated Servers
* Networking Solutions

BIODIESEL PROJECT:The Company's Biodiesel Unit has been established at Samsthan Narayanpur Village & Mandal, Nalgonda District with 40,000 liters per day capacity with an investment of Rs.25.72 crores and the the Company has commenced the sale of Biodiesel from july last year.It has been supplying biodiesel to various well reputed customers like IDEA Cellular, L&T, Airtel, Kirloskar Oil Engines, Toyota Kirloskar, TNT Express couriers, Giatech, Southern Rocks & Minerals etc,.The Company has further plans to upgrade the current Biodiesel unit from 12500 TPY to 25000 TPY,over a period of 3 years.It is also planning to set up a unit of 250 Tons per day capacity at Vizag to have presence in the Global markets.The project cost of the proposed Biodiesel plant is Rs. 75.00 Cr.

Now a question is inevitable,Yeh "BIODIESEL" kya hota hain bhai?
Ans)Well Biodiesel (methyl esters) is a renewable liquid fuel produced from new or used vegetable oils or animal fats.It is typically made by a chemical process called esterfication, transesterification which relies on an alcohol, such as methanol, and a catalyst. It can also be made from Pongamia,Jatropha, cottonseed, peanut, canola (a variety of rapeseed),sunflower oils, waste animal fats,and used cooking oil.

Conclusion:Southern online bio has been quite consistent over the last 5 years as far its topline and bottomline is concerned.The company is striving for more with its full strength.Sales may bloster further but margin pressure would countine to remain.I doubt whether there are more unique plays like southern online bio.An interesting company operating in the field of two sunrising sectors with huge potential.But it should be prudent to note that bio-diesel is still a huge hyper and many small companies which were touted to be dark horses came and at present are struggling for their existence.Dollex,ascent exim,ikf to name a few such companies.It has bagged some recent orders for its biodiesel stuffs and it expects to bag few more in the coming days.On the internet and its allied business i doubt its ability to compete and cope with much bigger players.So risk and returns both seems to be looming large on the company.Only thing which can shape it up in the coming years would be the management"s vision and ther calculated efforts,if any at all.Dilution of equity is again something which am never comfortable talking of but its in nascent stages of a huge boom period,so i give my nod on it.Its of no doubt that because of the potential and prospects,Southern online bio would always be in the reckoning and will find its place in the portfolio of several risk savvy takers but performing bigtime in the bourses may only happen after the deliveration of robust set of numbers.



Regards,
ARUN
I can be reached at:-arunanalyst@rediffmail.com

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