DIRECTORS' REPORT

TO

THE MEMBERS,

The Directors have pleasure in presenting before you the Seventeenth Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31 March, 2015.

STATE OF COMPANY AFFAIRS:

 Operations:

The total revenue of the Company for the financial year ended 31st march, 2015 is Rs. 24736.65 Lakhs as compared to the previous year's total revenue of Rs. 20151.14 lakhs. During this financial year the Company has incurred a net loss of Rs.1169.63 Lakhs as against the previous year's net loss of Rs. 1706.95 Lakhs. The net loss incurred is due to delay in getting the working capital limits and also plant was shutdown since October 2014 due to the damages caused by Hudhud cyclone.

Prospects:

Encouragement from Government under leadership of Hon'ble Prime Minister Sri Narender Modi, the Government of India initiated the usage of Bio diesel In all transport sectors due to which the Bio diesel industry has become much more attractive than earlier within India itself. The Company has received good amount of Biodiesel supply orders from Road Transport Corporations and Indian Railways, besides the existing orders from domestic and international markets. Hence the Bio diesel business in India will emerge as one of the most attractive and important sector.

ISP Division

The Company presently provides internet services as a Licensed ISP. The Company Services include the following:

- Server Co-Location

- Leased Line services (Terrestrial and RF links)

- Broad band services

- Networking solutions.

- Web hosting services

Bio diesel Division:

The Company has two Bio diesel units, one is at Samsthan Narayanpur (V&M), Nalgonda District, Telangana State with 36TPD capacity and the other is at APIIC, SEZ, Atchutapuram, Rambilli Mandal, Visakhapatnam, Andhra Pradesh state with 250 TPD capacity.

The Company has been supplying Bio diesel to various well reputed customers like India Railways,

Telangana State Road Transport Corporation, Sovino foods Pvt Ltd, Biking Foods Pvt Ltd, Jubilant Generics Ltd, Trimex Sands Pvt ltd, G.S B Forge Pvt Ltd, Coronet Foods PVt Ltd, Bio Future Ltd, Baharat Petroleum Corporation Ltd, My ECO Energy Ltd and other traders etc.,

Plant at Visakhapatnam:

The Company has executed 6000 MTs UCOME / PUCO order of Europe successfully. All the external damages of Hudhud cyclone have been restored and very shortly will commence the operations after thorough check for the internal damages.

Plant at Tondiarpet, Chennai:

The 30 TPD Biodiesel plant for Indian Railways Organization for Alternate Fuels (IROAF), Ministry of Railways is under implementation by the Company and is expected to commence the operations before the end of this year,

IROAF order for another Biodiesel plant at Ralpur,  Chattlsgarh:

Company has become L1 in the tender of executing the Raipur Bio diesel plant at Chattisgarh for IRAOF and awaiting for the execution order.

Bio diesel orders:

The Company has received Biodiesel supply Orders from Indian Railways, Telangana State Road Transport Corporation and many orders from Advait.

ISCC certificate:

Company has acquired prestigious International Sustainability and Carbon Certification (ISCC EU) which is approved by European Commission by Intertek, Germany.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

As required under Clause 49 of the Listing Agreements with Stock Exchanges, the Management Discussion and Analysis Report is enclosed as a part of this report.

CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION:

Your Company has taken adequate steps to adhere to all the stipulations laid down in Clause 49 of the Listing Agreement. A report on Corporate Governance is included as a part of this Annual Report. Certificate from the Statutory Auditors of the company M/s. P Murali & Co., Chartered Accountants confirming the compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is included as a part of this report.

LISTING WITH STOCK EXCHANGES:

The Company confirms that it has paid the Annual Listing Fees for the year 2015-16 to BSE where the Company's Shares are listed.

DEMATERIALISATION OF SHARES:

92.71% of the company's paid up Equity Share Capital is in dematerialized form as on 31st March, 2015 and balance 7.29% is in physical form. The Company's Registrars are M/s Aarthi Consultants Pvt. Ltd., having their registered office at 1-2-285, Domalguda, Hyderabad - 500 029.

DIRECTORS AND KEY MANANGERIAL PERSONNEL:

Pursuant to the provisions of the section 161(1} of the Companies Act, 2013 read with the Articles of Association of the company, Mr. G Viswanath is appointed as Nominee Director (Bank of India) who shall hold office only up to the date of this Annual General Meeting. Now the Board proposes to appoint him as Nominee Director (Bank of India) not liable to retire by rotation.

Notice has been received from a Member proposing candidature of the Director namely Mr.G Viswanath for the office of Director of the Company, A brief profile of proposed Nominee Director (Bank of India), including nature of his expertise, is provided in the Annual Report.

Mr. N Satish Kumar will retire by rotation at the ensuing Annual General Meeting and, being eligible, offer himself for re-appointment

Mr K. Radha Krishna will retire by rotation at the ensuing Annual General Meeting and, being eligible, offer himself for re-appointment.

Mr BHR Balaji re-appointed as an Executive Director for a period of three years w.e.f. 5th January 2015.

Mr K. Radha Krishna re-appointed as an Whole Time Director & CFO for a period of three years w.e.f. 5th January 2015.

Mr B. Sreedhara Reddy re-appointed as an Director - Administration for a period of three years w.e.f. 5th January 2015.

DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS:

The Company has received a declaration from MsT Rohini Reddy, Mr Bachala Ashok and Mr Ashlwlnl Kumar Tripathi directors of the company to the effect that they are meeting the criteria of independence as provided in Sub-section (6) of Section 149 of the Companies Act, 2013 and are annexed herewith. (Annexure - A)

NUMBER OF MEETINGS OF THE BOARD:

During the Financial Year 2014-15 the Board of Directors met 9 times on the following dates: 09th April 2014, 30th May 2014, 18th July 2014, 14th August 2014,     September 2014, 01st October 2014,14* November 2014,12th February 2015 and 30th March 2015.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) of the Companies Act, 2013, Directors of your Company hereby state and confirm that:

a) in the preparation of the annual accounts for the year ended 31s March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for the same period;

c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) they have prepared the annual accounts on a going concern basis;

e) they have laid down internal financial controls in the company that are adequate and were operating effectively.

f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively.

AUDITORS:

i) Statutory Auditors:

The Auditors, M/s. P Murali & Co., Chartered Accountants, Hyderabad retire at this Annual General Meeting and being eligible, offer themselves for re-appointment.

ii) Cost Auditors:

M/s. Lavanya & Associates, Cost Accountants were appointed as Cost Auditors for auditing the cost accounts of your Company for the financial year 2015-16 by the Board of Directors. The Cost Audit Report for the year 2013-14 has been filed under XBRL mode within the due date of filing.

iii) Internal Auditors

M.M Reddy & Co., Chartered Accountants, Hyderabad shall be the Internal Auditors of the Company.

iv) Secretarial Audit:

According to the provisions of section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit Report submitted by Company Secretary in Practice is enclosed as a part of this report (Annexure-1.)

AUDITORS REPORT:

The Board has duly reviewed the Statutory Auditors Report on the Accounts for the year ended 31s1 March 2015 and has noted that the same does not have any reservation, qualification or adverse remarks, however the Board decided to further strengthen the existing system and procedures.

SECRETARIAL AUDIT REPORT:

The Board has duly reviewed the Secretarial Auditor Report for the year ended 31st March 2015 and has noted that the same does not have any reservation, qualification or adverse remarks.

CAPITALOF THE COMPANY

The Authorised Share Capital of the Company is Rs 75,00,00,000/- (Rupees Seventy Five Crores only) divided into 7,50,00,000 equity shares of Rs 10/- each. During the year the company has allotted 77,15,414 Equity shares of Rs 10/- each. The paid up capital of the Company is Rs 58,99,32,880 divided into 5,89,93,288 equity shares of Rs 10/-each.

INFORMATION ABOUT SUBSIDIARIES:

Southern Biofe Biofuels Pvt Ltd (SBBF) is a wholly owned subsidiary of the Company. SBBF was incorporated on 08.05.2002 with an authorized share capital of Rs.34,40,000/-. SBBF initially focused on the establishment and production of biodiesel, the activity of which has been taken over by Southern Online Bio Technologies Ltd. The Company has no operations in the last financial year.

INVESTMENT IN MARVEL BIO OILf ZE:

Company has acquired in the financial year 2015-16, M/s. Marvel Bio Oil FZE in Hamriyah Free Zone, Sharjah, United Arab Emirates, to facilitate the trading activity in Middle East Subsequent to acquisition M/s Marvel Bio Oil FZE has become 100% Subsidiary of the Company.

PUBLIC DEPOSITS:

Your Company has not accepted any deposits falling within the meaning of Sec. 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules 2014, during the financial year under review.

DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS:

Your Company has well established procedures for internal control across its various locations, commensurate with its size and operations. The organization is adequately staffed with qualified and experienced personnel for implementing and monitoring the internal control environment. The internal audit function is adequately resourced commensurate with the operations of the Company and reports to the Audit Committee of the Board.

INSURANCE:

The properties and assets of your Company are adequately insured.

CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION:

Directors are happy to report that your Company is compliant with the Corporate Governance requirements as per Clause 49 of the Listing Agreement with the Stock Exchanges. A separate section on Corporate Governance and Management Discussion and Analysis together with a certificate from the Statutory Auditor confirming compliance is set out in the Annexure forming part of this report.

SECRETARIAL STANDARDS:

Event based Disclosures

During the year under review, the Company has not taken up any of the following activities:

1. Issue of sweat equity share: Not Applicable (NA)

2. Issue of shares with differential rights: NA

3. Issue of shares under employee's stock option scheme: NA

4. Disclosure on purchase by company or giving of loans by it for purchase of its shares: NA

5. Buy back shares: NA

6. Disclosure about revision: NA

7. Preferential Allotment of Shares: Yes

EMPLOYEE RELATIONS:

Your Directors are pleased to record their sincere appreciation of the contribution by the staff at all levels in the improved performance of the Company.

None of the employees is drawing Rs. 5,00,000/- and above per month or Rs.60,00,000/- and above in aggregate per annum, the limits prescribed under Section 134 of the Companies Act, 2013.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE [PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at workplace {Prevention, Prohibition and Redressal) Act, 2013. Internal Complaint Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees are covered under this policy.

The following is the summary of sexual harassment complaints received and disposed during the calendar year.

No. of complaints received: Nil

No. of complaints disposed off: Nil

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is given in the Annexure-B to this report.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

Corporate Social Responsibility required to be disclosed under Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 is not applicable to the company. Hence, composition of committee is not required.

VIGIL MECHANISM:

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.sol.net.in under investors.

RELATED PARTY TRANSACTIONS:

Pursuant to the Share holders approval in the Annual General Meeting held on30r September 2014, the Company tookon lease of Four wheeler Vehicles(Cars)from Three Whole Time Directors of the Company.

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure-2.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The company has not given loans, Guarantees or made any investments during the year under review. RATIO OF REMUNERATION TO EACH DIRECTOR:

Under section 197(12) of the Companies Act, 2013, and Rule 5(1 )(2) & (3) of the Companies(Appointment & Remuneration) Rules, 2014, ratio of remuneration to maiden employees for Mr. N Satish Kumar is 1:2.6 times in rupees and for Mr. K Radha Krishna is 1:1.6 times in rupees.

STATUTORY COMPLIANCE:

The Company has complied with the required provisions relating to Statutory compliance with respect to affairs of the Company with all respects.

DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY:

The Company has been addressing various risks impacting the Company and the policy of the Company on risk management is provided elsewhere in this Annual Report in Management Discussion and Analysis.

UNCLAIMED SECURITIES DEMAT SUSPENSE ACCOUNT:

As on date, there are 8239 Equity Shares of Rs. 10/- each, which were allotted in Initial Public Offer and Rights Issue of 2005, were lying in the escrow account due to non-availability of 18 shareholders correct particulars. Despite various reminders to them, byAarthi Consultants Private Limited our Registrars and Share Transfer Agents, no response has been received. As a result, the said unclaimed shares are credited to Southern Online Bio Technologies Ltd - Unclaimed Securities Demat Suspense Account in

view of compliance of Clause 5A of the Listing Agreement. Such shareholders may approach either the Company or our Registrars and Share Transfer Agents with their correct particulars and proof of their identity for crediting requisite shares from the Demat Suspense Account to their individual demat Account. The voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.

CONSOLIDATED FINANCIAL STATEMENTS:

In accordance with Accounting Standards AS - 21, notified by Companies (Accounting Standards) Rules 2006, the consolidated financial statements covered in this annual report by the Company include financial information of its Subsidiary M/s Southern Biofe Biofuels Pvt Ltd forms part of this annual report.

ACKNOWLEDGEMENT:

Directors take this opportunity to express their thanks to various departments of the Central and State Government, Indian Railways Organisation for Alternate fuels, Indian Railways, Telangana State Road Transport Corporation, Bankers, employees, Material Suppliers, Customers and Shareholders for their continued support and guidance.

The Directors wish to place on record their appreciation for the dedicated efforts put in by the Employees of the Company at all levels.

For and on behalf of the Board of Directors

Sd/ N Satish Kumar Managing Director

K Radha Krishna Whole Time Director & CFO

Date : 07.08.2015  

Place: Hyderabad So7-