TIMES OF INDIA (Business Times)

Southern Online plans Rs 15-cr bio-diesel project.

By K V Ramana

Hyderabad: With the bio-fuel segment attracting attention from several automobile majors, the industry too is excited about the prospects in the segment. One of the rst companies to jump into action is the citybased Southern Online Bio Technologies Ltd (SBT). The company, which has been a Category B Internet Service Provider (ISP), has begun its research and development activity to produce bio-diesel.

"Being an ISP we started working on diversillcation in 2002 and biotechnology was a clear option. Production bio-fuel is part of biotechnology according to regulations and we were excited about the prospects in the segment," the company's managing director N Satish Kumar said.

The company has networked with various institutions including Indian Institute of Science, Indian Institute of Technology, Indian Oil Corporation and Indian Institute of Petroleum in addition to Icrisat for arriving at a bio-fuel production model.

The company has finalised its plans to set up a bio-diesel production centre near Hyderabad with an in stalled capacity to produce 3,500 litres of bio-diesel per day. The commercial production is expected to begin in April 2005.

"We will use a variety of raw mate rial including acid oils, used cooking oil, distilled fatty acids and the oils an extracted from Pongamia and Jatropha seeds. We are in the process of signing up with suppliers basically from villages in the state for supplies. Simultaneously, we will also encourage waste land development project by encouraging farmers to plant Pongamia or Jatropha," he explained.

The company is planning to buy the seeds for Rs 4.50 a kg and sell a litre of bio-diesel for Rs 24, which is about 50 paise less than the price of diesel. "It is going to be a bulk sale for major organisations and fleet owners and any vehicle running on diesel can use the fuel," he explained.

The company claims to have secured letters of interest for purchase of biD-diesel from various organisations like Indian Railways, AP Lorry Owners Association, some hospitals, road transport corporations and municipal corporations.

The company's project is being executed with an outlay of Rs 15 crore. To fmance the project, the company is planning to go in for a rights issue, which will help in raising Rs 6 crare. The remaining would be met through debt. "We have tied up with Lurgi, a German company for technology and another German organisation called GTZ is giving a grant of Rs 50 lakh. GTZ has also agreed to buy carbon from us," Kumar said.