UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  _______________________
   FORM
10-KSB
  _______________________
  þ
                
                Annual
      report under Section 13 or 15(d) of the Securities Exchange Act of
      1934.For
      the fiscal year ended March 31,
2008
  o
                
                Transition
      report under Section 13 or 15(d) of the Exchange
  Act.
  Commission
file number000-1326205
  INDIA
GLOBALIZATION CAPITAL, INC.
 (Name of
small business issuer in its charter)
  Maryland
                  (State
      or other jurisdiction of incorporation or organization)
                20-2760393
                  (I.R.S.
      Employer Identification No.)
  4336 Montgomery Ave.
Bethesda, Maryland 20814
 (Address
of principal executive offices)
  (301) 983-0998
 (Issuer’s
telephone number)
 Securities
registered under Section 12(b) of the Exchange Act:
  Title of Each
      Class
                Name of exchange on
      which registeredUnits,
      each consisting of one share of Common Stock
                American
      Stock Exchangeand
      two WarrantsCommon
      Stock
                American
      Stock ExchangeCommon
      Stock Purchase Warrants
                American
      Stock Exchange
  Securities
registered under Section 12(g) of the Exchange Act: None.
  Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.     o
Yes          þ No
  Check
whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past
90 days.           þ
Yes             
o No
  Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. þ
 
 Indicate
by check mark whether the registrant is a large accelerated filer, or a
non-accelerated filer. See definition of “accelerated filer and large
accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):
  Large
Accelerated Filer o   
Accelerated Filer o   
Non-Accelerated Filer þ
 
 Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
          o Yes
           þ No
 
 State
issuer’s revenues for its most recent fiscal year. $2,188,018
  The
aggregate market value of the voting and non-voting common stock held by
non-affiliates of the Company, computed by reference to the closing price of
such stock as of June 2, 2008 was $ 32,839,278.87.  For purposes of
the computation we consider all directors and holders of 10 percent or more
of our common stock to be affiliates. Therefore, the number of shares of our
common stock held by non-affiliates as of June 2, 2008 was 6,070,107
shares. The number of shares of Common Stock outstanding on June 2, 2008
was 8,570,107 shares.
  Documents
incorporated by reference: Definitive Proxy statement filed on February 8, 2008;
Form 8-K filed on May 23, 2008.
 
 Transitional
Small Business Disclosure Format (Check one): Yes o No þ
  Table of Contents
  INDEX
  PagePART
      IItem
      1.
              Business
              3Item
      1A.
              Risk Factors
              6Item
      1B.
              Unresolved Staff Comments
              9Item
      2.
              Property
              10Item
      3.
              Legal
      Proceedings
              10Item
      4.
              Submission of Matters to Vote of Security
      HoldersPART
      IIItem
      5.
              Market
      forRegistrant’s
      Common Equity,RelatedStockholderMatterand
      Issuer Purchases of Equity
    Securities
              11Item
      6.
              Selected Financial DataItem
      7.
              Management's Discussion and
      AnalysisofFinancial Conditions and Results of
      Operations
              12Item
      7A.
              Quantitative and Qualitative Disclosures about Market
      RisksItem
      8.
              Financial
      Statements
      and Supplementary Data
              15Item
      9.
              Changes in and
      Disagreements with Accountants on Accounting and Financial
      Disclosure
              15Item
      9A.
              Controls and
      Procedures
              15Item
      9B.
              Other
      Information
              16PART
      IIIItem
      10.
              Directors
      and Executive Officersand
      Corporate Governance
              17Item
      11.
              Executive
      Compensation
              17Item
      12.
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
              17Item
      13.
              Certain
      Relationships and Related Transactions, and Director
      Independence
              17Item
      14.
              Principal Accountant Fees and ServicesPART
      IVItem
      15.
              Exhibits
      and Financial Statements
Schedules
              40Signatures
              41Section 1350 CertificationSection 1350 Certification
    Table of Contents
  PART
I
 Item1.  Business
  Background of India Globalization
Capital, Inc.
(IGC)
 
 IGC, a
Maryland corporation, was organized on April 29, 2005 as a blank check
company formed for the purpose of acquiring one or more businesses with
operations primarily in India through a merger, capital stock exchange, asset
acquisition or other similar business combination or acquisition. On March 8,
2006, we completed an initial public offering.  On February 19, 2007,
we incorporated India Globalization Capital, Mauritius, Limited (IGC-M), a
wholly owned subsidiary, under the laws of Mauritius.  On March 7,
2008, we consummated the acquisition of 63% of the equity of Sricon
Infrastructure Private Limited (Sricon) and 77% of the equity of Techni Bharathi
Limited (TBL). The shares of the two Indian companies, Sricon and TBL, are held
by IGC-M.
 
 Most of
the shares of Sricon and TBL acquired by IGC were purchased directly from the
companies. IGC purchased a portion of the shares from the existing owners of the
companies.  The founders and management of Sricon own 37% of Sricon
and the founders and management of TBL own 23% of TBL.
 
 The
acquisitions were accounted for under the purchase method of
accounting.  Under this method of accounting, for accounting and
financial purposes, IGC-M, Limited was treated as the acquiring entity and
Sricon and TBL as the acquired entities.  The financial statements
provided here and going forward are the consolidated statements of IGC, which
include IGC-M, Sricon, TBL and their subsidiaries.  However,
historical description of our business for periods and dates prior to March 7,
2008 include information on Sricon and TBL.
 
 Unless
the context requires otherwise, all references in this report to the “Company”,
“IGC”, “we”, “our”, and “us” refer to India Globalization Capital, Inc, together
with its wholly owned subsidiary IGC-M, and its direct and indirect subsidiaries
(Sricon and TBL).
 
 Our
Securities
 
 We have
three securities listed on the American Stock Exchange: (1) common stock, $.0001
par value (ticker symbol: IGC), (2) redeemable warrants to purchase common stock
(ticker symbol: IGC.WS) and (3) units consisting of one share of common stock
and two redeemable warrants to purchase common stock (ticker symbol:
IGC.U).  On March 8, 2006, we sold 11,304,500 units in our initial
public offering.  These 11,304,500 units include 9,830,000 units sold to
the public and the over-allotment option of 1,474,500 units exercised by the
underwriters of the public offering. The units may be separated into common
stock and warrants.  Each warrant entitles the holder to purchase one
share of common stock at an exercise price of $5.00.  The warrants
expire on March 3, 2011, or earlier upon redemption.  The
registration statement for initial public offering was declared effective on
March 2, 2006.  The warrants are exercisable and may be exercised by
contacting the Company or the transfer agent Continental Stock Transfer &
Trust Company.  We have a right to call the warrants, provided the
common stock has traded at a closing price of at least $8.50 per share for any
20 trading days within a 30 trading day period ending on the third business day
prior to the date on which notice of redemption is given.  If we call the
warrants, the holder will either have to redeem the warrants by purchasing the
common stock from us for $5.00 or the warrants will expire.
 
 On March
7, 2008, we bought and redeemed a total of 6,159,346 shares.  As a
result, on June 2, 2008, we had 8,570,107 shares outstanding (including shares
sold to our founders in a private placement prior to the public offering) and
24,874,000 shares of common stock were reserved for issuance upon exercise of
redeemable warrants and underwriters’ purchase option.
 
 Overview
 
 Sricon
Infrastructure Private Limited (“Sricon”) was incorporated as a private limited
company on March 3, 1997 in Nagpur, India.  Sricon is an engineering
and construction company that is engaged in three business areas: 12) civil
construction of highways and other heavy construction, 2) mining and quarrying
and 3) the construction and maintenance of high temperature cement and steel
plants.  Sricon has a pan-India focus and is accredited with ISO
9001:2000 certification and its present and past clients include various Indian
government organizations.  Sricon employs approximately 250 skilled
employees and over 800 unskilled labor contractors.  It currently has
the capacity and prior experience to bid on contracts that are priced at a
maximum of about $116 million. Sricon recently won, as disclosed in a press
release, a contract to build 150 miles of rural roads including one major and 33
minor bridges.
  Techni
Bharathi Limited (“TBL”) was incorporated as a public (but not listed on the
stock market) limited company on June 19, 1982 in Cochin, India.  TBL
is an engineering and construction company engaged in the execution of civil
construction and structural engineering projects.  TBL has a focus in
the Indian states of Andhra Pradesh, Karnataka, Assam and Tamil Nadu. Its
present and past clients include various Indian government
organizations.
 
  3
 Table of Contents
  Core
Business Areas
 
 Our core
business areas include the following:
 
 Highway and heavy
construction:
 
 The
Indian government has articulated a plan to build and modernize Indian
infrastructure.  The government’s plan, which calls for spending over
$475 billion over the next five years, includes the construction of rural roads,
major highways and townships among other infrastructure.  We have
approximately  $ 226 million worth of contracts in our order book
including a $103 million contract to build 150 miles of rural roads including 33
bridges in the state of Madhya Pradesh, and contracts for the building of
highways in Assam, Maharashtra and Madhya Pradesh totaling around $108
million.  In addition, we have smaller construction contracts
amounting for  $15 million, including a construction contract in a
township in Nagpur.
 
 Mining and
Quarrying
 
 As Indian
infrastructure modernizes, the demand for raw materials like stone aggregate,
coal, ore and similar resources is projected to increase. In 2006, according to
the Freedonia Group, India was the fourth largest stone aggregate market in the
world with demand of up to 1.1 billion metric tons.  Sricon has five
site licenses with two installed crushers and produces approximately 600,000
metric tons of aggregate annually.  The aggregate reserves in Sricon’s
five quarries have a projected value of around $50
million.  India is the third largest producer of coal and fourth
largest producer of ore.  Ten percent of the world’s coal reserves are
in India.  We have a multiyear contract valued around $62 million for
the removal of overburden  from open pit coal
mines.  Overburden is the layers and rock covering the coal
seam,  These types of excavation projects are necessary before mining
can began.
 
 Construction
and maintenance of high temperature plants
 
 Sricon
has an expertise in the civil engineering, construction and maintenance of high
temperature plants.   For example, we construct cement and steel
plants.  This requires specialized skills to build and maintain the
high temperature chimneys and kilns.  We have a multiyear contract
valued around $60 million for civil engineering and maintenance of high
temperature cement plants.
 
 Customers
 
 Over the
past 10 years, Sricon has qualified in all states in India and has worked in
several, including Maharashtra, Gujarat, Orissa and Madhya
Pradesh.  The National Highway Authority of India (NHAI) awards
interstate highway contracts on a national level, while intra-state contracts
are awarded by state agencies. The National Thermal Power Corporation (NTPC)
awards contacts for  civil work associated with power plants. The
National Coal Limited (NCL) awards large mining contracts. Our customers
include, or have included, NHAI, NTPC, and various state public works
departments.  Sricon is registered across India and is qualified to bid on
contracts anywhere in India.
 
 Contract
bidding process
 
 In order
to create transparency, the Indian government has centralized the contract
awarding process  for  building  inter-state
roads.  The new process is as follows: At the “federal” level, as an
example, NHAI publishes a Statement of Work for an interstate highway
construction project.  The Statement of Work has a detailed
description of the work to be performed as well as the completion time frame.
The bidder prepares two proposals in response to the Statement of Work. The
first proposal demonstrates technical capabilities, prior work experience,
specialized machinery, and manpower required, and other criteria required to
complete the project. The second proposal includes a financial
bid.  NHAI evaluates the technical bids and short lists technically
qualified companies. Next, the short list of technically qualified companies
are  invited to place a detailed financial bid and show adequate
financial strength in terms of  revenue, net worth, credit lines,
 and balance sheets. Typically, the lowest bid wins the contract. Also,
contract bidders must demonstrate an adequate level of capital reserves such as
the following:  1) An earnest money deposit  between 2% to
10% of  project costs, 2) performance guarantee of between 5% and 10%,
3) adequate working capital and 4) additional capital for plant and
machinery.   Bidding qualifications for  larger NHAI
projects are set by NHAI which are imposed on each contractor.  As the
contractor executes larger highway projects, the ceiling is increased by
NHAI.   For example, Sricon’s ceiling on highway construction
projects is around $116 million for each
contract.
 
 
 
 4
 Table of Contents
 
 Our
Growth Strategy and Business Model
 
 Our
business model is simple.  We bid on construction, mining and or
maintenance contracts.   Successful bids increase our backlog of
orders, which favorably impacts our revenues and margins.   The
contracting process typically takes approximately  six months. Over
the years, we have been successful in winning  one out of every seven
bids on average.  We currently have three bid
teams.   Historically, we  bid on multi-year contracts
up to $70 million, but more recently, we began bidding on contracts up to $110
million.  Our growth strategy is six pronged: 1) increase the backlog
of orders in the three areas of business to over $500 million, 2) recruit
executives, business managers, and specifically three leads for the three lines
of business, 3) recruit world class technical partners from the United States
for each of our business lines, 4) eliminate or hedge risks associated with the
volatility of commodity prices by, for example, ownership of aggregate quarries,
mines, control over suppliers, or pass through contracts, 5) adapt a strategic
and quantitative approach to building the business rather than one that is
generic and short-sighted,  and  6) install systems better
enabling corporate governance, USGAAP reporting and contract
monitoring.
  Indian
companies have historically reported in Indian GAAP.  However we have
increased the number of USGAAP accountants  and continue to
strengthen  USGAAP reporting capability within our
companies.  Currently, we have chief financial officers located in
India at of Sricon and TBL.  In addition, we have a Chief Accounting
Officer in the US.  Also, we have augmented the in-house teams with a
Delhi based consulting firm that specializes in both USGAAP and Sarbanes-Oxley
(SOX) compliance.  Adapting best practices for reporting, governance,
and monitoring is of immediate strategic value as it leads to a quantitative
approach and, therefore, part of our growth strategy and business
model.
 
 Competition
 
 We
operate in an industry that is fairly competitive.  However, there is
a large gap in the supply of well qualified and financed contractors and the
demand for contractors.  Large domestic and international firms
compete for jumbo contracts over $250 million in size, while locally based
contractors vie for contracts less than $20 million. The recent capital markets
crisis has made it more difficult for smaller companies to maturate into
mid-sized companies, as their access to capital has been restrained. Therefore,
we have  positioned ourselves in the $50 million to $125 million
contract range , above locally based contractors and below the large firms,
creating a distinct technical and financial advantage in this market
niche.
 
 Seasonality
 
 The
construction industry typically experiences recurring and natural seasonal
patterns throughout India..  The North East Monsoons, historically,
arrive on June 1, followed by the South West Monsoons, which usually lasts
intermittently until September.  Historically, the second fiscal
quarter ending in September is slower than other quarters because of these
natural phenomena’s.  Some projects, such as engineering or
maintenance of high temperature plants is less susceptible to seasonal
changes. This reduced paced period historically been used to bid and win
contracts. The contract bidding activity is typically very high during the
monsoon season in preparation for work activity when the rains
abate.
 
 Employees
and Consultants
 
 As of
March 31, 2008, we employed a work force of approximately 1,200 employees and
contract workers worldwide.  Employees are typically skilled workers
including executives, welders, drivers, and other specialized experts. Contract
workers require less specialized skills.. We make diligent efforts to comply
with all employment and labor regulations, including immigration laws in the
many jurisdictions in which we operate. With a projected macro increase in
construction activity, we anticipate a shortage of skilled labor.  In
order to attract and retain skilled employees, we have implemented a performance
based incentive program, offered career development
programs,  improved working conditions, and provided United States
work assignments, technology training, and other fringe benefits. While we have
not done so yet, we are exploring adopting best practices for creating and
providing vastly improved labor camps for our labor force.  We are
hoping that our efforts will make our companies “employers of choice” and best
of breed.  Our Chief Executive Officer is Ram Mukunda and our Chairman
is Ranga Krishna.  Our Managing Director for Sricon is Ravindra Lal
Srivastava and our Managing Director for TBL is Jortin
Antony.   Our Treasurer and Principal Accounting officer is John
Selvaraj.  Our Chief Financial Officer for Sricon is Abhay Wakhare and
our Chief Financial Officer for TBL is Santhosh Kumar.  We also
utilize the services of several consultants who provide USGAAP systems expertise
and SOX expertise among others.
 Environmental
Regulations
 
 India has
very strict environmental, occupational, health and safety
regulations.  In most instances, the contracting agency regulates and
enforces all regulatory requirements.   We internally monitor and
manage regulatory issues on a continuous basis, and we believe that we are in
compliance in all material respects with the regulatory requirements of the
jurisdictions in which we operate. Furthermore, we do not believe that
compliance will have a material adverse effect on our business
activities.
 
 
 5
 Table of Contents
 
 Information
and timely reporting
 
 Our
operations are located in India where the accepted accounting standards is
Indian GAAP, which in many cases, is  not congruent  to
USGAAP.  Indian accounting standards are evolving towards adopting
IFRS (International Financial Reporting Standards).  Currently, we
file financial statements in (1) India using IGAAP, (2) in Mauritius under IFRS
(International Financial Reporting Standards), and (3) with the SEC, filing
quarterly 10-Q’s and annual 10-k’s complying with USGAAP.   We
annually conduct IGAAP and PCAOB (USGAAP) audits for each company.  We
acknowledge that this process is at times cumbersome and places restraints on
our existing staff. Therefore, we are in the process of improving our closing
process and align our accounting operations more with U.S. reporting
requirements. This will enable timely completion of audits and SEC filings. We
will make available on our website, www.indiaglobalcap.com,
our annual reports, quarterly reports, proxy statements as well as up to- date
investor presentations.  Our SEC filings are also available at
www.sec.gov.
 
 Item1A.  Risk Factors
  THE  FOLLOWING  RISK
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING THE COMPANY,  ITS
BUSINESS, CONDITION AND PROSPECTS (FINANCIAL AND OTHERWISE). THESE RISK FACTORS
ARE NOT NECESSARILY EXHAUSTIVE AND ADDITIONAL RISK FACTORS, IF ANY,
MAY  BE MATERIAL OR HAVE SIGNIFICANCE TO AN INDIVIDUAL INVESTOR. MANY
INVESTMENT OPPORTUNITIES  INVOLVE  RISK  FACTORS
OR A RISK OF LOSS AND THE EXISTENCE OF THE NORMAL AND CERTAIN
EXTRAORDINARY  RISKS.
 Any
downgrading of India’s debt rating by an international rating agency, or an
increase in interest rates in India, could have a negative impact on our ability
to borrow in India.
 
 As we
scale our operations we may increase the amount of money we borrow for working
capital and leasing of equipment Any adverse revisions to India’s credit
ratings for domestic and international debt by international rating agencies as
well as an increase in Indian interest rates may adversely impact our ability to
finance growth through debt and could lead to a tightening of our margins,
adversely effecting our operating income.
 
 A
change in government policy, a down turn in the Indian economy or a natural
disaster could adversely affect our business, financial condition, results of
operations and future prospects.
 
 Sricon
and TBL are dependent on the government of India as well as the state
governments for contracts.  Their operations and financial results may
be affected by changes in the government’s policy towards building
infrastructure.  In addition, a slow down in the Indian economy or its
growth rate, social unrest, natural disasters, or a change in government could
cause the government to slow down the pace of infrastructure building which
could adversely affect our future performance.  We foresee no
immediate changes to government policy or market conditions that would adversely
affect our ability to conduct business.
 
 Political,
economic, social and other factors in India may adversely affect
business.
 
 Our
ability to grow our business may be adversely affected by political, economic,
social and religious factors, changes in Indian law or regulations and the
status of India’s relations with other countries. In addition, the economy of
India may differ favorably or unfavorably from the U.S. economy in such respects
as the rate of growth of gross domestic product, the rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position.
According to the World Factbook published by the United States Central
Intelligence Agency, the Indian government has exercised and continues to
exercise significant influence over many aspects of the economy, and
privatization of government-owned industries proceeds at a slow pace.
Accordingly, Indian government actions in the future could have a significant
effect on the Indian economy, which could have a material adverse affect on our
ability to achieve our business objective.
 
 Since
mid-1991, the Indian government has committed itself to implementing an economic
structural reform program with the objective of liberalizing India’s exchange
and trade policies, reducing the fiscal deficit, controlling inflation,
promoting a sound monetary policy, reforming the financial sector, and placing
greater reliance on market mechanisms to direct economic activity. A significant
component of the program is the promotion of foreign investment in key areas of
the economy and the further development of, and the relaxation of restrictions
in, the private sector. These policies have been coupled with the express
intention to redirect the government’s central planning function away from the
allocation of resources and toward the issuance of indicative guidelines. While
the government’s policies have resulted in improved economic performance, there
can be no assurance that the economic improvement will be sustained. Moreover,
there can be no assurance that these economic reforms will persist, and that any
newly elected government will continue the program of economic liberalization of
previous governments. Any change may adversely affect Indian laws and policies
with respect to foreign investment and currency exchange. Such changes in
economic policies could negatively affect the general business and economic
conditions in India, which could in turn adversely affect our
business.
 
 
 
 6
 Table of Contents
 Terrorist
attacks and other acts of violence or war involving India and other countries
could adversely affect the financial markets and our business.
 
 Terrorist
attacks and other acts of violence could have the direct effect of destroying
our plant and property causing a loss and interruption of
business.  According to the World Factbook, religious and border
disputes persist in India and remain pressing problems. For example, India has
from time to time experienced civil unrest and hostilities with neighboring
countries such as Pakistan. The longstanding dispute with Pakistan over the
border Indian state of Jammu and Kashmir, a majority of whose population is
Muslim, remains unresolved. If the Indian government is unable to control the
violence and disruption associated with these tensions, the results could
destabilize the economy and, consequently, adversely affect our
business.
 
 Since
early 2003, there have also been military hostilities and civil unrest in
Afghanistan, Iraq and other Asian countries. These events could adversely
influence the Indian economy and, as a result, negatively affect our
business.
 
 While we
will have insurance to cover these risks there can be no guarantee that we will
be able to collect in a timely manner.  Terrorist attacks,
insurgencies or the threat of violence could slow down road building activity
adversely affecting our road building business.
 
 Returns
on investment in Indian companies may be decreased by withholding and other
taxes.
 
 Our
investments in India will incur tax risk unique to investment in India and in
developing economies in general. Income that might otherwise not be subject to
withholding of local income tax under normal international conventions may be
subject to withholding of Indian income tax.  Under treaties with
India and under local Indian income tax law, income is generally sourced in
India and subject to Indian tax if paid from India. This is true whether or not
the services or the earning of the income would normally be considered as from
sources outside India in other contexts. Additionally, proof of payment of
withholding taxes may be required as part of the remittance procedure. Any
withholding taxes paid by us on income from our investments in India may or may
not be creditable on our income tax returns.
 
 We intend
to avail ourselves of income tax treaties with India and minimize any Indian
withholding tax or local taxes.  However, there is no assurance that
the Indian tax authorities will always recognize such treaties and its
applications. We have also created a foreign subsidiary in Mauritius, in
order to limit the potential tax exposure.
 
 The
cost of obtaining bank financing may reduce TBL’s income.
 
 TBL has
restructured some of its bank debt and may, in the future, face higher interest
rates or will require higher collateral with the banks.  This
increases the cost of money for TBL and could decrease its margins.  
IGC expects to provide collateral support for two to three years, by which time
we expect the credit worthiness of TBL to increase to adequate levels. However,
there can be no assurance that TBL will not have to pay higher interest rates in
the future, which could reduce its net income.
  Availability
of  raw materials at competitive prices.
 
 Construction
contracts are primarily dependent on adequate and timely supply of raw
materials, such as cement, steel and aggregates, at competitive prices. As the
demand from competing larger and well-established firms increases for procuring
raw materials, we could face an increase in the price of raw materials that may
negatively impact profitability.
  Our
business is dependent on contracts awarded by the Government and its
agencies.
 
 The
businesses of Sricon and TBL are dependent on central and state budget
allocations to the infrastructure sector. Sricon and TBL derive the bulk of
their revenue from contracts awarded by the central and state governments of
India and their agencies. If there are delays in the payment of invoices by the
government, our working capital requirements could increase. The BOT industry is
highly competitive, and Sricon and TBL may be outbid for government contracts.
In addition, to the extent that Sricon and TBL fail to perform in accordance
with the criteria of existing contracts, the governments may be more inclined to
seek alternative sources of BOT services.
 
 
 7
 Table of Contents
 
 Leveled
penalties for time overruns may adversely effect our economic
performance.
 
 Sricon
and TBL execute construction contracts primarily in the roads and infrastructure
development sectors. Sricon and TBL typically enter into high value contracts
for these activities, which impose penalties if contracts are not executed in a
timely manner.  If Sricon and TBL are unable to meet the performance
criteria as prescribed by respective contracts, then levied penalties may
adversely affect our financial performance.
  Our
business is dependent on continuing relationships with clients and strategic
partners.
  Our
business is dependent on developing and maintaining strategic alliances with
contractors that undertake turnkey contracts for infrastructure development
projects as well as government organizations.  The business and our
results could be adversely affected if we are unable to maintain continuing
relationships and pre-qualified status with key clients and strategic
partners.
 
 Our business model relies heavily on our
management team and any unexpectedloss of key officersmay adversely affectour
operations
 The
continued success of our business is largely dependent on the continued services
of key employees in IGC, Sricon, and TBL.  The loss of the services of
certain key personnel, without adequate replacement, could have an adverse
effect on our performance. Our senior management as well as the senior
management of our subsidiaries have played a significant role in developing and
executing the overall business plan, maintaining client relationships,
proprietary processes and technology.  While no one  is
irreplaceable, the loss of the services of any would be disruptive to our
business.  In order to mitigate this risk factor we are recruiting
professional managers and expanding the executive ranks as well as pursuing
succession-planning initiatives,but there can be no guarantees that
these mitigation efforts will be successful.
 Quarterlyfinancial
resultswillvary.
  Factors
that may contribute to the variability of quarterly revenue, operating results
or profitability include:
  ·
              Fluctuations
      in revenue due to seasonality:  For example, during the monsoon
      season, the heavy rains slow down road building and construction
      work.  This results in uneven revenue and operating results
      through the quarters.  In general the months  between June
      and September are the rainy seasons and these tend to be slower quarters
      than the others.
 
 ·
              Our
      revenue recognition policy records contract revenue for those stages of a
      project that we complete, after we receive certification from the client
      that such stage has been successfully completed.  Since revenue
      is not recognized until we receive a certification from our clients,
      revenue recognition can be uneven.
  Our
subsidiaries may become involved in litigation in the future.
 
 Our
subsidiaries are fairly large companies and may have to initiate actions in the
Indian Courts to enforce their rights and may also be drawn into legal
litigation.  The expenses of litigation and any judgments against us
could have a material adverse effect on us.
  We
face competition in the Indian infrastructure industry.
 
 The
Indian real estate and infrastructure industries are increasingly attracting
foreign capital.  We currently have competition from international as
well as domestic companies that operate at the national
level.  Smaller localized contractors and companies are also competing
in their respective regions.  If we are unable to offer competitive
prices and obtain contracts, there could be a significant reduction in our
revenue.
  Our
operations are sensitive to weather conditions.
 
 Our
business activities in India could be materially and adversely affected by
severe weather conditions. Severe weather conditions may require Sricon and TBL
to evacuate personnel or curtail services and may result in damage to a portion
of Sricon and TBL’s fleet of equipment or to our facilities, resulting in the
suspension of operations, and may further prevent Sricon and TBL from delivering
materials to project sites in accordance with contract schedules or generally
reduce our productivity.  Difficult working conditions and extremely
high temperatures also adversely affect the operations of Sricon and TBL during
summer months and during monsoon season, which restrict our ability to carry on
construction activities and fully utilize our resources.
 
 The
revenue recorded in the first half of our fiscal year between June through
September is traditionally lower than revenue recorded during the second half of
our fiscal year due to the weather conditions.  During periods of
curtailed activity due to adverse weather conditions, Sricon and TBL may
continue to incur operating expenses, reducing profitability.
   8
 Table of Contents
 
 We incur costs as a result of
operating as a publiccompany. Our management
is required to devote substantial time to new compliance
initiatives.  Because we report inIndiain IGAAP and in theUSin USGAAP, we may experience
untimely close of our books and records and delays in the preparation of
financial statements and related disclosures.
 
 Prior to
our acquisitions, both Sricon and TBL operated as private
companies.  As part of a public company with
substantial operations, we are experiencing an increase in legal,
accounting and other expenses.  In addition the Sarbanes-Oxley Act of
2002 (the “SOX” act), as well as new rules subsequently implemented by the SEC
and the American Stock Exchange, have imposed various requirements on public
companies, including requiring changes in corporate governance
practices.  Our management and other personnel need to devote a
substantial amount of time to these compliance initiatives.  We have
not evaluated or tested internal controls over financial reporting at Sricon and
TBL.  We expect to carry out the evaluations and take install systems
and processes as required. However, we cannot be certain as to the timing of
completion of the evaluation testing and remediation actions or the impact of
the same on our operations.
 
 The
audit report provided by Yoganandh and Ram (Y&R) will require a review by a
US firm.
 
 The SEC
requires that the 2008 audits of Sricon and TBL, conducted by Y&R, be
reviewed by another PCAOB registered firm.  If the review identifies
changes to the audit, we will be required to amend our annual report as filed on
Form 10-K.  This is expected to increase our legal, accounting and
other expenses.   Ideally, the annual report as filed on Form
10-K would have been filed after the review.  However, we would not
have been able to file on time.  We have therefore moved our annual
meeting of the shareholders to September in order to give ourselves enough time
to have the annual report reviewed.
 
 The
Company is still in the process of making significant compensation
decisions.
 
 The
compensation committee is still in the process of making decisions on
compensation.  In the event the compensation committee awards cash,
stock or options to key employees and directors, it will impact our
earnings.
 
 The
Company has warrants outstanding, which could dilute the number of shares
outstanding.
 
 At the
time the warrants are exercised, the company will get the exercise price, unless
the exercise is cashless.   In either case, such an exercise will
also increase the number of shares outstanding.  This may adversely
affect the share price as the supply of shares eligible for sale in the public
market will increase.  The increased number of shares offered for sale
in the public market may exceed the public demand to buy shares at a given
market price resulting in the market price adjusting downward to equalize supply
and demand.
 
 Item1B.  Unresolved Staff Comments
 
 On May
19, 2008 we received a letter from the SEC in response to our filing of a Form
8-K on May 8, 2008 stating that the audit firm of Yoganandh and Ram (Y&R)
which has audited the financial statements contained in this Form 10-K is not
recognized by the staff of the SEC.  The SEC informed us that foreign
auditors that wish to practice before the SEC are expected to demonstrate their
knowledge and experience in applying U.S. GAAP, PCAOB standards, SEC financial
reporting rules and SEC requirements prior to inclusion of their audit reports
in SEC filings.
 
 The firm
of Y&R is registered with the PCAOB and we are working with Y&R and the
SEC to ensure that requirements of the SEC are fulfilled. We expect that the
audits of Sricon, TBL and the annual report of IGC performed by Y&R will be
reviewed by another PCAOB registered audit firm experienced with SEC filings and
recognized by the SEC.  If the review process results in adjustments
to the financial statements, we will file an amendment to this Form
10-K. Waiting for the review in order to file this Form 10-K would have
resulted in an inordinate delay in filing.
 Item2.
              Property
  We do not
own any real estate or other physical properties materially important to our
operation. Our headquarters are located at 4336 Montgomery Avenue, Bethesda,
Maryland, 20814.  Sricon’s headquarters are located at Pragati Layout,
Rajeev Nagar, Nagpur 440025, India.  TBL’s headquarters are located at
34/136 A Edappally Bypass Road, Cochin 682024, Kerala, India.  In
addition, we have offices in Mauritius, Delhi, Bombay and Bangalore,
India.  We have temporary facilities at each of our work centers in
the states of Maharashtra, Madhya Pradesh, Karnataka, Andhra Pradesh and
Assam.
  The  Company
is not involved in investments in (i) real estate or interests in real estate,
(ii) real estate mortgages, and (iii) securities of or interests
in  persons  primarily  engaged  in  real  estate
activities, as all of its land rights
are  used  for  production  purposes.
 Item3.
              Legal
      Proceedings
 
 None.
   9
 Table of Contents
 
 Item4.
              Submission
      of Matters to a Vote of Security
Holders
 
 On or
about February 6, 2008, we distributed our Definitive Proxy Statement to each
stockholder of record as of February 4, 2008, for our Special Meeting of
Stockholders held on March 7, 2008 at 10:00 a.m. local time (the “Special
Meeting”).  We subsequently mailed a supplement to our Definitive
Proxy Statement to our stockholders of record.  At the Special
Meeting, the stockholders were asked to consider two proposals.
  The first
proposal involved the vote on the acquisition of majority interests in Sricon
and TBL by the Company. The voting results were:
  For:
              
              
              11,097,953Against:
              
              
              2,064,105Abstain:
              
              
              3,404Broker
      Non-Votes:
              
              
              0
 
 In
addition, holders of  1,910,469 shares of our common stock elected to
redeem their shares for a pro-rata portion of the trust account.
  The
second proposal involved the adoption of IGC’s 2008 Omnibus Incentive Plan,
which provides for the grant of up to 300,000 shares (subject to adjustment as
provided by the Plan) of IGC’s common stock or cash equivalents to directors,
officers, employees and/or consultants of IGC and its subsidiaries. The voting
results were:
  For:
              
              
              11,677,732Against:
              
              
              1,342,482Abstain:
              
              
              5,004Broker
      Non-Votes:
              
              
              0
  In
addition, at the meeting, Sudhakar Shenoy and Suhail Nathani were elected to our
board of directors to hold office as Class A directors for a period to expire at
the fourth annual meeting of stockholders. The voting results with respect to
Mr. Shenoy were:
  For:
              
              
              11,938,017Withhold:
              
              
              1,227,445Broker
      Non-Votes:
              
              
              0
  The
voting results with respect to Mr. Nathani were:
  For:
              
              
              11,884,517Withhold:
              
              
              1,320,945Broker
      Non-Votes:
              
              
              0
  Our
remaining directors, Dr. Ranga Krishna, Ram Mukunda and Richard Prins, were not
up for election at the meeting, and their terms as directors continued
subsequent to the meeting.
  
 10
 Table of Contents
 
 PART
II
  Item5. Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities
  The
Company commenced its initial public offering on March 8, 2006. In the
initial public offering, the Company offered  units for purchase. A
unit in the Company is comprised of one share of common stock of the Company and
two warrants to purchase one share of common stock. On April 13, 2006,
there was a voluntary separation of the Company’s units into shares of common
stock and warrants to purchase common stock which permitted separate trading of
the common stock and warrants. The common stock, units and warrants trade on the
American Stock Exchange under the symbols “IGC,” “IGC.U,” and “IGC.WS,”
respectively. The following table sets forth the high and low sales prices of
the units for the fiscal year, as reported on the American Stock
Exchange.
 The
following table shows, for the last eight fiscal quarters, the high and low
closing prices per share of the Common Stock, Warrants and Units as quoted on
the American Stock Exchange:
  Common
      Stock
                    
                    
                    Warrants
                    
                    
                    UnitsQuarter
      Ended
                    
                    High
                    
                    
                    Low
                    
                    
                    High
                    
                    
                    Low
                    
                    
                    High
                    
                    
                    LowJune
      30, 2006
                    
                    $
                    5.65
                    
                    
                    $
                    5.35
                    
                    
                    $
                    0.84
                    
                    
                    $
                    0.46
                    
                    
                    $
                    7.49
                    
                    
                    $
                    6.35September
      30, 2006
                    
                    $
                    5.54
                    
                    
                    $
                    5.32
                    
                    
                    $
                    0.53
                    
                    
                    $
                    0.32
                    
                    
                    $
                    6.60
                    
                    
                    $
                    6.00December
      31, 2006
                    
                    $
                    5.86
                    
                    
                    $
                    5.43
                    
                    
                    $
                    0.87
                    
                    
                    $
                    0.39
                    
                    
                    $
                    7.74
                    
                    
                    $
                    6.22March
      31, 2007
                    
                    $
                    5.86
                    
                    
                    $
                    5.56
                    
                    
                    $
                    0.99
                    
                    
                    $
                    0.64
                    
                    
                    $
                    7.79
                    
                    
                    $
                    6.85June
      30, 2007
                    
                    $
                    5.77
                    
                    
                    $
                    5.57
                    
                    
                    $
                    0.79
                    
                    
                    $
                    0.59
                    
                    
                    $
                    7.32
                    
                    
                    $
                    6.85September
      30, 2007
                    
                    $
                    5.85
                    
                    
                    $
                    5.64
                    
                    
                    $
                    0.63
                    
                    
                    $
                    0.36
                    
                    
                    $
                    7.10
                    
                    
                    $
                    6.40December
      31, 2007
                    
                    $
                    5.94
                    
                    
                    $
                    5.69
                    
                    
                    $
                    0.59
                    
                    
                    $
                    0.34
                    
                    
                    $
                    6.90
                    
                    
                    $
                    6.35March
      31, 2008
                    
                    $
                    5.90
                    
                    
                    $
                    3.60
                    
                    
                    $
                    0.73
                    
                    
                    $
                    0.25
                    
                    
                    $
                    7.45
                    
                    
                    $
                    4.15
  Holders
 
 As of
March 31, 2008, there were approximately 187 unit holders of record, 1,009
stockholders and 1,076 holders of warrants. The last sale price as reported
by the American Stock Exchange on March 31, 2008, was $5.28 for units, $ 4.31
for shares and $ 0.62 for warrants. The Company has never paid a cash dividend
on its common stock and does not anticipate the payment of cash dividends in the
foreseeable future.
 
 Unregistered
Sales of Equity Securities
 
 As
previously disclosed in the Company’s Form 8-K’s dated December 27, 2007 and
January 8, 2008, the Company completed the private placement to accredited
investors of secured promissory notes (the “Notes”) for an aggregate principal
amount of $7,275,000 (the “Bridge Offering”). As part of the Bridge Offering,
the Company also agreed to issue an aggregate of 754,953 shares of its common
stock to the investors on a pro rata basis within ten business days following
the consummation of a Business Combination that is approved by a majority of the
Company’s stockholders.  On March 7, 2008 we consummated a Business
Combination that was approved by a majority of the Company’s stockholders and
the investors in the Bridge Offering became eligible to receive the
shares.  The Company issued 754,953 shares to the Bridge
Investors.  The Company agreed to allow the Investors to register the
resale of the shares as part of a subsequent registration statement relating to
securities of the Company, subject to certain specified exceptions.
 
 On March
7, 2008 Messrs. Mukunda and Krishna entered into an agreement with third parties
to transfer on September 8, 2008 pursuant to the terms of certain Share
Redistribution Agreements an aggregate of 1,368,031 shares of the Company’s
common stock.  Specifically, Mr. Mukunda agreed to transfer 1,131,581
shares and Dr. Krishna agreed to transfer 236,450 shares.   The
purpose of the agreements were to induce such third parties to acquire shares of
the Company's common stock and to cause such shares to be voted in favor of the
Company’s acquisition.
 
 
 11
 Table of Contents
 
 Issuer
Purchases of Equity Securities
  During
the fourth quarter of our fiscal year ended March 31, 2008, the Company made the
following purchases of its equity securities:
  ISSUER
      PURCHASES OF EQUITY SECURITIESPeriod
              
              (a)
      Total Number of Shares Purchased
              
              
              (b)
      Average Price Paid per Share (or Unit)
              
              
              (c)
      Total Number of Shares (or Units) Purchased as Part of Publicly Announced
      Plans or Programs**
              
              
              (d)
      Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May
      Yet Be Purchased Under the Plans or ProgramsMonth
      #1 (January 1, 2008-January 31, 2008)
              
              
              0
              
              
              
              N/A
              
              
              
              N/A
              
              
              
              N/AMonth
      #2 (February 1, 2008-February 29, 2008)
              
              
              0
              
              
              
              N/A
              
              
              
              N/A
              
              
              
              N/AMonth
      #3 (March 1, 2008-March 31, 2008)
              
              
              6,159,356
              *
              
              $
              5.94
              
              
              
              6,159,356
              
              
              
              0Total
              
              
              6,159,356
              *
              
              $
              5.94
              
              
              
              6,159,356
              
              
              
              0
 
 *The
total shares repurchased include 1,910,469 shares  purchased at a
price of $5.94 per share from stockholders who voted against the Acquisitions
and exercised their rights to convert their shares into a pro rata portion of
the funds maintained by the Company in trust and 4,248,877 shares purchased at a
price of  $5.94 from stockholders, at , who expressed a desire to sell
their shares to the Company in individually negotiated
transactions.
  **In a
supplement to the Company’s proxy statement filed with the SEC on March 4, 2008,
the Company indicated its intent to purchase shares from up to 10 stockholders
in privately negotiated transactions in exchange for such stockholders agreeing
to vote in favor of, or to change their vote to vote in favor of, the proposals
presented at the Company’s stockholders meeting or granting the Company a proxy
to vote their shares in the Company’s discretion. The Company did not set
out an express limit on the number of shares to be repurchased but indicated
that it expected the repurchases to be funded by loans for approximately
$23,000,000.  The Company concluded the repurchases upon the
consummation of the Acquisitions.
 
 Dividends
 
 IGC has
not paid any cash dividends on its common stock to date.  It is the
present intention of the board of directors to retain all earnings, if any, for
use in the business operations, and consequently, the board does not anticipate
declaring any dividends in the foreseeable future.  The payment of any
dividends will be with the discretion of the board of directors and will be
contingent upon our financial condition, results of operations, capital
requirements and other factors our board deems relevant.
 
 Item 6. Selected Financial
Data
 
 All three
companies IGC, Sricon and TBL, have fiscal years that end at March 31.
 
 IGC’s
historical information is derived from its audited financial
statements  for the period from its inception (April 29, 2005) to
March 31, 2006, for the fiscal year ended March 31, 2007 and March 31, 2008. The
information is only a summary and should be read in conjunction with each of
IGC’s, Sricon’s and TBL’s historical financial statements and related notes and
IGC’s, Sricon’s and TBL’s respective Management’s Discussion and Analysis of
Financial Condition and Results of Operations contained elsewhere herein. The
historical results included below and elsewhere herein are not indicative of the
future financial performance of IGC, Sricon and TBL.
 
 India
Globalization Capital, Inc.
 (Amounts
in Thousands Except Per Share Data)
 
 Selected
      Statement of Operations Data:
                
                April
      29, 2005
                  To
      March 31, 2006
                
                
                Year
      Ended
                  March
      31, 2007
                
                
                Year
      Ended
                  March
      31, 2008Revenue
                
                
                
                
                
                
                
                
                2,188,018Other
      Income-Interest, net
                
                $
                210,584
                
                
                
                3,171,818
                
                
                
                471,698Net
      Income (loss)
                
                
                (443,840
                )
                
                
                1,517,997
                
                
                
                (5,224,834
                )Per
      Share DataEarnings
      per share – basic
                
                $
                (0.14
                )
                
                $
                0.11
                
                
                $
                (0.61
                )Earnings
      per share  - diluted
                
                
                
                
                
                
                
                
                
                $
                (0.61
                )Weighted
      Average SharesBasic
                
                
                3,191,000
                
                
                
                13,974,500
                
                
                
                8,570,107Diluted
                
                
                
                
                
                
                
                
                
                
                8,570,107
   12
 Table of Contents
 
 India
Globalization Capital, Inc.
 Selected
Summary Balance Sheet Data
 
 March
      31, 2007
              
              
              March
      31, 2008ASSETSInvestments
      held in trust fund
              
              $
              66,104,275
              
              
              $
              -LIABILITIESCommon
      stock subject to possible conversion
              
              
              12,762,785
              
              
              
              -Total
      stockholders’ equity
              
              $
              52,923,699
              
              
              $
              67,626,973
 
 he
following table sets forth certain selected financial data of
Sricon.  The selected financial data presented below was derived from
Sricon’s audited consolidated financial statements for the period April 1, 2007
through March 7, 2008 and for the three year period ended March 31, 2007, and
from Sricon’s unaudited consolidated financial statements for the year ended
March 31, 2004. The information is only a summary and should be read in
conjunction with each of IGC’s, Sricon’s and TBL’s historical financial
statements and related notes and IGC’s, Sricon’s and TBL’s respective
Management’s Discussion and Analysis of Financial Condition and Results of
Operations contained elsewhere herein. The historical results included below and
elsewhere herein are not indicative of the future financial performance of IGC,
Sricon and TBL.
 
 Sricon
Infrastructure
 
 Amounts
      in Thousands Except Per Share Data
                
                Unaudited
                  Year
      Ended
                  March
      31, 2004
                
                
                Year
      Ended March 31, 2005
                
                
                Year
      Ended
                  March
      31, 2006
                
                
                Year
      Ended
                  March
      31, 2007
                
                
                April
      1, 2007 to
                  March
      7, 2008Revenue
                
                $
                15,298
                
                
                
                11,477
                
                
                
                11,011
                
                
                
                10,604
                
                
                
                22,614Income
      Before Tax
                
                
                646
                
                
                
                907
                
                
                
                668
                
                
                
                778
                
                
                
                3,144Income
      Taxes
                
                
                (199
                )
                
                
                (363
                )
                
                
                (186
                )
                
                
                (368
                )
                
                
                (768
                )Net
      Income (loss)
                
                
                446
                
                
                
                544
                
                
                
                482
                
                
                
                410
                
                
                
                2,376Per
      Share DataEarnings
      per share - basic
                
                $
                0.11
                
                
                
                0.19
                
                
                
                0.16
                
                
                
                0.14
                
                
                
                0.81Earnings
      per share  - diluted
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                0.78Weighted
      Average SharesBasic
                
                
                183,259
                
                
                
                2,932,159
                
                
                
                2,932,159
                
                
                
                2,932,159
                
                
                
                2,932,159Diluted
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                3,058,881
 
  13
 Table of Contents
  Sricon
Infrastructure Private Limited
 Selected
Summary Balance Sheet Data
  Unaudited(Amounts
      in Thousand US Dollars)
              
              March
      31, 2004
              
              
              March
      31,
                2005
              
              
              March
      31, 2006
              
              
              March
      31, 2007
              
              
              March
      07, 2008ASSETSAccounts
      receivables
              
              $
              2,223
              
              
              $
              2,128
              
              
              $
              2,083
              
              
              $
              2,751
              
              
              $
              7,764Unbilled
      receivables
              
              
              984
              
              
              
              974
              
              
              
              2,980
              
              
              
              2,866
              
              
              
              4,527Inventories
              
              
              71
              
              
              
              154
              
              
              
              248
              
              
              
              71
              
              
              
              447Property
      and equipment, net
              
              
              3,098
              
              
              
              3,424
              
              
              
              4,347
              
              
              
              4,903
              
              
              
              5,327BOT
      Project under progress
              
              
              0
              
              
              
              0
              
              
              
              1,584
              
              
              
              3,080
              
              
              
              3,485LIABILITIESShort-term
      borrowings and current portion of long-term debt
              
              
              359
              
              
              
              5,103
              
              
              
              3,868
              
              
              
              3,646
              
              
              
              5,732Due
      to related parties
              
              
              1,553
              
              
              
              1,724
              
              
              
              1,604
              
              
              
              2,264
              
              
              
              1,322Long-term
      debt, net of current portion
              
              
              1,089
              
              
              
              1,278
              
              
              
              1,855
              
              
              
              2,182
              
              
              
              1,264Other
      liabilities
              
              
              1,267
              
              
              
              1,307
              
              
              
              697
              
              
              
              1,913
              
              
              
              1,519Total
      stockholders’ equity
              
              $
              2,822
              
              
              $
              2,760
              
              
              $
              3,740
              
              
              $
              4,289
              
              
              $
              9,673
 
 The
following table sets forth certain selected financial data of
TBL.  The selected financial data presented below was derived from
TBL’s audited consolidated financial statements for the period April 1, 2007
through March 7, 2008 and for the three year period ended March 31, 2007, and
from Sricon’s unaudited consolidated financial statements for the year ended
March 31, 2004.  The information is only a summary and should be read
in conjunction with each of IGC’s, Sricon’s and TBL’s historical financial
statements and related notes and IGC’s, Sricon’s and TBL’s respective
Management’s Discussion and Analysis of Financial Condition and Results of
Operations contained elsewhere herein. The historical results included below and
elsewhere herein are not indicative of the future financial performance of IGC,
Sricon and TBL.
 
 Techni
Bharathi Limited
 Selected
Summary Statement of Income Data
  (Amounts
      in Thousand US Dollars, except share data and as stated
      otherwise)
              
              Unaudited
                March
      31, 2004
              
              
              March
      31, 2005
              
              
              March
      31, 2006
              
              
              March
      31, 2007
              
              
              April
      1 2007 to March 7, 2008Revenue
              
              $
              8,773
              
              
              $
              8,954
              
              
              $
              2,285
              
              
              $
              4,318
              
              
              $
              5,321Income
      (loss) before income taxes
              
              
              (2,609
              )
              
              
              (3,823
              )
              
              
              (2,369
              )
              
              
              401
              
              
              
              2,245Income
      taxes
              
              
              (63
              )
              
              
              515
              
              
              
              62
              
              
              
              135
              
              
              
              (86
              )Net
      (loss)/income
              
              
              (2,672
              )
              
              
              (3,308
              )
              
              
              (2,307
              )
              
              
              536
              
              
              
              1,988Earnings
      (loss) per shareBasic
              
              $
              (0.62
              )
              
              $
              (0.77
              )
              
              $
              (0.54
              )
              
              $
              0.13
              
              
              $
              0.46Diluted
              
              $
              (0.62
              )
              
              $
              (0.77
              )
              
              $
              (0.54
              )
              
              $
              0.13
              
              
              $
              0.22Weighted
      average number of shares outstandingBasic
              
              
              4,287,500
              
              
              
              4,287,500
              
              
              
              4,287,500
              
              
              
              4,287,500
              
              
              
              4,287,500Diluted
              
              
              4,287,500
              
              
              
              4,287,500
              
              
              
              4,287,500
              
              
              
              4,287,500
              
              
              
              9,089,928
 
  Techni
Bharathi Limited
 Selected
Summary Balance Sheet Data
 
 Unaudited(Amounts
      in Thousand US Dollars)
              
              March
      31, 2004
              
              
              March
      31, 2005
              
              
              March
      31, 2006
              
              
              March
      31, 2007
              
              
              March
      7, 2008ASSETSCash
      and cash equivalents
              
              $
              107
              
              
              $
              83
              
              
              $
              69
              
              
              $
              1,208
              
              
              $
              736Inventories
              
              
              4,922
              
              
              
              4,459
              
              
              
              4,182
              
              
              
              1,284
              
              
              
              1,428Prepaid
      and other assets
              
              
              2,070
              
              
              
              1,765
              
              
              
              1,275
              
              
              
              1,231
              
              
              
              271Property,
      plant and equipment (net)
              
              
              3,985
              
              
              
              3,463
              
              
              
              2,417
              
              
              
              2,265
              
              
              
              1,979LIABILITIESShort
      term borrowings and current portion of long-term loan
              
              
              6,614
              
              
              
              6,291
              
              
              
              8,125
              
              
              
              6,079
              
              
              
              2,437Trade
      payable
              
              
              2,738
              
              
              
              3,341
              
              
              
              987
              
              
              
              1,502
              
              
              
              2,222Long
      term debts, net of current portion
              
              
              2,892
              
              
              
              3,897
              
              
              
              3,656
              
              
              
              2,333
              
              
              
              -Advance
      from customers
              
              
              2,755
              
              
              
              3,057
              
              
              
              2,997
              
              
              
              1,877
              
              
              
              824Total
      Stockholders' equity
              
              $
              320
              
              
              $
              (3,032
              )
              
              $
              (5,438
              ))
              
              $
              (4,895
              )
              
              $
              (397
              )
   14
 Table of Contents
 
 Item7.   Management's Discussion and
Analysis
 
 Forward-Looking
Statements
 
 This
report contains forward-looking statements, including, among others,
(a) our expectations about possible business combinations, (b) our
growth strategies, (c) our future financing plans, and (d) our
anticipated needs for working capital. Forward-looking statements, which involve
assumptions and describe our future plans, strategies, and expectations, are
generally identifiable by use of the words “may,” “should,” “expect,”
“anticipate,” “approximate,” “estimate,” “believe,” “intend,” “plan,” or
“project,” or the negative of these words or other variations on these words or
comparable terminology. This information may involve known and unknown risks,
uncertainties, and other factors that may cause our actual results, performance,
or achievements to be materially different from the future results, performance,
or achievements expressed or implied by any forward-looking statements. These
statements may be found in this report. Actual events or results may differ
materially from those discussed in forward-looking statements as a result of
various factors, including, without limitation, the risks outlined under our
“Description of Business” and matters described in this report generally. In
light of these risks and uncertainties, the events anticipated in the
forward-looking statements may or may not occur. These statements are based on
current expectations and speak only as of the date of such statements. We
undertake no obligation to publicly update or revise any forward-looking
statement, whether as a result of future events, new information or
otherwise.
  The
information contained in this report identifies important factors that could
adversely affect actual results and performance. All forward-looking statements
attributable to us are expressly qualified in their entirety by the foregoing
cautionary statements.
 
 Background
 
 IGC,
a Maryland corporation was organized on April 29, 2005 as a blank check
company for the purpose of acquiring one or more businesses with operations
primarily in India through a merger, capital stock exchange, asset acquisition
or other similar business combination or acquisition. On March 8, 2006, we
completed an initial public offering.  On February 19. 2007, we
incorporated India Globalization Capital, Mauritius, Limited (IGC-M), a wholly
owned subsidiary, under the laws of Mauritius.  On March 7, 2008, we
consummated an agreement to acquire 63% of Sricon Infrastructure Private Limited
(Sricon) and 77% of Techni Bharathi Limited (TBL). The shares of the two Indian
companies, Sricon and TBL, are held by IGC-M.
 
 Most of
the shares of Sricon and TBL acquired by IGC were purchased directly from the
companies. IGC purchased a portion of the shares from the existing owners of the
companies.  The founders and management of Sricon own 37% of Sricon
and the founders and management of TBL own 23% of TBL.
 
 The
acquisitions were accounted for under the purchase method of
accounting.  Under this method of accounting, for accounting and
financial purposes, IGC-M, Limited, was treated as the acquiring entity and
Sricon and TBL as the acquired entities.  The financial statements
provided here and going forward are the consolidated statements of IGC, which
include IGC-M, Sricon, TBL and their subsidiaries.  However,
historical descriptions of our business for periods and dates prior to March 7,
2008 include information on Sricon and TBL.
  Sricon
was incorporated in 1997 with the Registrar of Companies, Maharashtra in the
name of “Srivastava Construction Private Limited.”  Sricon is located
in Nagpur, India. TBL was incorporated in 1982.
 
 Until the
formation of Sricon, the infrastructure construction work was carried out in
Vijay Engineering Enterprises (partnership concern)
(“VEE”).  Sricon was incorporated with an objective to execute large
scale infrastructure projects in sectors such as Highways, Water Management
System, Power and Cement Plants, etc. In an effort to consolidate all
infrastructure activities under one company to garner better synergy, business
profile, as well as improve cost management, VEE was merged with Sricon
effective March 31, 2004.
 
 Company
Overview
 
 We are an
engineering and construction company engaged in three core business areas: 1)
civil construction of highways and other heavy construction, 2) mining and
quarrying and 3) the construction and maintenance of high temperature cement and
steel plants.  Through our subsidiaries, we have a pan-India focus and
Sricon is accredited with ISO 9001:2000 certification.  Our present
and past clients include various Indian government
organizations.   Including our subsidiaries, we have
approximately 300 skilled employees and over 800 unskilled labor
contractors.  Our larger subsidiary, Sricon, has the capacity and
prior experience to bid on contracts priced at a maximum of about $116
million.  Our subsidiaries have recently won several new construction
contracts including, as disclosed in a press release, a contract to build 150
miles of rural roads including one major and 33 minor bridges.  Also,
we  recently won five licenses
for  quarrying  rock aggregate which is a raw material used
in heavy construction as well as road building.  We estimate that
there is around $50 Million of rock aggregate in the five
quarries.  We expect to mine this over the next three to five
years.
 
 15
 Table of Contents
  Through
our subsidiaries, we have over $349 million of backlog of orders in the three
core areas of business.  We expect to execute these contracts over the
next 30 months.   The increases in labor and commodity prices
poses a margin risk, which we are diligently mitigating through the following
steps: 1) ensuring that contracts have an escalation clause, which allows us to
pass on increases in commodity prices to the contracting agency, 2) shore up
reserves of raw materials. For, for example, we use rock aggregate in all our
construction and having an adequate supply of rock aggregate mitigates the risk
of unforeseen prices increases, 3) adapting best practices to recruit and retain
skilled and unskilled labor.
 
 The
Indian government has articulated plans to modernize the Indian
Infrastructure.  It expects to spend over $475 billion in this effort.
We believe that these initiatives will continue to be favorable to our business
model.  Our model is quite simple: we bid on construction, mining and
engineering contracts; the contracts we win increase our backlog of orders,
which translates into greater revenues and earnings.  There is
seasonality in our business as outdoor construction activity slows down during
the Indian monsoons.  The rains typically last intermittently from
June through September.
 
 Industry
Overview
  The
Indian economy reached a significant milestone when rapidly growing GDP
surpassed the $1 Trillion mark in fiscal 2007.  According to the World
Bank, only nine economies at the close of 2005 generated more than $1
Trillion in GDP.  In general, India’s growth rates have held
steady for the past few years ranging from 6.2% to 8.5% since 2003 and peaked at
9.2% last fiscal year ending March 31, 2007.  The Indian stock markets
experienced significant growth with the SENSEX peaking at 21, 000 (January 8,
2008) during fiscal year March 31, 2008. However, due to speculative
inflationary expectations, the markets have retreated to early 2007
levels.
 
 India’s
GDP growth for fiscal year end March 31, 2008 was 9%, a slight drop compared to
9.2% in the previous 12-month period, but the third year in a row where it has
finished at 9% or above.  The factors contributing to maintaining this
high growth included stellar performances in the agriculture and service
industries, favorable demographic dynamics (India has a large youth population
that exceeds 550 Million), the savings rate and spending habits of the Indian
middle class.  Other factors are attributed to changing investment
patterns, increasing consumerism, healthy business confidence, inflows of
foreign investment (India ranks #2 behind China in the A.T. Kearney “FDI
Confidence Index” for 2007) and improvements in the Indian banking
system.  Meanwhile, several economic think tanks are forecasting a
slight downward trend in India’s GDP growth rate during the current fiscal year
to approximately 8.5%, which still ranks India among the top 9 global
performers. Planning Commission Deputy Chairman was more optimistic
addressing reporters in New Delhi on June 24, 2008 stating that India can
maintain a rate of 9% growth despite challenges such as rising oil
prices.
 
 To
sustain India’s fast growing economy, the share of infrastructure investment in
India is expected to increase  to 9 per cent of GDP, which is an
increase from 5 per cent in 2006-07.  This forecast is based on The
Indian Planning Commission’s annual publication that for the Eleventh Plan
period (2007-12), a large investment of approximately $494 Billion would be
required for Infrastructure build and modernization.  This industry is
the largest employer in the country – the construction industry alone employs
more than 30 million people.  According to the Business Monitor
International (BMI), by 2012, the construction industry’s contribution to
India’s GDP is forecasted to be 16.98%.  The sector is riding on a
high growth wave powered by the large expenditures committed to
infrastructure programs – evidenced all over the country in the form of new
highways, dams, power plants and pipelines. The sectors contributing to the high
growth rates are power, transport, petroleum and urban
infrastructure.
 
 This
ambitious infrastructure development mandate by the Indian Government will
require huge funding.  The Government of India has already raised
funds from multi-lateral agencies such as the World Bank and the Asian
Development Bank.   The India Infrastructure Company was set up
to back projects by guaranteeing up to  $2 Billion
annually.  In addition, the Indian Government has identified
public-private partnerships (PPP) as the cornerstone of its infrastructure
development policy.  The government is also proactively seeking
additional FDI and approval is not required for up to 100% of FDI in most
infrastructure areas.  According to Indian Prime Minister Dr. Manmohan
Singh, addressing the Finance Ministers of ASEAN countries, at the Indo ASEAN
Summit at New Delhi, in August 2007, India needs  $150 billion at the
rate of $15 billion per annum for the next 10 years.  Speaking to the
media in November of 2007, Indian commerce minister Kamal Nath
added:  "Our FDI policy is perhaps one of the most liberal in the
world, India remains a favorite FDI destination despite what is going on in the
stock market."
 
 Previously,
Minister Nath said the government had fixed an ambitious $30 billion FDI target
for the country's 2007-08 financial year (April to March)  following
total inflows in 2006-07 of $19.5 billion (or $16B excluding reinvested
earnings) compared with $7.7 billion in 2005-06.  Actual FDI for
2007-08 surged past $25 Billion.  With the exception of Japan, the
focus and expected growth of infrastructure in India has made it a leading FDI
destination within Asia in terms of private equity.  Eight of the
Lipper's world's top ten infrastructure funds in 2007 were Indian equity
funds.  However, in comparison , China received $67 billion in
FDI, while  India received only  $16B.  More than
50% of India’s FDI’s will be utilized for infrastructure, telecom, and power
among others.
 
 The
Government of India is also permitting External Commercial Borrowings (ECB’s) as
a source of financing Indian Companies looking to expand existing
capacity as well as incubation for new startups.   ECB’s 
include commercial bank loans, buyers' credit, suppliers' credit, securitized
instruments such as Floating Rate Notes and Fixed Rate Bonds, credit from
official export credit agencies, and commercial borrowings from private sector
Multilateral Financial Institutions such as International Finance Corporation
(Washington), ADB, AFIC, CDC, etc.  National credit policies seek to
keep an annual cap or ceiling on access to ECB, consistent with prudent debt
management.   Also, these policies seek to encourage greater
emphasis on infrastructure projects  and core sectors such as power,
oil exploration, telecom, railways, roads & bridges, , ports, industrial
parks, urban infrastructure, and  fosters exporting.
exporting..   Applicants will be free to raise ECB from any
internationally recognized source such as banks, export credit agencies,
suppliers of equipment, foreign collaborators, foreign equity-holders, and
international capital markets.
 
 ECB can
be accessed in two methods, namely,  the Automatic Route and the
Approval Route. The Automatic Route is primarily for investment  in
Indian infrastructure, and will not require Reserve Bank of India
(RBI)/Government approval. The maximum amount of ECB’s under the Automatic Route
raised by an eligible borrower is limited to $500 million during any financial
year. The following are additional requirements under the Automatic
route:
 
 16
 Table of Contents
 
 a) ECB up to  $20 million or
equivalent with minimum average maturity of 3 years.
 b) ECB above  $20 million and
up to $500 million or equivalent with minimum average maturity of 5
years.
 
 Some of
the areas where ECB’s are utilized is the National Highway Development Project
and the National Maritime Development Program.  In addition, the
following represent some of the major infrastructure projects planned for the
next five years:
  1.
              Constructing
      dedicated freight corridors between Mumbai-Delhi and
      Ludhiana-Kolkata.
  2.
              Capacity
      addition of 485 million MT in Major Ports, 345 million MT in Minor
      Ports.
  3.
              Modernization
      and redevelopment of 21 railway
stations.
  4.
              Developing
      16 million hectares through major, medium and minor irrigation
      works.
  5.
              Modernization
      and redevelopment of 4 metro and 35 non-metro
  airports.
  6.
              Expansion
      to six-lanes 6,500 km (4,038 Miles) of Golden Quadrilateral and selected
      National Highways.
  7.
              Constructing
      228,000 miles of new rural roads, while renewing and upgrading the
      existing 230,000 miles covering 78,304 rural
    habitations.
  Results
of Operations (IGC)
  The
following discussion relates to IGC for the years ended March 31, 2008 and March
31, 2007 and for the period from April 29, 2005 (inception) to March 31,
2006:
  For
the year ended March 31, 2007 and the period ended March 31, 2006
 
 We
acquired Sricon and TBL on March 7, 2008.  The consolidated statements
of IGC reflect the consolidation for the three remaining weeks in
March.  For the year ended March 31, 2008 and March 31, 2007, we had
revenue of 2,188,018 and zero respectively and net loss of 5,215,270 and
earnings of 1,517,997 respectively. The loss primarily consists of and one-time
expenses related to the payment of shares to Bridge Investors and SPAC
related charges.
 17
 Table of Contents
 
 Management
Discussion and Analysis (Sricon)
 Effects
of the Acquisition on Sricon
 
 Sricon
will account for the acquisition as a subscription of new common
stock.  There will be no tax impact on the transaction, other than
regulatory registration fees.  Sricon will continue to operate as an
Indian company and will be subject to the Indian tax regime.
 
 Results
of Operations (Sricon)
 
 Summarized
balance sheet information for Sricon is as follows:
 
 (Amounts
      in Thousand US Dollars)
              
              As
      of
                March
      31, 2007
              
              
              As
      of
                March
      7, 2008Total
      Assets
              
              $
              15,358
              
              
              $
              25,790Total
      liabilities and stockholders’ equity
              
              $
              15,358
              
              
              $
              25,790
 
 Major
items of Sricon’s assets and liabilities are as follows:
 
 (Amounts
      in Thousand US Dollars)
              
              As
      of
                March
      31, 2007
              
              
              As
      of
                March
      7, 2008ASSETSAccounts
      receivables
              
              $
              2,751
              
              
              $
              7,764Unbilled
      receivables
              
              
              2,866
              
              
              
              4,527Inventories
              
              
              71
              
              
              
              447BOT
      Project under progress
              
              
              3,080
              
              
              
              3,485LIABILITIESShort-term
      borrowings and current portion of long-term debt
              
              
              3,646
              
              
              
              5,732Due
      to related parties
              
              
              2,264
              
              
              
              1,322Long-term
      debt, net of current portion
              
              
              2,182
              
              
              
              1,264Other
      liabilities
              
              
              1,913
              
              
              
              1,519Total
      stockholders’ equity
              
              $
              4,289
              
              
              $
              9,673
 
 
 18
 Table of Contents
 
 The
following table sets forth an overview of Sricon’s results of operations for the
same period.
  April
      1, 2007 to(Amounts
      in Thousand US Dollars)
              
              March
      31, 2007
              
              
              March
      07, 2008Revenue
              
              $
              10,604
              
              
              $
              22,614Net
      income before income taxes
              
              
              778
              
              
              
              3,144Income
      Taxes
              
              
              (368)
              
              
              
              (768)Net
      Income
              
              
              410
              
              
              
              2,376Income
      (loss) per share: basic
              
              $
              0.14
              
              
              $
              0.81Diluted
              
              
              
              
              
              
              0.78
 
 Discussion
 
 April
1, 2007 to March 7, 2008 compared to FYE March 31, 2007 (FY 2007)
 
 Revenues
 
 Total
revenue increased by 113% for the period April 1, 2007 to March 7, 2008 ($22.61
million) over the prior fiscal year ($10.60 million). The company began several
large contracts including  civil construction of cement
plants. The company continues to maintain large construction contracts and
is expected to resume after the monsoons end in September 2008.
 
 Expenses
 
 Sricon’s
expenses primarily consist of construction materials, employee compensation and
benefits, depreciation and amortization, interest expense and general and
administrative expense.   For the period April 1, 2007 to March
7, 2008, total expenses increased by $9.77 million or 98%, as compared to FY
2007. Cost of revenue increased by  $7.88 million or 97%, as compared
to FY 2007. The increase was due to higher construction costs associated with
increased contract revenue during the period April 1, 2007 to March 7, 2008.
Selling, general and administrative expenses increased by $1.27 million or 114%,
as compared with FYE 2007 due to the same reasons. . Interest expense increased
by nearly .50 million or 86%, as compared with FYE 2007. The increase in
interest expense was due to higher utilization of debt and an increase in
interest rates.
 
 Liquidity
and Capital Resources
 
 The
Company’s liquidity and funding risk management policies are designed to ensure
that we are able to access adequate financing. The principal sources of
financing Sricon’s business are stockholders’ equity and bank lines of credit.
As of March 7, 2008, Sricon’s net capital exceeded its net capital
requirements.  Also, Sricon has entered into several credit agreements
with various banks.
  Cash
Flows
 
 During
the period April 1, 2007 to March 7, 2008, Sricon utilized nearly 1 million
in cash in operating activities. The net cash was primarily used to finance the
increased receivables, non-current assets, advance from customers and other
non-current liabilities. Also, Sricon  invested .23 million in the
purchase of plants, machinery, and other equipment. We and we purchased
non-current investments for  .69 million, resulting in net cash used
in investing activities of  .76 million. These investments were mainly
financed from capital leases, reinvestment of profits and share subscription
money received from IGC. The net increase in cash and cash equivalents was .21
million.
 
 Sricon
used .91 million in operating activities during 2006-07. The net cash was
primarily used to finance increased receivables, BOT Projects under
Progress and decreased trade payables. Sricon also invested in the purchase of
plant, machinery, and other equipment for .73 million resulting in net cash used
in investing activities of .18 million in 2006-07. These investments were
primarily financed by bank overdrafts, term loans, reinvestment of profits, and
customer and related party balances. The net decrease in cash and cash
equivalents was .45 million during the 2006-07 fiscal year.  Sricon is
in talks with several banks in India to secure revolving lines of debt to meet
its working capital requirements and fund rapid growth.
 
 19
 Table of Contents
 
 Fiscal
Year Ended March 31, 2007 compared to Fiscal Year Ended March 31,
2006
 
 Revenues
  Total
revenues were $10.60 million in FYE 2007, and $11.01 million for FYE
2006
  Expenses
 
 Sricon’s
expenses principally consist of construction materials, employee compensation
and benefits, depreciation and amortization, interest expense and general and
administrative expense. In FYE 2007, total expenses decreased by $.47 million or
5%, compared to FYE 2006. Cost of Revenue decreased by $.50 million or 6%,
compared to FYE 2006.  The decrease was due to lower contract revenue
during the year. Selling, general and administrative expenses decreased
by  $.13 million or 10%, compared to FYE 2006, due to lower scale of
operations during the year.  Interest expense increased
by  $.14 million or 37% compared to FYE 2006.  The increase
was due to higher utilization of debt and an increase in interest
rates.
 
 Liquidity
and Capital Resources
 
 As of
March 31, 2007, Sricon’s net capital exceeded the net capital
requirements.
 
 Sricon
has entered into credit agreements with various banks. As of March 31, 2007,
Sricon had access to, with certain limitations,  $2.49 million in
unutilized bank borrowings.
 
 Cash
Flows
 
 Sricon
used  $.91 million in operating activities during FY
2007.  Net cash was used to finance increased receivables, BOT
Projects under progress and decreased trade payables. Sricon also invested .73
million in the purchase of plant, machinery, and other equipment, resulting
in net cash used in investing activities of $.18 million in FY
07.  These investments were primarily financed by  bank
overdrafts, term loans, reinvestment of profits and customer and related party
balances. The net decrease in cash and cash equivalents was $.45 million
during  FY 07.
 
 Off
Balance Sheet Arrangements
 
 Options
and warrants issued by the Company are equity-linked derivatives and
accordingly represent off balance sheet arrangements. The options and warrants
meet the scope exception in paragraph 11(a) of FAS 133, and are accordingly, not
accounted for as derivatives for purposes of FAS 133, but instead are accounted
for as equity.
 
 Management
Discussion and Analysis (TBL)
  Effects
of the Acquisition on TBL
 
 The
preparation of financial statements in conformity with U.S. GAAP requires TBL
management to make estimates and judgments that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amount of revenues and
expenses during the reporting period. TBL has based its estimates and judgments
on historical experience and other assumptions that it finds reasonable under
the circumstances. Actual results may differ from such estimates under different
conditions and could have a material impact on the financial statements, and it
is possible that such changes could occur in the near term.
 
 Significant
estimates and assumptions are used when accounting for certain items, such as
but not limited to, revenue recognition, the useful lives and the evaluation of
impairment of property and equipment, the income tax, the contingencies and the
provision for impairment of receivables and advances. Actual results could
differ from these estimates.
   20
 Table of Contents
  Summarized
balance sheet information for TBL is as follows:
  As
      ofMarch 31, 2007
                
                
                April
      1, 2007 toMarch 7, 2008Total
      Assets
                
                $
                7,098
                
                
                
                7,9297Total
      Liabilities and Stockholders' Equity
                
                $
                7,098
                
                
                
                7,929
 
 Major
items of TBL’s assets and liabilities are as follows:
 
 (Amounts
      in US Dollars ‘000)
              
              As
      of
                March
      31, 2007
              
              
              April
      1, 2007 to
                March
      7, 2008ASSETSCash
      and cash equivalents
              
              $
              1,208
              
              
              
              736Inventories
              
              
              1,284
              
              
              
              1,428Prepaid
      and other assets
              
              
              1,231
              
              
              
              271Property,
      plant and equipment (net)
              
              
              2,265
              
              
              
              1,979LIABILITIESShort
      term borrowings and current portion of long tern loan
              
              
              6,079
              
              
              
              2,437Trade
      payable
              
              
              1,502
              
              
              
              2,222Long
      term debts, net of current portion
              
              
              2,333
              
              
              
              -Advance
      from customers
              
              
              1,877
              
              
              
              824Total
      Stockholders' equity
              
              $
              (4,895
              )
              
              
              (397
              )
 
 Summarized
statement of income information for TBL is as follows:
 April
      1, 2007 to(Amounts
      in US Dollars ‘000)
              FYE
      March 31, 2007
              
              March
      7, 2008
                March
      7, 2008Revenues
              
              $
              4,318
              
              
              
              5,321Expenses
              
              
              (4,465
              )
              
              
              (5,877
              )Net
      Income (Loss)
              
              $
              536
              
              
              
              1,988
 
 Recent
Accounting Developments and their impact on TBL
 
 In May
2005, the FASB issued FAS No. 154, “Accounting Changes and Error Corrections-a
replacement of APB Opinion No. 20 and FASB Statement No. 3” (FAS 154). This
Statement replaces APB Opinion No. 20, “Accounting Changes,” and FASB Statement
No. 3, “Reporting Accounting Changes in Interim Financial Statements.” This
Statement requires retrospective application to prior periods’ financial
statements for changes in accounting principle, unless it is impractical to
determine either the period-specific effects or the cumulative effect of the
change. FAS 154 also requires that a change in depreciation, amortization, or
depletion method for long-term, non-financial assets be accounted for as a
change in accounting estimate effected by a change in accounting principle. The
Company adopted FAS 154 for accounting changes and corrections of errors made
after the adoption date. The adoption of the provisions of FAS 154 did not have
an impact on the Company’s financial statements.
 
 In
September 2006, the Securities and Exchange Commission (“SEC”) staff issued
Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial
Statements” (“SAB 108”). SAB 108 provides guidance on how prior year
misstatements should be taken into consideration when quantifying misstatements
in current year financial statements for purposes of determining whether the
current year’s financial statements are materially misstated. The provisions of
SAB 108 are required to be applied by registrants in their annual financial
statements covering fiscal years ending on or before November 15, 2007. The
adoption of the provisions of SAB 108 did not have an impact on the Company’s
financial statements.
 
 In June
2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes—an interpretation of FASB Statement No. 109” (FIN 48). FIN 48
clarifies the accounting and reporting for uncertainties in income tax law. This
Interpretation prescribes a comprehensive model for the financial statement
recognition, measurement, presentation and disclosure of uncertain tax positions
taken or expected to be taken in income tax returns. The provisions of FIN 48
will be applied beginning in the first quarter of 2008 (i.e. from April 1,
2008), with the cumulative effect of the change in accounting principle recorded
as an adjustment to retained earnings. The Company is currently assessing the
impact of the adoption of this Interpretation on its financial
statements.
  21
 Table of Contents
  Discussion
of Operations at TBL
 
 April
1, 2007 to March 7, 2008 compared to FYE March 31, 2007 (FY 2007)
 
 Revenues
 
 Total
revenue increased by 23% April 1, 2007 to March 7, 2008 ($5.32 million) over the
prior FYE 2007 ($4.32 million).
 
 Expenses
 
 TBL’s
expenses primarily consist of construction materials, employee compensation and
benefits, depreciation and amortization, interest expense and general and
administrative expense.   For the period April 1, 2007 to March
7, 2008, total expenses increased by $1.41 million or 32%, as compared to FY
2007.   Cost of revenue increased by $2.06 million or 77%, as
compared to FY 2007. The increase was due to higher contract revenue during the
period April 1, 2007 to March 7, 2008. Selling, general and administrative
expenses decreased by $.21 million or 46%, as compared with FYE 2007, due to
primarily an cost cutting initiatives by management. Interest expense
decreased by $.67 million or 59%, as compared with FYE 2007. The decrease was
due to lower utilization of debt and repayment of outstanding
debts.
 
 Liquidity
and Capital Resources
 
 The
Company’s liquidity and funding risk management policies are designed to ensure
that we are able to access adequate financing. The principal sources of
financing TBL’s business are stockholders’ equity and bank lines of
credit.  As of March 7, 2008, TBL’s net capital exceeded its net
capital requirements.
 
 Cash
Flows
 
 During
the period April 1, 2007 to March 7, 2008, TBL generated $2.78 million in cash
in operating activities. The net cash was primarily generated from income
earned for the period, prepaid expenses and other current assets and other
non-current liabilities.   TBL also generated cash from the
release of restricted cash for  $.21 million, resulting in net cash
generated from investing activities of $.20 million. The company used cash
primarily to repay bank overdrafts, term loans and other debts
for  $6.58 million. The net decrease in cash and cash equivalents was
$.47 million.
 
 
 Fiscal
Year Ended March 31, 2007 compared to Fiscal Year Ended March 31,
2006
 
 Revenues
 
 Total
revenues were $4.32 million in the fiscal year ended March 31, 2007, an increase
of 89% over the corresponding 12-month period in 2006.
 
 Other
Income
 Other
income in FYE 2007 and FYE 2006 was $532 thousand and $516 thousand,
respectively.  Other income typically includes the sale and hauling of
scrap and other waste from construction sites as well as income from rental of
idle equipment.
 
 Expenses
 
 TBL’s
expenses principally consist of construction materials, employee compensation
and benefits, depreciation and amortization, interest expense and general and
administrative expense. In the year ended March 31, 2007, total expenses
decreased by  $.75 million or 14%, over the 2005-06 period. Cost of
Revenue decreased by $.09 million or 3%, over 2005-06. The decrease was due to
higher contract revenue during the year. Selling, general and administrative
expenses decreased by $.16 million or 26%, over 2005-06, due to high level cost
cutting measures adopted by management during the year. Interest expense
decreased by $.38 million or 25%, over 2005-06. The decrease was due to
repayment of debts.
 
 Liquidity
and Capital Resources
 
 TBL’s
senior management establishes the overall liquidity and capital policies of the
company. The company’s liquidity and funding risk management policies are
designed to ensure that TBL is able to access adequate financing to service its
financial obligations when they are due. The principal sources of financing
TBL’s business are shareholder’s equity and overdraft facilities from banks. TBL
has entered into credit agreements with various banks.
 
 22
 Table of Contents
  Cash
Flows
 
 TBL
generated  $4.95 million in operating activities during 2006-07. The
net cash was primarily generated from decreased inventory and increased trade
payables. TBL paid debts worth $4.2 million in 2006-07. The net increase in
cash and cash equivalents was $1.08 million during the 2006-07 fiscal
years.
 
 TBL
believes that its cash profits, existing cash balances and its credit agreements
will be sufficient to meet its cash requirements for the next twelve months. In
the longer term, the company y believes future cash requirements will continue
to be met by its cash from operations, credit arrangements and future debt or
equity financings as required.
 
 Off
Balance Sheet Arrangements
 
 Options
and warrants issued by the Company are equity-linked derivatives and
accordingly represent off balance sheet arrangements. The options and warrants
meet the scope exception in paragraph 11(a) of FAS 133 and are  not
accounted for as derivatives for purposes of FAS 133, but instead are accounted
for as equity.
 
 Item
7A. Quantitative and Qualitative Disclosure about Market
Risks
 
 The
primary objective of the following information is to provide forward-looking
quantitative and qualitative information about our potential exposure to market
risks.  Market risk is the sensitivity of income to changes in
interest rates, foreign exchanges, commodity prices, equity prices, and other
market-driven rates or prices.  The disclosures are not meant to be
precise indicators of expected future losses, but rather, indicators of
reasonably possible losses.  This forward-looking information provides
indicators of how we view and manage our ongoing market risk
exposures.
  Customer
Risk
 
 The
Company’s customers are the Indian government, state government, private
companies and Indian government owned companies.   Therefore, our
business requires that we continue to maintain a pre-qualified status with our
clients so  we are not disqualified from bidding on future
work.  The loss of a significant client, like the National Highway
Authority of India (NHAI), may have an adverse effect on
Company.  Disqualification can occur if, for example, we run out of
capital to finish contracts that we have undertaken.  We are
negotiating with several banks in India for working capital lines of up to $25
million in order to help mitigate this risk.  There can be no
assurance that we will be successful in obtaining these lines.
 
 Commodity
Prices and Vendor Risk
 
 The
Company is affected by the availability, cost and quality of raw materials
including cement, asphalt, steel, rock aggregate and fuel.  For
example, the cost of rock aggregate has doubled in the past 24
months.  The prices and supply of raw materials and fuel depend on
factors beyond the control of the Company, including general economic
conditions, competition, production levels, transportation costs and import
duties.  The Company typically builds contingencies into the
contracts, including indexing key commodity prices into escalation
clauses.  However, drastic changes in the global markets for raw
material and fuel could affect our vendors, which may create disruptions in
delivery schedules that could affect our ability to execute contracts in a
timely manner.  We are taking steps to mitigate some of this risk by
attempting to control the supply of raw materials.  For example, the
Company operates five rock quarries and is able to partly sustain its needs for
rock aggregate through its mines.  We do not currently hedge commodity
prices on capital markets. However, we are analyzing this option as a possible
risk mitigation strategy.
 
 Labor
Risk
 
 The
building boom in India and the Middle East (India, Pakistan, and Bangladesh
exported labor) is creating pressure on the availability of skilled labor like
welders, equipment operators, etc.  We mitigate the financial impact
by factoring wage increases into our contract bids and
projections.  However, the building boom is unpredictable and a severe
shortage of skilled labor may impact our ability to complete projects in a
timely manner.
 
 Compliance,
Legal and Operational Risks
 
 We
operate under regulatory and legal obligations imposed by the Indian
governments and U.S. securities regulators.  Those obligations
relate, among other things, to the company’s financial reporting, trading
activities, capital requirements and the supervision of its
employees.   For example, we file our financial statements in
three countries under three different Generally Accepted Accounting Standards,
(GAAP).  Failure to fulfill legal or regulatory obligations can lead
to fines, censure or disqualification of management and/or staff and other
measures that could have negative consequences for Sricon’s activities and
financial performance. We are mitigating this risk by hiring local consultants
and staff who can manage the compliance in the various jurisdictions in which we
operate.  However, the cost of compliance in various jurisdictions
could have an impact on our future earnings.
 
 23
 Table of Contents
  Interest
Rate Risk
  The
infrastructure development industry is one in which leverage plays a large
role. A typical contract requires that we furnish an earnest money
deposit and a performance guaranty.  Furthermore, most contracts
demand that we reserve between 7 and 11 percent of contract value in the form of
bank guaranties and/or deposits.  Finally, as interest rates rise, our
cost of capital increases thus impacting our margins.
 
 Exchange
Rate Sensitivity
 
 Our
Indian subsidiaries conduct all  business in Indian Rupees with the
exception of foreign equipment that is purchased from the U.S. or
Europe.  Exchange rates have a insignificant impact on our financial
results.  However, as we convert from Indian Rupees to USD and
subsequently report in U.S. dollars, we may see an impact on translated
revenue and earnings.
  Accounting
Developments and their impact
 
 In
September 2006, FASB issued FAS No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Benefit Plans” (FAS 158). This
Statement requires companies to recognize the over-funded or under-funded status
of a defined benefit postretirement plan as an asset or liability in its
statement of financial position. The Company has applied FAS 158, and there is
no impact on the financial statements.
 
 In May
2005, FASB issued FAS No. 154, “Accounting Changes and Error Corrections-a
replacement of APB Opinion No. 20 and FASB Statement No. 3” (FAS 154). This
Statement replaces APB Opinion No. 20, “Accounting Changes,” and FASB Statement
No. 3, “Reporting Accounting Changes in Interim Financial Statements.” This
Statement requires retrospective application to prior periods’ financial
statements for changes in accounting principle, unless it is impractical to
determine either the period-specific effects or the cumulative effect of the
change. FAS 154 also requires that a change in depreciation, amortization, or
depletion method for long, non-financial assets be accounted for as a change in
accounting estimate effected by a change in accounting principal. The Company
adopted FAS 154 for accounting changes and corrections of errors made after the
adoption date. The adoption of the provisions of FAS 154 did not have an impact
on the Company’s financial statements.
 
 In
September 2006, the Securities and Exchange Commission (‘SEC’) staff issued
Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial
Statements” (‘SAB 108’). SAB 108 provides guidance on how prior year
misstatements should be taken into consideration when quantifying misstatements
in current year financial statements for purposes of determining whether the
current year’s financial statements are materially misstated. The provisions of
SAB 108 are required to be applied by registrants in their annual financial
statements covering fiscal years ending on or before November 15, 2007. The
adoption of the provisions of SAB 108 did not have an impact on the Company’s
financial statements.
 
 In June
2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes—an interpretation of FASB Statement No. 109” (FIN 48). FIN 48
clarifies the accounting and reporting for uncertainties in income tax law. This
Interpretation prescribes a comprehensive model for the financial statement
recognition, measurement, presentation and disclosure of uncertain tax positions
taken or expected to be taken in income tax returns. The provisions of FIN 48
will be applied beginning in the first quarter of 2008 (i.e. from April 1,
2008), with the cumulative effect of the change in accounting principle recorded
as an adjustment to retained earnings. The Company is currently assessing the
impact of the adoption of this Interpretation on its financial
statements.
 
 Critical
Accounting Policies
 
 The
preparation of financial statements in conformity with U.S. GAAP requires both
Sricon and TBL to make estimates and judgments that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amount of revenues and
expenses during the reporting period. Both our Indian subsidiaries
have  based their estimates and judgments on experience and other
assumptions that they find reasonable.  Actual results may differ from such
estimates as conditions and assumptions change, which could have a material
impact on the financial statements.
 
 Significant
estimates and assumptions are used when accounting for certain items, such as
but not limited to, revenue recognition, the useful lives and the evaluation of
impairment of property and equipment, income taxes, contingencies and the
provision for impairment of receivables and advances. Actual results could
differ from these estimates.
  Item8. Financial Statements and Supplementary Data
 
 Our
Consolidated Financial Statements and supplementary financial data are included
in this annual report on Form 10-KSB beginning on page F-1
 24
 Table of Contents
 INDEXTO FINANCIAL STATEMENTS
  PageIndia
      Globalization Capital, Inc.Report of
      Independent Registered Public Accounting Firm
                F-1Consolidated Balance Sheets – FYE 2008 and
    2007
                F-2Consolidated
      Statements of Income (Loss) -For FYE 2008, 2007 andthe
      period April 29, 2005 to FYE 2006
                F-3Consolidated
      Statements of Changes in Stockholder’s Equity - For FYE 2008, 2007and
      the period April 29 2005 to FYE 2006
                F-4Consolidated
      Statements of Cash Flows - For FYE 2008, 2007 andthe
      period April 29 2005 to FYE 2006
                F-5Notes to Consolidated Financial
    Statements
                F-6Sricon
      Infrastructure Private LimitedReport of Independent Registered Public Accounting
      Firm
                F-14Balance
      SheetsMarch 7, 2008
      and FYE 2007
                F-15Statements
      of Income (Loss) for the period from April 1, 2007 through March 7, 2008
      andFYE
      2007 and FYE 2006
                F-16Statement of Stockholders’ Equity (Deficit)- for the period
      from April 1, 2007 through March 7, 2008 and FYE 2007 and FYE
      2006
                F-17Statements
      of Cash Flows for the period from April 1, 2007 through March 7, 2008 andFYE
      2007 and FYE 2006
                F-18Notes to
      Financial Statements
                F-19Techni
      Bharathi LimitedReport
      of Independent Registered Public Accounting FirmBalance
      Sheets March 7, 2008 and FYE 2007
                F-36Statements
      of Income (Loss) for the period from April 1, 2007 through March 7, 2008
      andFYE
      2007 and FYE 2006
                F-37Statement of Stockholders’ Equity (Deficit)- for the period
      from April 1, 2007 through March 7, 2008 and FYE 2007 and FYE
      2006
                F-38Statements
      of Cash Flows for the period from April 1, 2007 through March 7, 2008 andFYE
      2007 and FYE 2006
                F-39Notes to
      Financial Statements
                F-41


i
 Table of Contents
  REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM
 
 To the
Board of Directors and Stockholders
 India
Globalization Capital, Inc.
 
 We have
audited the accompanying balance sheet of India Globalization Capital, Inc. and
its subsidiaries as of March 31, 2008 and the related consolidated statements of
operations, stockholders’ equity and cash flows for the year ended March 31,
2008.
 
 The
balance sheet for the year ended March 31, 2007 and the related statements of
operations, stockholders’ equity and cash flows for the year ended March 31,
2007 and the period from April 29, 2005 (inception) to March 31, 2006 were
audited by other independent auditors. Those independent auditors expressed an
unqualified opinion on the financial statements audited by them.
 
 These
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
 We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.The Company
is not required to have, nor were we engaged to perform an audit of its internal
control over financial reporting.Our audit included consideration of
internal control over financial reporting as a basis for designing
audit
 procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the
 Company’s
internal control over financial reporting.  Accordingly, we express no
such opinion.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of India Globalization Capital, Inc.
and Subsidiaries as of March 31, 2008, and the consolidated results of their
operations and their cash flows for the year ended March 31, 2008 in conformity
with accounting principles generally accepted in the United States of
America.   Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statementstaken
as a whole, presents fairly in all material respects, the information set forth
therein for the year ended March 31, 2008.
 
  /s/
Yoganandh &
Ram
 Chartered
Accountants
 Independent
Auditors registered with
 Public
Company Accounting Oversight Board (USA)
 Chennai,
India
 July 14,
2008
   F-1
 Table of Contents
   REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Board of Directors and Stockholders
 India
Globalization Capital, Inc.
 
 We have
audited the accompanying balance sheet of India Globalization Capital, Inc. (a
development stage company) as of March 31, 2007 and the related statements of
operations, stockholders' equity and cash flows for the year ended March 31,
2007 and the period from April 29, 2005 (inception) to March 31, 2006. These
financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these
financial statements based on our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of India Globalization Capital, Inc.
as of March 31, 2007 and the results of its operations and its cash flows for
the year ended March 31, 2007 and the period from April 29, 2005 (inception) to
March 31, 2006 in conformity with United States generally accepted accounting
principles.
 
 The
accompanying financial statements have been prepared assuming that India
Globalization Capital, Inc. will continue as a going concern. The Company may
face a mandatory liquidation by March 8, 2008 if a business combination is not
consummated, unless certain extension criteria are met, which raises substantial
doubt about its ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
 
 
 
 /s/ Goldstein Golub and
Kessler LLP
 GOLDSTEIN
GOLUB KESSLER LLP
 New York,
New York
 July 10,
2007
  
 
 F-2
 Table of Contents
  IndiaGlobalization Capital, Inc.
 CONSOLIDATED
BALANCE SHEET
 
 March
      31, 2008
              
              
              March
      31, 2007ASSETSCurrent
      Assets:Cash
      and cash equivalents
              
              $
              8,397,441
              
              
              $
              1,169,422Accounts
      Receivable
              
              
              8,708,861Unbilled
      Receivables
              
              
              5,208,722Inventories
              
              
              1,550,080Investments
      held in Trust Fund
              
              
              -
              
              
              
              66,104,275Interest
      Receivable - Convertible Debenture
              
              
              277,479
              
              
              
              37,479Convertible
      debenture in MBL
              
              
              3,000,000
              
              
              
              3,000,000Loan
      acquisition costs
              
              
              -
              
              
              
              -Prepaid
      taxes
              
              
              49,289
              
              
              
              -Restricted
      cash
              
              
              6,257Short
      term investments
              
              
              671Prepaid
      expenses and other current assets
              
              
              4,324,201
              
              
              
              74,197Due
      from related parties
              
              
              1,373,446
              
              
              
              -Total
      Current Assets
              
              
              32,896,447
              
              
              
              70,385,373Property
      and equipment, net
              
              
              7,337,361BOT
      under Progress
              
              
              3,519,965Goodwill
              
              
              17,483,501Investment
              
              
              1,688,303Deposits
      towards acquisitions
              
              
              187,500
              
              
              
              -Restricted
      cash, non-current
              
              
              2,124,160Deferred
      acquisition costs
              
              
              -
              
              
              
              158,739Deferred
      tax assets - Federal and State, net of valuation allowance
              
              
              1,013,611
              
              
              
              142,652Other
      Assets
              
              
              1,376,126Total
      Assets
              
              $
              67,626,973
              
              
              $
              70,686,764LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      Liabilities:Short-term
      borrowings and current portion of long-term debt
              
              $
              5,635,408Trade
      payables
              
              
              1,771,151Advance
      from Customers
              
              
              931,092Accrued
      expenses
              
              
              1,368,219
              
              
              $
              237,286Notes
      payable to stockholders
              
              
              -
              
              
              
              870,000Taxes
      payable
              
              
              58,590
              
              
              
              296,842Deferred
      trust interest
              
              
              -
              
              
              
              32,526Notes
      Payable to Oliveira Capital, LLC
              
              
              3,000,000
              
              
              
              1,794,226Due
      to Underwriters
              
              
              
              
              
              
              1,769,400Due
      to related parties
              
              
              1,330,291Other
      current liabilities
              
              
              3,289,307Total
      current liabilities
              
              $
              17,384,059
              
              
              $
              5,000,280Long-term
      debt, net of current portion
              
              
              1,212,841
              
              
              
              -Advance
      from Customers
              
              
              832,717
              
              
              
              -Deferred
      taxes on income
              
              
              608,535
              
              
              
              -Other
      liabilities
              
              
              6,717,109
              
              
              
              -Total
      Liabilities
              
              
              26,755,261
              
              
              
              -Minority
      Interest
              
              
              13,545,656Common
      stock subject to possible conversion, 2,259,770 at conversion
      value
              
              
              -
              
              
              
              12,762,785COMMITMENTS
      AND CONTINGENCYSTOCKHOLDERS’
      EQUITYPreferred
      stock $.0001 par value; 1,000,000 shares authorized; none issued and
      outstanding
              
              
              
              
              
              
              -Common
      stock — $.0001 par value; 75,000,000 shares authorized; 8,570,107 issued
      and outstanding at March 31, 2008 and 13,974,500 (including
      2,259,770 shares subject to possible conversion) issued and outstanding at
      March 31, 2007
              
              
              857
              
              
              
              1,397Additional
      paid-in capital
              
              
              31,470,134
              
              
              
              51,848,145(Defecit)
      Income accumulated during the development stage
              
              
              (4,141,113)
              
              
              
              1,074,157Accumulated
      other comprehensive (loss) income
              
              
              (3,822)Total
      stockholders’ equity
              
              
              27,326,056
              
              
              
              52,923,699Total
      liabilities and stockholders’ equity
              
              $
              67,626,973
              
              
              $
              70,686,764
  The
accompanying notes should be read in connection with the financial
statements.
  
 F-3
 Table of Contents
  IndiaGlobalization Capital, Inc.
 CONSOLIDATED
STATEMENT OF OPERATIONS
 
  Year
      Ended March 31, 2008
              
              
              Year
      Ended March 31, 2007
              
              
              April
      29, 2005 (inception) through March 31, 2006Revenue
              
              $
              2,188,018
              
              
              $
              
              
              $Cost
      of revenue
              
              
              (1,783,117
              )Gross
      profit
              
              
              404,901Selling,
      general and administrative expenses
              
              
              (341,372
              )Depreciation
              
              
              (58,376
              )Operating
      income
              
              
              5,153Legal
      and formation, travel and other start up costs
              
              $
              (5,765,620
              )
              
              $
              (765,047
              )
              
              $
              (68,183
              )Compensation
      expense
              
              
              (26,274
              )
              
              
              
              
              
              
              (535,741
              )Interest
      expense
              
              
              (1,944,660
              )
              
              
              (103,916
              )
              
              
              (5,500
              )Interest
      income
              
              
              2,213,499
              
              
              
              3,171,818
              
              
              
              210,584Other
      Income
              
              
              202,858
              
              
              
              -
              
              
              
              -Income
      / (loss) before income taxes
              
              
              (5,315,044
              )
              
              
              2,302,855
              
              
              
              (398,840
              )Provision
      for income taxes, net
              
              
              (76,089
              )
              
              
              784,858
              
              
              
              45,000Income
      after Income Taxes
              
              
              (5,391,134
              )
              
              
              1,517,997
              
              
              
              (443,840
              )Provision
      for Dividend on Preference Stock and its Tax
              
              
              171,084
              
              
              
              -
              
              
              
              -Minority
      interest
              
              
              4,780
              
              
              
              -
              
              
              
              -Net
      income / (loss)
              
              $
              (5,215,270
              )
              
              $
              1,517,997
              
              
              $
              (443,840
              )Net
      income / (loss) per share: basic and diluted
              
              $
              (0.61
              )
              
              $
              0.11
              
              
              $
              (0.14
              )Weighted
      average number of shares outstanding-basic and diluted
              
              
              8,570,107
              
              
              
              13,974,500
              
              
              
              3,191,000
 
 The
accompanying notes should be read in connection with the financial
statements.
   F-4
 Table of Contents
  
 IndiaGlobalization Capital, Inc.
 CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY
  Common
      Stock
              
              
              AdditionalPaid-in
              
              Earnings(Deficit)Accumulatedduring
      theDevelopment
              
              
              AccumulatedOtherComprehensive
      Income
              
              TotalStockholders'Shares
              
              
              Amount
              
              
              Capital
              
              Stage
              
              
              /
      Loss
              
              EquityIssuance of common
      stock to founders at $.01 per share(1,750,000 shares on
      May 5, 2005 and 750,000 shares on June 20, 2005)
              
              2,500,000
              
              
              $
              250
              
              
              $
              24,750
              
              $
              -
              
              
              
              
              $
              25,000Surrendered
      shares (on September 7, 2005 andFebruary
      5, 2006 of 62,500 and 137,500 respectively)
              
              (200,000
              )
              
              
              (20
              )
              
              
              20
              
              
              -
              
              
              
              
              
              -Issuance
      of common stock to founders at $.01 per shareon
      February 5, 2006
              
              200,000
              
              
              
              20
              
              
              
              537,721
              
              
              -
              
              
              
              
              
              537,741Issue
      of 170,000 units in a private placementPlacement
              
              170,000
              
              
              
              17
              
              
              
              1,019,983
              
              
              -
              
              
              
              
              
              1,020,000Issue
      of 11,304,500 units, net of underwriters’ discountand
      offering expenses (including 2,259,770 sharessubject
      to possible conversion) and $100 fromunderwriters
      option
              
              11,304,500
              
              
              
              1,130
              
              
              
              61,793,456
              
              
              -
              
              
              
              
              
              61,794,586Proceeds
      subject to possible conversion of shares
              
              -
              
              
              
              -
              
              
              
              (12,762,785
              )
              
              -
              
              
              
              
              
              (12,762,785
              )Net
      loss for the period
              
              -
              
              
              
              -
              
              
              
              -
              
              
              (443,840
              )
              
              
              
              
              (443,840
              )Balance
      at March 31, 2006
              
              13,974,500
              
              
              
              1,397
              
              
              
              50,613,145
              
              
              (443,840
              )
              
              
              
              
              50,170,702Fair
      value of 425,000 warrants issued to Oliveira Capital, LLC
              
              -
              
              
              
              -
              
              
              
              1,235,000
              
              
              -
              
              
              
              
              
              1,235,000Net
      income / (Loss)
              
              -
              
              
              
              -
              
              
              
              -
              
              
              1,517,997
              
              
              
              
              
              1,517,997Balance
      at March 31,2007
              
              13,974,500
              
              
              
              1,397
              
              
              
              51,848,145
              
              
              1,074,157
              
              
              
              
              
              52,923,699Redemption
      of 1,910,469 shares on March 7, 2008 and balance in shares subject to
      possible conversion transferred to paid in capital
              
              (1,910,469
              )
              
              
              (191
              )
              
              
              (1,689,164
              )
              
              
              
              
              
              
              
              1,688,973Buyback
      of 4,248,877 shares on March 7, 2008
              
              (4,248,877
              )
              
              
              (425
              )
              
              
              (25,237,905
              )
              
              
              
              
              
              
              
              (25,238,330
              )"Issuance
      of common stock to Bridge Investors at $.01 per share
              
              754,953
              
              
              
              76
              
              
              
              3,170,730
              
              
              
              
              
              
              
              
              3,170,806Net
      Loss for the year
              
              -
              
              
              
              -
              
              
              
              -
              
              
              (5,215,270
              )
              
              (3,822)
              
              
              (5,219,091
              )Balance
      at March 31, 2008
              $
              8,570,107
              
              
              $
              857
              
              
              $
              31,470,134
              
              $
              (4,141,113
              )
              $
              (3,822)
              
              $
              27,326,056
  The
accompanying notes should be read in connection with the financial
statements.
 
 F-5
 Table of Contents
  IndiaGlobalization Capital, Inc.
 CONSOLIDATED
STATEMENT OF CASH FLOWS
  Year
      Ended March 31, 2008
              
              
              Year
      Ended March 31, 2007
              
              
              April
      29, 2005 (inception) through March 31, 2006Cash
      flows from operating activities:Net
      income (loss)
              
              $
              (5,215,270
              )
              
              $
              1,517,997
              
              
              $
              (443,840
              )Adjustment
      to reconcile net income (loss) to net cash used in operating
      activities:Interest
      earned on Treasury Bills
              
              
              (2,119,104
              )
              
              
              (3,098,769
              )
              
              
              (203,022
              )Non-cash
      compensation expense
              
              
              
              
              
              
              
              
              
              
              535,741Deferred
      taxes
              
              
              (743,652
              )
              
              
              (117,652
              )
              
              
              (25.000
              )Depreciation
              
              
              58,376Loss
      / (Gain) on sale of property, plant and equipment
              
              
              29Amortization
      of debt discount on Oliveira debt
              
              
              4,052,988
              
              
              
              29,226Amortization
      of loan acquisition cost
              
              
              250,000Changes
      in:Accounts
      receivable
              
              
              808,978Unbilled
      Receivable
              
              
              (635,207
              )Inventories
              
              
              341,950Prepaid
      expenses and other current assets
              
              
              (3,063,771
              )
              
              
              2,569
              
              
              
              (76,766
              )Trade
      Payable
              
              
              (1,744,137
              )Other
      Current Liabilities
              
              
              (884,639
              )Advance
      from Customers
              
              
              (97,946
              )Other
      non-current liabilities
              
              
              3,050,821Non-current
      assets
              
              
              928,698BOT
      Project under Progress
              
              
              (50
              )Interest
      receivable - convertible debenture
              
              
              (240,000
              )
              
              
              (37,479
              )
              
              
              -Deferred
      interest liability
              
              
              (3,597,998
              )
              
              
              32,526
              
              
              
              -Accrued
      expenses
              
              
              854,902
              
              
              
              (113,819
              )
              
              
              47,679Prepaid
      / taxes payable
              
              
              (569,283
              )
              
              
              226,842
              
              
              
              70,000Minority
      Interest
              
              
              (4,780
              )       -Net
      cash used in operating activities
              
              $
              (8,569,097
              )
              
              $
              (1,558,559
              )
              
              $
              (95,208
              )Cash
      flows from investing activities:
              
              
              
              
              
              
              0Purchase
      of treasury bills
              
              
              (585,326,579
              )
              
              
              (772,540,587
              )
              
              
              (131,229,427
              )Maturity
      of treasury bills
              
              
              653,554,076
              
              
              
              725,189,331
              
              
              
              65,780,000Purchase
      of property and equipment
              
              
              (3,447
              )Proceeds
      from sale of property and equipment
              
              
              (13,521
              )Purchase
      of short term investments
              
              
              (1
              )Non
      Current Investments
              
              
              (498,677
              )Investment
      in joint ventures
              
              
              -Restricted
      cash
              
              
              (1,714,422
              )Decrease
      (increase) in cash held in trust
              
              
              (4,116
              )
              
              
              170,766
              
              
              
              (172,567
              )Purchase
      of convertible debenture
              
              
              -
              
              
              
              (3,000,000
              )Deposit
      towards acquisitions, net of cash acquired
              
              
              (6,253,028
              )Payment
      of deferred acquisition costs
              
              
              (2,482,431
              )
              
              
              (93,739
              )
              
              
              -Net
      cash provided/(used) in investing activities
              
              $
              57,257,854
              
              
              $
              (274,229
              )
              
              $
              (65,621,994
              )Cash
      flows from financing activities:Issuance
      of common stock to founders
              
              
              (541
              )
              
              
              
              
              
              
              27,000Payments
      of offering costs
              
              
              -
              
              
              
              
              
              
              
              (4,024,688
              )Net
      movement in cash credit and bank overdraft
              
              
              646,515Proceeds
      from other short-term borrowings
              
              
              (275,114
              )Proceeds
      from long-term borrowings
              
              
              (3,075,012
              )Repayment
      of long-term borrowings
              
              
              (1,023
              )Due
      to related parties, net
              
              
              (255,093
              )Issue
      of Equity Shares
              
              
              0Money
      received pending allotment
              
              
              (3,669,574
              )Proceeds
      from notes payable to stockholders
              
              
              (270,000
              )
              
              
              
              
              
              
              870,000Proceeds
      from notes payable to stockholders
              
              
              (600,000
              )Proceeds
      from issuance of underwriters option
              
              
              -
              
              
              
              
              
              
              
              100Gross
      proceeds from initial public offering
              
              
              (33,140,796
              )
              
              
              
              
              
              
              67,827,000Proceeds
      from private placement
              
              
              -
              
              
              
              
              
              
              
              1,020,000Proceeds
      from note payable to Oliveira Capital, LLC
              
              
              (769,400
              )
              
              
              3,000,000Proceeds
      from loan
              
              
              -
              
              
              
              
              
              
              
              -Net
      cash provided/(used) by financing activities
              
              $
              (41,378,991
              )
              
              $
              3,000,000
              
              
              $
              65,719,412Effect
      of exchange rate changes on cash and cash equivalents
              
              
              (81,747
              )Net
      increase/(decrease) in cash and cash equivalent
              
              
              7,228,019
              
              
              
              1,167,212
              
              
              
              2,210Cash
      and cash equivalent at the beginning of the period
              
              
              1,169,422
              
              
              
              2,210
              
              
              
              -Cash
      and cash equivalent at the end of the period
              
              $
              8,397,441
              
              
              $
              1,169,422
              
              
              $
              2,210Supplemental
      schedule of non cash financing activities:Accrual
      of offering cost
              
              
              
              
              
              
              
              
              
              
              238,426Accrual
      of deferred underwriters’ fees
              
              
              
              
              
              
              -
              
              
              
              1,769,400Accrual
      of deferred acquisition costs
              
              
              26,000
              
              
              
              65,000Accrual
      of loan acquisition cost
              
              
              250,000Supplemental
      disclosure of cash flow information:
                Fair
      value of warrants included in additional paid in capital
              
              
              
              
              
              
              1,235,000Issuance
      of Common Stock to Bridge Investors
              
              $
              3,170,806Interest
      paid
              
              
              1,977,660
              
              
              
              -Income
      taxes paid
              
              
              700,000
              
              
              
              675,668
              
              
              
              675,668
  The
accompanying notes should be read in connection with the financial
statements.
   F-6
 Table of Contents
  INDIAGLOBALIZATION CAPITAL, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 For
the Years Ended March 31, 2008 and 2007
 And
the Period From April 29, 2005 (Inception) to March 31, 2006
   NOTE
A — BASIS OF PRESENTATION
 
 The
financial statements at March 31, 2008, 2007 and for the period from April 29,
2005 (date of inception) to March 31, 2006 are audited.  The
statements ending March 31, 2008 are consolidated with the newly acquired
subsidiaries Sricon and TBL beginning March 8, 2008.  All our
companies Sricon, TBL, IGC-M and IGC have financial years that end on March
31.
 
 In the
opinion of management, all adjustments (consisting of normal accruals) have been
made that are necessary to present fairly the financial position of the Company
as of March 31, 2008 and the results of its operation and cash flows for the
three years ended March 31, 2008, March 31, 2007 and the period from April 29,
2005 (date of inception) to March 31, 2006.
 
 These
financial statements should be read in conjunction with the financial statements
that were included in the Company’s Annual Report on Form 10-KSB for the year
ended March 31, 2007.  The March 31, 2007 balance sheet and the statement
of stockholders’ equity through March 31, 2007 have been derived from the
audited financial statements.
 
 NOTE
B — ORGANIZATION AND BUSINESS OPERATIONS
 
 India
Globalization Capital, Inc. (the “Company” or “IGC”), a Maryland
corporation, was incorporated on April 29, 2005 as a blank check
company, formed for the purpose of acquiring one or more infrastructure
businesses with operations primarily in India through a merger, capital stock
exchange, asset acquisition or other similar business combination or
acquisition. On March 8, 2006 the Company completed an initial public
offering.  On February 19, 2007 the Company incorporated India
Globalization Capital, Mauritius, Limited (IGC-M), a wholly owned subsidiary,
under the laws of Mauritius.
 
 Through
its subsidiaries, the company’s primary focus is to execute
major infrastructure projects in India such as constructing interstate
highways, rural roads, mining and quarrying, and construction of high
temperature cement and steel plants.
 
 The
registration statement for the Company’s initial public offering (the “Public
Offering”) (as described in Note C) was declared effective March 2, 2006. The
Company consummated the Public Offering including the over allotment option on
March 8, 2006, and preceding the consummation of the Public Offering on March 2,
2006 certain of the officers and directors of the Company purchased an aggregate
of 170,000 units (the “Units”) from the Company in a private placement (the
“Private Placement”).  The Units sold in the Private Placement were
identical to the 11,304,500 Units sold in the Public Offering, but the
purchasers in the Private Placement have waived their rights to conversion and
receipt of the distribution on liquidation in the event the Company does not
complete a business combination (as described below). The Company received net
proceeds from the Private Placement and the Public Offering of approximately
$62,815,000 (Note C).
 
 As
described inNote J, on March 7, 2008 following
the stockholder approval of and pursuant to the terms of the purchase agreement,
the Company consummated the acquisition of 63% of the equity of Sricon
Infrastructure Private Limited (Sricon) for  approximately $28.75
Million.  As also described in Note J, the Company paid about
$12.03 Million for the acquisition of 77% of Techni Bharathi Limited
(TBL).  The shares of the two Indian companies, Sricon and TBL, are
held by IGC-M.  The founders and management of Sricon own 37% of
Sricon and the founders and management of TBL own 23% of TBL.
  NOTE
C — INITIAL PUBLIC OFFERING
  On
March 8, 2006, the Company sold 11,304,500 Units in the Public
Offering, including the
exercise by  the Underwriter of the over-allotment in full. EachUnit
consists of one share of the Company’s common stock, $.0001 par value, and two
redeemable common stock purchase warrants (“Warrants”). Each Warrant entitles
the holder to purchase from the Company one share of common stock at an exercise
price of $5.00. The Company has a right to redeem the Warrants in the event that
the last sale price of the common stock is at least $8.50 per share for any 20
trading-days within a 30-trading day period ending on the third day prior to the
date on which notice of redemption is given.  If the Company redeems
the Warrants, either the holder will have to exercise the Warrants by purchasing
the common stock from the Company for $5.00, or the Warrants will
expire.The Warrants
expire on March 3, 2011, or earlier upon
redemption.
 
 In
connection with the Public Offering, the Company issued an option, for $100, to
the Underwriter to purchase 500,000 Units at an exercise price of $7.50 per
Unit. The Company has accounted for the fair value of the option, inclusive of
the receipt of the $100 cash payment, as an expense of the Public Offering
resulting in a charge directly to stockholders’ equity. The Company estimated,
using the Black-Scholes method, the fair value of the option granted to the
Underwriter as of the date of grant was approximately $756,200 using the
following assumptions: (1) expected volatility of 30.1%, (2) risk-free interest
rate of 3.9% and (3) expected life of five years. The estimated volatility was
based on a basket of Indian companies that trade in the United States or the
United Kingdom.  The option may be exercised for cash or on a
“cashless” basis, at the holder’s option, such that the holder may use the
appreciated value of the option (the difference between the exercise prices of
the option and the underlying Warrants and the market price of the Units and
underlying securities) to exercise the option without the payment of any cash.
The Warrants underlying such Units are exercisable at $6.25 per
share.
   F-7
 Table of Contents
 
 NOTE
D — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Principles
of Consolidation:
 
 The
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiaries. All material intercompany balances and transactions
have been eliminated.
 
 Policy
for Goodwill / Impairment
 
 Goodwill
represents the excess cost of an acquisition over the fair value of the Group's
share of net identifiable assets of the acquired subsidiary at the date of
acquisition.  Goodwill on acquisition of subsidiaries is disclosed
separately.  Goodwill is stated at cost less accumulated amortization
and impairment losses, if any.
  The
company adopted provisions of FAS No. 142, "Goodwill and Other Intangible
Assets" ('FAS 142') which sets forth the accounting for goodwill and intangible
assets subsequent to their acquisition. FAS 142 requires that goodwill and
indefinite-lived intangible assets be allocated to the reporting unit level,
which the Group defines as each circle.
 
 FAS 142
also prohibits the amortization of goodwill and indefinite-lived intangible
assets upon adoption, but requires that they be tested for impairment at least
annually, or more frequently as warranted, at the reporting unit
level.
  The
goodwill impairment test under FAS 142 is performed in two phases. The first
step of the impairment test, used to identify potential impairment, compares the
fair value of the reporting unit with its carrying amount, including goodwill.
If the carrying amount of the reporting unit exceeds its fair value, goodwill of
the reporting unit is considered impaired, and step two of the impairment test
must be performed. The second step of the impairment test quantifies the amount
of the impairment loss by comparing the carrying amount of goodwill to the
implied fair value. An impairment loss is recorded to the extent the carrying
amount of goodwill exceeds its implied fair value.
 
 Impairment
of long – lived assets and intangible assets
  The
company reviews its long-lived assets, including identifiable intangible
assets with finite lives, for impairment whenever events or changes in business
circumstances indicate that the carrying amount of assets may not be fully
recoverable. Such circumstances include, though are not limited to, significant
or sustained declines in revenues or earnings and material adverse changes in
the economic climate.  For assets that the company intends to hold for
use, if the total of the expected future undiscounted cash flows produced by the
assets or subsidiary company is less than the carrying amount of the assets, a
loss is recognized for the difference between the fair value and carrying value
of the assets.  For assets the company intends to dispose of by
sale, a loss is recognized for the amount by which the estimated fair value less
cost to sell is less than the carrying value of the assets.  Fair
value is determined based on quoted market prices, if available, or other
valuation techniques including discounted future net cash flows.
 
 Income
per common share:
 
 Basic
earnings per share is computed by dividing net income (loss) applicable to
common stockholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per share reflect the additional dilution for
all potentially dilutive securities such as stock warrants and options. The
effect of the 23,374,000 warrants have been included in the diluted weighted
average shares.   However, for the year ending March 31, 2008 the
weighted average price of the common stock was below the exercise price of all
outstanding warrants and therefore the warrants did not contribute to the
dilution of basic shares.
 
 Use
of estimates:
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
 
 Income
taxes:
 
 Deferred
income taxes are provided for the differences between the bases of assets and
liabilities for financial reporting and income tax purposes. A valuation
allowance is established when necessary to reduce deferred tax assets to the
amount expected to be realized.
  F-8
 Table of Contents
  Cash
and Cash Equivalents:
 
 For
financial statement purposes, the Company considers all highly liquid debt
instruments with maturity of three months or less when purchased to be cash
equivalents. The company maintains its cash in bank accounts in the United
States of America and Mauritius, which at times may exceed applicable insurance
limits. The Company has not experienced any losses in such accounts. The Company
believes it is not exposed to any significant credit risk on cash and cash
equivalent.  The company does not invest its cash in securities that
have an exposure to U.S. mortgages.
 
 Recent
Pronouncements:
 
 The
Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes,” an interpretation of FASB Statement No. 109 (“FIN 48”) on
April 1, 2007.  FIN 48 clarifies the criteria for the recognition,
measurement, presentation and disclosure of uncertain tax positions. A tax
benefit from an uncertain position may be recognized only if it is “more likely
than not” that the position is sustainable based on its technical merits. FIN 48
also provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure, and
transition.  In May 2007, the FASB issued Staff Position, FIN 48-1,
“Definition of Settlement in
FASB Interpretation No. 48” (FSP FIN 48-1) which provides guidance on how
an enterprise should determine whether a tax position is effectively settled for
the purpose of recognizing previously unrecognized tax
benefits.   FSP FIN 48-1 was effective with the initial adoption
of FIN 48.  The adoption of FIN 48 or FSP FIN 48-1 did not have a material
effect on the Company’s financial condition or results of
operations.
 
 In
December 2007, the Financial Accounting Standards Board released SFAS 160
“Non-controlling Interests in Consolidated Financial Statements” that is
effective for annual periods beginning December 15, 2008. The pronouncement
resulted from a joint project between the FASB and the International Accounting
Standards Board and continues the movement toward the greater use of fair values
in financial reporting. Upon adoption of SFAS 160, the Company will re-classify
any non-controlling interests as a component of equity.
 
 Management
does not believe that any other recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.
  NOTE
E — RELATED PARTY TRANSACTION
 
 From
inception to March 31, 2008, $50,000 was paid to SJS Associates for Mr.
Selvaraj’s services.  We entered into an agreement with SJS Associates
on substantially the same terms subsequent to the stockholder’s approval of the
acquisitions of Sricon and TBL.As a result of the new
agreement, an additional $3,871 was accrued as due to SJS Associates for the
period between March 8, 2008 and March 31, 2008.  This was paid to SJS
Associates in the Company’s 2009 fiscal year.
 
 The
Company had agreed to pay Integrated Global Network, LLC (“IGN, LLC”), an
affiliate of our Chief Executive Officer, Mr. Mukunda, an administrative fee of
$4,000 per month for office space and general and administrative services from
the closing of the Public Offering through the date of a Business
Combination. From inception to March 31, 2008, approximately $96,000 was
paid to IGN, LLC.  The Company and IGN, LLC have agreed to continue
the agreement on a month-to-month basis.
 
 The
Company uses the services of Economic Law Practice (ELP), a law firm in
India. A member of our Board Directors is a Partner with ELP. 
Since inception to March 31, 2008, the Company has incurred $169,847 for legal
services provided by ELP.
 
 NOTE
F — COMMON STOCK
 
 On August
24, 2005, the Company’s Board of Directors authorized a reverse stock split of
one share of common stock for each two outstanding shares of common stock and
approved an amendment to the Company’s Certificate of Incorporation to decrease
the number of authorized shares of common stock to 75,000,000. All references in
the accompanying financial statements to the number of shares of stock have been
retroactively restated to reflect these transactions.  On March 7,
2008 we redeemed and bought a total of 6,159,346 shares at $5.94 per
share.  At March 31, 2008 and 2007 we had 8,570,107 and 13, 974,500
shares of common stock issued and outstanding respectively.   At
March 31, 2008 and 2007, 24,874,000 shares of common stock, were reserved for
issuance upon exercise of redeemable warrants, underwriters’ purchase option and
warrants issued to Oliveira Capital, LLC.
   F-9
 Table of Contents
  NOTE  G
– INCOME TAXES
 
 The
provision for income taxes for the year ended March 31, 2008 and the period
ended March 31, 2007 consists of the following:
 
 March
      31,2008
              
              
              2007Current:Federal
              
              $
              708,868
              
              
              $
              902,510Foreign
              
              
              (370,355
              )
              
              
              -State
              
              
              -
              
              
              
              -Net
      Current
              
              
              338,513
              
              
              
              902,510Deferred:Federal
              
              
              (748,894
              )
              
              
              (117,652
              )Foreign
              
              
              420,368
              
              
              
              -State
              
              
              66,103
              
              
              
              -Net
      Deferred
              
              
              (262,424
              )
              
              
              (117,652
              )Total
      tax provision
              
              $
              76,089
              
              
              $
              784,858
 
 The total
tax provision for income taxes for year ended March 31, 2008 and the period
ended March 31, 2007 differs from that amount which would be computed by
applying the U.S. Federal income tax rate to income before provision for income
taxes as follows:
 
 March
      31,2008
              
              
              2007Statutory
      Federal income tax rate
              
              
              34
              %
              
              
              34
              %Non-cash
      compensation expenseState
      tax benefit net of federal tax
              
              
              (0.8
              )%
              
              
              (1.3
              )%Increase
      in state valuation allowance
              
              
              0.8
              %
              
              
              1.3
              %OtherEffective
      income tax rate
              
              
              34.0
              %
              
              
              34
              %
 
 March
      31,2008
              
              
              2007Operating
      costs deferred for income tax purposes
              
              $
              184,570
              
              
              $
              242,015Interest
      income deferred for reporting purposes
              
              $
              95,792
              
              
              
              11,059Difference
      between accrual accounting for reporting purposes and cash accounting for
      tax purposes
              
              $
              235,665
              
              
              
              (75,514
              )Less:
      Valuation Allowance
              
              
              (110,951
              )
              
              
              (34,908
              )Net
      deferred tax asset
              
              $
              405,076
              
              
              $
              142,652
 
 The
Company has recorded a valuation allowance against the state deferred tax asset
since they cannot determine realizability for tax purposes and therefore cannot
conclude that the deferred tax asset is more likely than not recoverable at this
time.
 
 F-10
 Table of Contents
 
 NOTE
H — COMMITMENTS AND CONTINGENCY
 
 The
Founders will be entitled to registration rights with respect to their shares of
common stock acquired prior to the Public Offering and the shares of common
stock they purchased in the Private Placement pursuant to an agreement executed
on March 3, 2006. The holders of the majority of these shares are entitled
to make up to two demands that the Company register these shares at any time
after the date on which the lock-up period expires.  In addition, the
Founders have certain “piggy-back” registration rights on registration
statements filed subsequent to the anniversary of the effective date of the
Public Offering.
  In
connection with our proposed acquisition of a majority interest in MBL
Infrastructures Limited (“MBL”), an unaffiliated third party has claimed that it
is entitled to a finder's fee of approximately five percent of the purchase
price (or, $1.75 million) for the acquisition if the acquisition was
consummated.  While we do not admit that the unaffiliated third party
is a finder that is entitled to payment, we had expressed a willingness to pay
our customary Finder's fee of 0.25%.  The parties were attempting to
reach an agreement on the amount of the fee to be paid if the acquisition was
consummated.  As the MBL acquisition is no longer probable, we expect
that there will be no finders fees payable and the claim to be without
merit.
 
 In
connection with our proposed acquisition of a wind energy farm from
Chiranjjeevi Wind Energy Limited ("CWEL"), we have agreed to pay a finder’s fee
of 0.25% of the purchase price to Master Aerospace Consultants (Pvt) Ltd, a
consulting firm located in India. The fee is contingent on the consummation
of the transaction.
 
 In
connection with the Public Offering and pursuant to an advisory agreement, the
Company engaged the Underwriter as its investment bankers to provide the Company
with assistance in structuring the Business Combination. As compensation for the
foregoing services, the Company paid the Underwriter a cash fee at the closing
of a Business Combination equal to 2% of the aggregate consideration, or
$1,500,000.  In addition, a fee of $90,000 was paid to Ferris, Baker
for facilitating the loan to the Company by Oliveira Capital, LLC, at the
closing of a Business Combination.
  NOTE
I – INVESTMENT ACTIVITIES
 
 MBL
Infrastructure Limited Purchase Agreement
 
 On
February 5, 2007, the Company entered into an agreement to sell 425,000
warrants, and a note for $3,000,000 to Oliveira Capital, LLC for
$3,000,000. The note carries interest at the rate of 8% and was due upon the
earlier of February 5, 2008, or the consummation of a Business
Combination.  The Company is negotiating an extension with Oliveira
Capital.  If the Company extends the loan for 90 days without
renegotiating an extension we would be required to issue an additional 425,000
warrants.  The Black Scholes valuation of the warrants was based on an
annualized volatility of 42.8%, an annual interest rate of 3% and an expiration
of 1,500 days would be $1,030,625.  We computed volatility for a
period of 1,500 days. For approximately the first two years, we used the
trading history of two representative companies that are listed on the Indian
Stock exchange. For approximately two years, the trading history of the
Company’s common stock was used.  The average volatility of the
combined data extending just over four years was calculated as 42.8%. 
Management believes that this volatility is a reasonable benchmark to use in
estimating the value of the warrants.  Following the receipt of the
$3,000,000 from Oliveira Capital, the Company on February 6, 2007 purchased
$3,000,000 of convertible debentures from MBL. The debentures carry interest at
the rate of 8%, are secured by 1,131,356 shares of MBL common stock and are
carried at cost. The note from Oliveira Capital, LLC is secured by the
convertible debentures issued to MBL.
  Contract
Agreement between IGC, CWEL, AMTL and MAIL
 
 As
previously disclosed in our Form 8-K dated May 2, 2007 and Form 10-QSB for the
quarterly period ended June 30, 2007, on April 29, 2007, the Company entered
into a Contract Agreement Dated April 29, 2007 (“CWEL Purchase Agreement”) with
CWEL, Arul Mariamman Textiles Limited (AMTL), and Marudhavel Industries
Limited (MAIL), collectively CWEL. Pursuant to the CWEL Purchase Agreement, the
Company or its subsidiary in Mauritius will acquire 100% of a 24-mega watt wind
energy farm, consisting of 96 250-kilowatt wind turbines, located in Karnataka,
India to be manufactured by CWEL.
 
 CWEL is a
manufacturer and supplier of wind operated electricity generators, towers and
turnkey implementers of wind energy farms.  On May 22, 2007, the
Company made a down payment of approximately $250,000 to
CWEL.  Pursuant to the First Amendment dated August 20, 2007 (as
previously disclosed in the Company’s Form 8-K dated August 22, 2007), if the
Company does not consummate the transaction with CWEL, approximately $187,500
will be returned to the Company.
 
 The
Company is contemplating pursuing this opportunity, or a similar one if it is
able to obtain adequate funding from the exercise of warrants, debt or other
means.
 
 F-11
 Table of Contents
 
  NOTE
J – BUSINESS COMBINATION
 
 As previously disclosed in our Form 8-K
dated September 21, 2007 and Form 10-QSB for the quarterly period ended June 30,
2007, on September 21, 2007, the Company entered into a Share Subscription cum
Purchase Agreement  (the “Sricon Subscription Agreement”) dated as of
September 15, 2007 with Sricon Infrastructure Private
Limited  (“Sricon”) and certain individuals (collectively, the “Sricon
Promoters”), pursuant to which the Company or its subsidiary in Mauritius
(IGC-M) will acquire (the “Sricon Acquisition”)4,041,676 newly-issued equity
shares  (the “New Sricon Shares”) directly from Sricon for
approximately $26 million and 351,840 equity shares from Mr. R. L. Srivastava
for approximately $3 million (both based on an exchange rate of INR 40 per USD)
so that at the conclusion of the transactions contemplated by the Sricon
Subscription Agreement the Company would ownapproximately63% of the outstanding equity shares of
Sricon.The Sricon Acquisition was consummated
on March 7, 2008.
 
 As
previously disclosed in our Form 8-K dated September 21, 2007 and Form 10-QSB
for the quarterly period ended June 30, 2007, on September 21, 2007, the Company
entered into a Share Subscription Agreement  (the “TBL Subscription
Agreement”) dated as of September 16, 2007 with Techni Bharathi Limited (“TBL”)
and certain individuals (collectively, the “TBL Promoters”), pursuant to which
the Company through its subsidiary in Mauritius (IGC-M) acquired (the “TBL
Acquisition”)7,150,000 newly-issued
company stock for approximately $6.9 million, 1,250,000 newly-issued convertible
preference shares for approximately $3.13 million  (both at an
exchange rate of INR 40 per USD; collectively, the “New Shares”) directly from
TBL and 5,000,000 convertible preference shares from Odeon, a Singapore based
holder of TBL securities, for approximately $2 million.  With the
conclusion of this transaction, on March 7, 2008 the Company ownsapproximately 77%, of
the outstanding equity shares of TBL.
 
 The
assets and liabilities acquired as a result of above business combinations were
recorded at fair values, with the excess of the purchase consideration over fair
value of the net assets acquired recorded as goodwill. The following table
summarizes the company's share of the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition during the year
ended March 31, 2007:
  Sricon
                $
              
              
              TBL
                $
              
              
              Total
                $Current
      assets
              
              
              23,205,026
              
              
              
              9,428,415
              
              
              
              32,633,442Property
      and equipment, net
              
              
              3,356,275
              
              
              
              1,520,974
              
              
              
              4,877,249BOT
      under Progress
              
              
              2,195,651
              
              
              
              -
              
              
              
              2,195,651Other
      non current assets
              
              
              1,389,571
              
              
              
              1,371,199
              
              
              
              2,760,770Total
      Assets
              
              
              30,146,523
              
              
              
              12,320,588
              
              
              
              42,467,112Short-term
      borrowings and current portion of long-term debt
              
              
              3,611,176
              
              
              
              1,873,115
              
              
              
              5,484,290Other
      Current liabilities
              
              
              4,409,153
              
              
              
              2,277,528
              
              
              
              6,686,682Long-term
      debt, net of current portion
              
              
              796,296
              
              
              
              -
              
              
              
              796,296Other
      non-current liabilities
              
              
              1,337,077
              
              
              
              2,250,720
              
              
              
              3,587,797Total
      Liabilities
              
              
              10,153,702
              
              
              
              6,401,363
              
              
              
              16,555,065Fair
      Value of net assets acquired
              
              
              19,992,822
              
              
              
              5,919,225
              
              
              
              25,912,047
  The
allocation of the purchase considerations of the above business combinations
during the year ended March 31, 2007 was as follows:
  Sricon
              
              
              TBL
              
              
              TotalNew
      Shares - Equity or Preference
              
              $
              25,705,119
              
              
              $
              10,038,081
              
              
              $
              35,743,199Existing
      Shares purchased
              
              
              2,985,147
              
              
              
              2,000,000
              
              
              $
              4,985,147Allocation
      of estimated acquisition costs
              
              
              1,854,750
              
              
              
              812,451
              
              
              $
              2,667,201Total
      Purchase Price
              
              $
              30,545,016
              
              
              $
              12,850,532
              
              
              $
              43,395,547Allocation
      of Purchase Price:Fair
      Value of net assets acquired
              
              $
              19,992,822
              
              
              $
              5,919,225
              
              
              $
              25,912,047Goodwill
              
              
              10,552,194
              
              
              
              6,931,307
              
              
              
              17,483,501Total
      Purchase Price
              
              $
              30,545,016
              
              
              $
              12,850,532
              
              
              $
              43,395,547
 
 
 
 F-12
 Table of Contents
 
 NOTE
K – PRIVATE PLACEMENT OF PROMISSORY NOTES
 
 Private
Placement Offering of Secured Promissory Notes (the “Bridge
Offering”)
 
 As
previously disclosed in our Form 8-K dated December 27, 2007, we conducted a
private placement offering of secured promissory notes (the “Notes”) for an
aggregate principal amount of  $7,275,000 (the “Bridge Offering”). The
Notes bear interest at a rate equal to 5% per annum from the date of issuance
(January 10, 2008) until paid in full.  The Notes were repaid in
full on March 19, 2008.
 
 On March
7, 2008 the Company, issued 754,953 shares of common stock to the holders
of the Notes on a pro rata basis and recorded the cost of the shares as an
expense based on the closing price of the company’s stock on March 7,
2008.  The expense associated with the issuance of the shares is about
$3,170,806.
  NOTE
L – VALUATION OF WARRANTS ISSUED TO OLIVEIRA CAPITAL, LLC
 
 As
previously disclosed, the Company sold a promissory note and 425,000 warrants to
Oliveira Capital, LLC for $3,000,000. Each warrant will entitle the holder
to purchase from the Company one share of common stock at an exercise price of
$5.00 and expires five years from the date of issuance.  The Company has
determined, based upon a Black-Scholes model, that the fair value of the
warrants on the date of issuance would approximately be $ 1,235,000 using an
expected life of five years, volatility of 46% and a risk-free interest rate of
4.8%. This amount is accounted for as a discount of the notes payable to
Oliveira Capital, LLC.
 
 We
computed volatility for a period of five years. For approximately the first
four years, we used the trading history of two representative companies that are
listed on the Indian Stock exchange. For approximately one year, the
trading history of the Company’s common stock was used. The average volatility
of the combined data extending over five years was calculated as
46%. Management believes that this volatility is a reasonable benchmark to
use in estimating the value of the warrants.
 
 NOTE
M – SPAC RELATED EXPENSES
 
 As of
March 31, 2008 we incurred about $5.765 Million of SPAC related expenses, and
about $1.9 Million of SPAC interest related expenses, mostly as one-time
expenses.  The major expenses are as follows: 1) as explained in Note
K, about $3.1 Million was non-cash expenses associated with the award of stock
to the Bridge investors.  2) As described in Note H, approximately
$1.5 Million was paid to Ferris Baker Watts, of which $.9 Million was expensed
as the services rendered by them related to acquisitions that we did not
close.  3) Approximately, $.469 Million relates to the bridge loan
from Oliveira Capital, LLC as described in Note I, and 5) approximately $.5
Million was incurred for legal and professional fees for two bridge loans and
several acquisitions that we did not close.  In addition, we incurred
about $1.23 Million in non-cash interest related expenses for the warrants
issued to Oliveira Capital as described in Note I.
  NOTE
N – SUBSEQUENT EVENTS
 None


F-13
 Table of Contents


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   To the
Board of Directors and Shareholders
   Sricon
Infrastructure Private Limited (Formerly Srivastava Construction Private
Limited):
  We have
audited the accompanying  balance sheets of Sricon Infrastructure
Private Limited as of March 7, 2008, and as of March 31, 2007 and the
related  statements of operations, stockholders' equity
and  cash flows for the period ended March 7, 2008, and years ended
March 31, 2007 and 2006.  These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our
audits.
  We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
   In our
opinion, the  financial statements referred to above present fairly ,
in all material respects, the financial position of Sricon Infrastructure
Private Limited (Formerly Srivastava Construction Private Limited), Nagpur,
India as of March 7, 2008, and as of March 31, 2007 and the results of
its  operations, stockholders' equity and cash flows for the the
period ended March 7, 2008, and years ended March 31, 2007 and 2006 in
conformity with United States generally accepted accounting
principles.
   YOGANANDH
& RAM
   Chartered
Accountants
 Independent
Auditors registered with
 Public
Company Accounting Oversight Board (USA)
   Chennai,
India, 2008
   
  F-14
 Table of Contents
  
 SriconInfrastructure Private Limited
 BALANCE
SHEETS
 (Amounts
in Thousand US Dollars)
  As
      of
                
                
                As
      ofMarch
      31, 2007
                
                
                March
      7, 2008ASSETSCash
      and cash equivalents
                
                $
                89
                
                
                $
                301Accounts
      receivables
                
                
                2,751
                
                
                
                7,764Unbilled
      receivables
                
                
                2,866
                
                
                
                4,527Inventories
                
                
                71
                
                
                
                447Restricted
      cash
                
                
                -
                
                
                
                1Short
      term investments
                
                
                -
                
                
                
                1Prepaid
      and other assets
                
                
                674
                
                
                
                727Due
      from related parties
                
                
                259
                
                
                
                1,004Total
      Current Assets
                
                
                6,710
                
                
                
                14,772Property
      and equipment, net
                
                
                4,903
                
                
                
                5,327BOT
      Project under Progress
                
                
                3,080
                
                
                
                3,485Investment
      – others
                
                
                387
                
                
                
                1,103Restricted
      cash, non-current
                
                
                62
                
                
                
                217Other
      assets
                
                
                216
                
                
                
                886Total
      Assets
                
                $
                15,358
                
                
                $
                25,790LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      liabilitiesShort-term
      borrowings and current portion of long-term debt
                
                $
                3,646
                
                
                $
                5,732Trade
      payables
                
                
                139
                
                
                
                1,263Advance
      from Customers
                
                
                -
                
                
                
                1,019Due
      to related parties
                
                
                2,264
                
                
                
                1,322Other
      current liabilities
                
                
                39
                
                
                
                3,395Total
      current liabilities
                
                
                6,088
                
                
                
                12,731Long-term
      debt, net of current portion
                
                
                2,182
                
                
                
                1,264Deferred
      taxes on income
                
                
                538
                
                
                
                603Security
      Deposit from joint ventures
                
                
                348
                
                
                
                -Other
      liabilities
                
                
                1,913
                
                
                
                1,519Total
      liabilities
                
                $
                11,069
                
                
                $
                16,117Stockholders'
      equityCommon
      stock, par value USD 0.23 (INR 10) per share
                
                
                674
                
                
                
                674Additional
      Paid in Capital
                
                
                726
                
                
                
                726Money
      received pending allotment
                
                
                -
                
                
                
                3,643Retained
      earnings
                
                
                2,818
                
                
                
                4,284Accumulated
      other comprehensive (loss) income
                
                
                71
                
                
                
                346Total
      stockholders' equity
                
                
                4,289
                
                
                
                9,673Total
      liabilities and stockholders' equity
                
                $
                15,358
                
                
                $
                25,790
  The
accompanying notes form an integral part of these financial
statements.
   F-15
 Table of Contents
 
  SriconInfrastructure Private Limited
 STATEMENT
OF OPERATIONS
 (Amounts
in Thousand US Dollars)
  Year
      ended
                
                
                Year
      ended
                
                
                Period
      endedMarch
      31, 2006
                
                
                March
      31, 2007
                
                
                March
      7, 2008Revenue
                
                $
                11,011
                
                
                $
                10,604
                
                
                $
                22,614Cost
      of revenue
                
                
                (8,596
                )
                
                
                (8,101
                )
                
                
                (15,968
                )Gross
      profit
                
                
                2,415
                
                
                
                2,503
                
                
                
                6,646Selling,
      general and administrative expenses
                
                
                (1,241
                )
                
                
                (1,115
                )
                
                
                (2,385
                )Depreciation
                
                
                (240
                )
                
                
                (243
                )
                
                
                (416
                )Operating
      income
                
                
                934
                
                
                
                1,145
                
                
                
                3,845Interest
      expense (net)
                
                
                (389
                )
                
                
                (533
                )
                
                
                (994
                )Interest
      income (net)
                
                
                50
                
                
                
                66
                
                
                
                259Other
      income
                
                
                73
                
                
                
                100
                
                
                
                34Operating
      income before income taxes
                
                
                668
                
                
                
                778
                
                
                
                3,144Income
      tax gain / (expense)
                
                
                (179
                )
                
                
                (357
                )
                
                
                (746
                )Fringe
      Benefit tax expense
                
                
                (7
                )
                
                
                (11
                )
                
                
                (22
                )Net
      Income:
                
                $
                482
                
                
                $
                410
                
                
                $
                376Earnings
      per share:Basic
                
                $
                0.16
                
                
                $
                0.14
                
                
                $
                0.81Diluted
                
                $
                0.16
                
                
                $
                0.14
                
                
                $
                0.78Weighted
      average number of common shares outstanding:Basic
                
                
                2,932,159
                
                
                
                2,932,159
                
                
                
                2,932,159Diluted
                
                
                2,932,159
                
                
                
                2,932,159
                
                
                
                3,058,881
 
  The
accompanying notes form an integral part of these financial
statements.
   F-16
 Table of Contents
  SriconInfrastructure Private Limited
 STATEMENT
OF STOCKHOLDERS’ EQUITY
 (Amounts
in Thousand US Dollars)
  
 Common
      StockShares
                  
                  
                  Par
      value
                  
                  
                  Additional
                    Paid in
      Capital
                  
                  
                  Money received
                    pending
      allotment
                  
                  
                  Retained
      Earnings
                  
                  
                  Accumulated
      other comprehensive income / (loss)
                  
                  
                  TotalBalance
      as of April 1, 2005
                  
                  
                  2,932,159
                  
                  
                  $
                  674
                  
                  
                  $
                  726
                  
                  
                  $
                  -
                  
                  
                  $
                  1,926
                  
                  
                  $
                  (1
                  )
                  
                  $
                  3,325Loss
      on foreign currency translation
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (67
                  )
                  
                  
                  (67
                  )Net
      Income for the period
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  482
                  
                  
                  
                  -
                  
                  
                  
                  482Balance
      as of March 31, 2006
                  
                  
                  2,932,159
                  
                  
                  
                  674
                  
                  
                  
                  726
                  
                  
                  
                  -
                  
                  
                  
                  2,408
                  
                  
                  
                  (68
                  )
                  
                  
                  3,740Balance
      as at April 1, 2006
                  
                  
                  2,932,159
                  
                  
                  
                  674
                  
                  
                  
                  726
                  
                  
                  
                  -
                  
                  
                  
                  2,408
                  
                  
                  
                  (68
                  )
                  
                  
                  3,740Gain
      on foreign currency translation
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  140
                  
                  
                  
                  140Net
      Income for the period
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  409
                  
                  
                  
                  -
                  
                  
                  
                  409Balance
      as of March 31, 2007
                  
                  
                  2,932,159
                  
                  
                  
                  674
                  
                  
                  
                  726
                  
                  
                  
                  -
                  
                  
                  
                  2,817
                  
                  
                  
                  72
                  
                  
                  
                  4,289Balance
      as at April 1, 2007
                  
                  
                  2,932,159
                  
                  
                  
                  674
                  
                  
                  
                  726
                  
                  
                  
                  -
                  
                  
                  
                  2,817
                  
                  
                  
                  72
                  
                  
                  
                  4,289Gain
      on foreign currency translation
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  274
                  
                  
                  
                  274Net
      Income for the period
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,467
                  
                  
                  
                  -
                  
                  
                  
                  1,467Money
      received pending allotment
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,643
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,643Balance
      as of March 7, 2008
                  
                  
                  2,932,159
                  
                  
                  $
                  674
                  
                  
                  $
                  726
                  
                  
                  $
                  3,643
                  
                  
                  $
                  4,284
                  
                  
                  $
                  346
                  
                  
                  $
                  9,673
    The
accompanying notes form an integral part of these financial
statements.
   F-17
 Table of Contents
  SriconInfrastructure Private Limited
 STATEMENT
OF CASH FLOWS
 (Amounts
in Thousand US Dollars)
  Year
      ended
                
                
                Year
      ended
                
                
                Period
      endedMarch
      31, 2006
                
                
                March
      31, 2007
                
                
                March
      31, 2008Cash flows from operating
      activitiesNet
      income
                
                $
                482
                
                
                $
                409
                
                
                $
                2,376Adjustments
      to reconcile net income to net cashprovided
      (used) in operating activities:Depreciation
                
                
                240
                
                
                
                243
                
                
                
                416Deferred
      tax expense
                
                
                34
                
                
                
                79
                
                
                
                30Loss
      on sale of property and equipment
                
                
                5
                
                
                
                (67
                )
                
                
                117761
                
                
                
                664
                
                
                
                2,939Changes in assets and
      liabilitiesAccounts
      receivable
                
                
                4
                
                
                
                (574
                )
                
                
                (3,757
                )Unbilled
      Receivable
                
                
                (2,039
                )
                
                
                200
                
                
                
                (1,481
                )Inventories
                
                
                (98
                )
                
                
                177
                
                
                
                (88
                )Prepaid
      expenses and other current assets
                
                
                (473
                )
                
                
                (36
                )
                
                
                828Trade
      payables
                
                
                792
                
                
                
                (1,214
                )
                
                
                781Other
      current liabilities
                
                
                (302
                )
                
                
                (15
                )
                
                
                1,633Advance
      from Customers
                
                
                340
                
                
                
                -
                
                
                
                (522
                )Other
      non-current liabilities
                
                
                528
                
                
                
                1,140
                
                
                
                (524
                )Non-current
      assets
                
                
                (91
                )
                
                
                126
                
                
                
                (583
                )BOT
      Project under Progress
                
                
                (1,595
                )
                
                
                (1,380
                )
                
                
                (201
                )Net
      cash used in (provided by) operating activities
                
                
                (2,173
                )
                
                
                (911
                )
                
                
                (975
                )Cash
      flows from investing activitiesPurchase
      of property and equipment
                
                
                (1,415
                )
                
                
                (727
                )
                
                
                (228
                )Proceeds
      from sale of property and equipment
                
                
                26
                
                
                
                10
                
                
                
                315Purchase
      of short term investments
                
                
                -
                
                
                
                -
                
                
                
                (1
                )Non
      Current Investments
                
                
                506
                
                
                
                (224
                )
                
                
                (694
                )Investment
      in joint ventures
                
                
                (43
                )
                
                
                111
                
                
                
                -Restricted
      cash
                
                
                (483
                )
                
                
                654
                
                
                
                (152
                )Net
      cash (used in) provided by investing activities
                
                
                (1,409
                )
                
                
                (176
                )
                
                
                (760
                )Cash flows from financing
      activitiesNet
      movement in cash credit and bank overdraft
                
                
                2,294
                
                
                
                (628
                )
                
                
                (967
                )Proceeds
      from other short-term borrowings
                
                
                44
                
                
                
                165
                
                
                
                55Proceeds
      from long-term borrowings
                
                
                2,343
                
                
                
                1,497
                
                
                
                2,618Repayment
      of long-term borrowings
                
                
                (752
                )
                
                
                (966
                )
                
                
                (1,597
                )Due
      to related parties, net
                
                
                (63
                )
                
                
                572
                
                
                
                (1,834
                )Issue
      of Equity Shares
                
                
                -
                
                
                
                -
                
                
                
                -Money
      received pending allotment
                
                
                -
                
                
                
                -
                
                
                
                3,670Net
      cash provided by financing activities
                
                
                3,866
                
                
                
                640
                
                
                
                1,945Effect
      of exchange rate changes on cash and cash equivalents
                
                
                (7
                )
                
                
                (4
                )
                
                
                2Net
      increase (decrease) in cash and cash equivalents during the
      year
                
                
                277
                
                
                
                (450
                )
                
                
                212Add:
      Balance as at the beginning of the period
                
                
                262
                
                
                
                539
                
                
                
                89Balance
      as at the end of the period
                
                $
                539
                
                
                $
                89
                
                
                $
                301
  Supplementary
information to Cash flow Statement
  Year
      ended
                
                
                Year
      ended
                
                
                Period
      endedMarch
      31, 2006
                
                
                March
      31, 2007
                
                
                March
      31, 2008Cash
      paid during the yearIncome
      tax
                
                $
                270
                
                
                $
                170
                
                
                $
                198Interest
                
                
                293
                
                
                
                386
                
                
                
                994
  The
accompanying notes form an integral part of these financial
statements.
  F-18
 Table of Contents
  SriconInfrastructure Private Limited
 NOTES
TO  FINANCIAL STATEMENTS
 (Amounts
in Thousand US Dollars, except share data and as stated otherwise)
  1.
BACKGROUND
   a)
Incorporation and History
   Sricon Infrastructure Private Limited
(“SIPL” or “Sricon”) is an Infrastructure Company that has established itself as
one of the leading companies in terms of  in  India
infrastructure projects such as: National Highways, Civil and Structural
Engineering Works for Power Plants, Steel Mills, Sugar Plants, Turnkey Power
Supply Systems, Water Supply Schemes, Mining, Quarrying, and Cement Plants.
SIPL’s business strategy is inspired by R.L. Srivastava, the Company Chairman
and Managing Director, who started his career as a Civil Engineering
Contractor.  Mr. Srivastava’s years of experience and technological
insight has guided this company in the mist of great economic achievement and
promise in the country of India. SIPL was incorporated in 1997 with the
Registrar of Companies, Maharashtra as  “Srivastava Construction
Private Limited”.
  Until the official formation of SIPL,
the infrastructure construction projects  performed by our partner
firm, Vijay Engineering Enterprises “VEE” (partnership concern). SIPL was later
formed to participate in larger scale development projects such as Highway
development, Water Management Systems, Power and Cement Plants to name a
few.  The two rapidly growing companies eventually combined to take
advantage of greater synergies in terms of better managed resources, both human
and capital.   SIPL is proud to  service
it’s impressive book of business which includes notable infrastructure clients
and partners such as the National Highway Authority of India, National Thermal
Power Corporation, Western Coalfields Limited, Larsen & Turbo Limited,
Nagpur Municipal Corporation, Bharat Heavy Electrical Limited, and Hindustan
Steelworks Construction Limited.
  The company is accredited with ISO
9001:2000 Certification and the scope for registration being     “To execute projects
in the field of construction comprising of Road Works, Industrial
Building/Infrastructure Projects, Plants foundations, Housing/Colony
construction, bridge construction, Water works, Refractory Works and Jetty
Works”.
   b)
Description of Business
   The current infrastructure construction
business of the company primarily comprises of:
   ·
                Road Construction and
      Maintenance
  ·
                Canal
      and Earth work
  ·
                Maintenance
      of Cement Plant including Refractory
work
  ·
                Civil
      work for Power and Steel Plants
  ·
                Limestone
      and Coal Mining
   c)
Industry Overview
  India’s construction industry revenue
is estimated to be over $28 billion annually, which accounts for more than 6% of
the GDP. The construction industry is currently the largest employer in the
country, employing nearly32 million workers. The country’s apparent and
limitless demand for new highways for better transportation systems, dams,
pipelines along with government incentives, has caused a drastic surge in nearly
all segments of the country.  This is evidenced by the increase in the
large number of infrastructure procurement contracts over the past 7 to 10
years.   This remarkable growth is anticipated to continue for
many years to come.
   F-19
 Table of Contents
  To
illustrate India’s shared economic optimism among country leaders, Indian Prime
Minister Dr. Manmohan Singh, n, while addressing the Finance Ministers of ASEAN
countries at the Indo ASEAN Summit in New Delhi, forecasted that India requires
$150 billion at the rate of $15 billion per annum over the next 10 years. The
current rate of U.S. Foreign Direct Investment in India is estimated at $5
billion per year.. It is further estimated that more than 50%
of  future FDI’s will be earmarked for Infrastructure, Telecom, and
Power projects.
  Another
example of India’s infrastructural growth is the Golden Quadrilateral, which is
one of the largest highway projects under current development. It now has
approximately 4,500 miles with and an  impressive 13,300 miles of
north-south corridors.   Legislation is underway to plan miles
of  East and West Coast corridors.
  The Nodal
Agencies (NHAI, NTPC, NHPC, and PGCL, which specializes in alternative energy
sources,  has ambitious development plans in the near future. The
value of overseas projects, under execution by Indian Companies is
conservatively estimated to be nearly 4.2176 billion U.S. dollars , which covers
major markets including  Malaysia, Middle East, and East Africa. The
Industry is led by an intensely competitive environment, which is typically
characteristic of larger and mature markets such as the United States and Japan.
Therefore, no single alternative energy company controls the overall
market.
  The
Infrastructure Budget of the Government for the 10th Plan (FY 02-07) is as
under:
  (USD
      in Millions)Sector
                
                FY20
      01-04
                
                
                FY20
      04-07Roads
                
                $
                7,656.61
                
                
                $
                14,617.16Power
                
                
                9,280.74
                
                
                
                19,721.57Oil
      & Gas
                
                
                8,816.70
                
                
                
                15,313.22Ports/
      Airports/ Shipping
                
                
                2,088.16
                
                
                
                3,712.29Railways
                
                
                7,424.59
                
                
                
                11,136.89Telecom
                
                
                15,313.22
                
                
                
                16,937.35Total
                
                $
                50,580.02
                
                
                $
                81,438.48
  The
Outlay for the Central Sector Roads alone is 12,642.69 million. The position of
on-going Road Projects in India is:
  (USD
      in Millions)Funding
      Agency/Source
                
                No.
      of Projects
                
                
                Total
      ValueNHAI
                
                $
                50
                
                
                $
                2,218.46World
      Bank
                
                
                15
                
                
                
                1,043.20Asian
      Development Bank
                
                
                8
                
                
                
                290.14Annuity
                
                
                8
                
                
                
                546.10BOT
                
                
                7
                
                
                
                768.90Total
                
                $
                88
                
                
                $
                4,866.80
  d)
Business Outlook
  Sricon
has networked with many partners in the industry in anticipation of jointly
executing very large projects. The Company has signed MOU’s (Memoranda of
Understanding) with industry leaders, Systems America and Hindustan Steel Works
Construction Limited “HSCL”, to participate in large value
projects.
  The
company has also been pre-qualified by the National Highway Authority of India f
to bid in various projects. National Highway Authority of India is
implementing highways projects totaling 12,529 million including the Golden
Quadrilateral Projects, which is publically funded by taxes levied on petrol and
diesel fuel sales. .    The company, using its network of
infrastructure building partners, has strategically positioned itself to be
frontrunners in acquiring these types of highway construction
contracts.    The National Highway Authority has
pre-qualified the company to bid on construction contracts with values up to 116
million. The company has been awarded a National Highway Authority contract for
24.36 million which is eligible to expand by 10.44 million in additional
contracts acquisitions.     Also, the following
companies have joined Scrion in expanding its’ service delivery
capability:
   F-20
 Table of Contents
  ·
                Systems
      America Inc.: An established and leading American company engaged in
      construction and development of infrastructure projects, which will
      support SIPL in large highways
projects.
  ·
                MECON
      Limited: A public enterprise having vast experience in engineering and
      turnkey execution of civil construction and infrastructure projects that
      will assist SIPL in  undertaking projects within the GCC
      countries on turnkey basis
  ·
                Hindustan
      Steelworks Construction Limited (“HSCL”): A Government undertaking having
      vast experience in turnkey execution of civil construction and
      infrastructure projects and will assist SIPL  participate in
      various  NHAI contracts in Maharashtra and Madhya Pradesh each
      valuing 225 million US dollars
  SIPL has
successfully completed various infrastructure projects with the following
strategic partners:
  ·
                National
      highway Authority of India
  ·
                Projects
      on BOT basis
  ·
                National
      Thermal Power Corporation
  ·
                Maharashtra
      Jeevan Pradhikaran
  ·
                Western
      Coalfields Limited
  ·
                Larsen
      and Tubro Limited
  ·
                Public
      Works Department
  ·
                Nagpur
      Municipal Corporation
  ·
                Nagpur
      Improvement Trust
  ·
                Bharat
      Heavy Electricals Limited
  ·
                Hindustan
      Steelworks Construction Limited
  ·
                Pradhan
      Mantri Gram Sadak Yojana
   F-21
 Table of Contents
  The
Company’s registration with the following entities reflects its technical
expertise, project execution capabilities and reliability:
  ·
                Central
      Public Works Department
  ·
                National
      Building Construction Corporation
Limited
  ·
                Engineers
      Project India Limited
  ·
                Mecon
  ·
                Hindusthan
      Construction Limited
  ·
                National
      Project Construction Limited
  ·
                Sardar
      Sarovar Narmada Nigam Limited
  ·
                R
      & B Division, Amveli
  ·
                Nagpur
      Municipal Corporation
  ·
                Nagpur
      Improvement Trust
  The
Company’s registration with the following entities reflects its technical
expertise, project execution capabilities and reliability:
  ·
                Central
      Public Works Department
  ·
                National
      Building Construction Corporation
Limited
  ·
                Engineers
      Project India Limited
  ·
                Mecon
  ·
                Hindusthan
      Construction Limited
  ·
                National
      Project Construction Limited
  ·
                Sardar
      Sarovar Narmada Nigam Limited
  ·
                R
      & B Division, Amveli
  ·
                Nagpur
      Municipal Corporation
  ·
                Nagpur
      Improvement Trust
  e)
Risks and Threats
  ·
                The industry is highly governed
      by the political environment and economical policies prevalent
      within the country
      since significant portion of infrastructure spending originates from the
      Government. Any adverse change in the policies
      may slow down the Government’s commitment towards Infrastructure
      development.
  ·
                Competition:
   F-22
 Table of Contents
  Foreign
Competition – The Government has opened the sector to foreign companies who can
bid on projects on their own, or through joint ventures with domestic companies.
This could create more competition in the future.
  Domestic
Competition - The Company faces two types of competition in the domestic
sector:
  (i)
                
                Competition
      from the local development companies in and around their state, typically
      this is applicable to low value contracts.(ii)
                
                Marketing
      / Business Development - Construction contracts for infrastructure in
      India are offered by the Government sector, Central Government and the
      State Governments. Funds for these are allocated through their budgetary
      support as well as through international and domestic financial
      institutions such as World Bank, Asian Development Bank, Japan Bank for
      International co-operation, Housing & Urban Development Corporation,
      National Bank for Agricultural & Rural Development, etc. In view of
      the nature of our market, the major sources of information of ensuing
      tenders for construction contracts are newspapers and government gazettes.
      In addition to these, construction contracts are also offered by the
      private sector.
  f)
Strengths and Opportunities
  ·
                The Company is an integrated
      construction and infrastructure development company with front-end
      civil engineering
      and design skills.
  ·
                The Company has sufficient
      internal resources, technology and human capital that will. that enables
      us to pre-qualify for major contract
      solicitations.
  ·
                The Company leverages its’ key
      relationships with  national and international organizations for use of
      specialized resources whenever the market
  dictates.
  ·
                The Company has a diverse service
      capability ranging from water and sewer management, to
      ,  installing power transmission lines, construction of roads, housing
      complexes, airport and  sea port construction, cement plant
      operations, canal  excavation
  projects.
  2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  a)
Basis of preparation
  The financial statements for the years
ended March 31, 2006, 2007 and for the period ended March 7, 2008 have been
prepared in accordance with accounting principles generally accepted in the
United States of America (‘US GAAP’). The significant accounting policies
adopted by Sricon, in respect of these financial statements, are set out
below.
  These
Financial statements have been prepared in US Dollars (USD), the national
currency of United States of America.
  b)
Foreign Currency Translation
  The accompanying financial statements
are reported in U.S. dollars. The Indian rupee is the functional currency for
the company. The translation of the functional currencies into U.S. dollars is
performed for assets and liabilities using the exchange rates in effect at the
balance sheet date and for revenues, costs and expenses using average exchange
rates prevailing during the reporting periods. Adjustments resulting from the
translation of functional currency financial statements to reporting currency
are accumulated and reported as other comprehensive income/(loss), a separate
component of shareholders’ equity.
  Transactions in foreign currency are
recorded at the exchange rate prevailing on the date of transaction. Monetary
assets and liabilities denominated in foreign currencies are expressed in the
functional currency at the exchange rates in effect at the balance sheet date.
Revenues, costs and expenses are recorded using exchange rates prevailing on the
date of transaction. Gains or losses resulting from foreign currency
transactions are included in the statement of income. Share Capital issued has
been recorded at historical rates whereas those existing on March 31, 2004 have
been translates at the rates prevailing on that date.
  The exchange rates used for translation
purposes are as under:
  Year
                
                Month
      end Average Rate (P&L rate)
                
                Year
      end rate (Balance sheet rate)2005-06
                
                INR
      44.18 per USD
                
                INR
      44.48 per USD2006-07
                
                INR
      45.11 per USD
                
                INR
      43.10 per USD2007-08
                
                INR
      40.13 per USD
                
                INR
      40.42 per USD
 
 
 F-23
 Table of Contents
  c)
Revenue recognition
  Sales and services include adjustments
made towards liquidated damages, price variation and charges paid for
discounting of receivables arising from construction/project contracts on a
non-recourse basis, wherever applicable.
  Revenue is recognized based on the
nature of activity when consideration can be reasonably measured and there
exists reasonable certainty of its recovery.
  Revenue from sale of goods is
recognized when substantial risks and rewards of ownership are transferred to
the buyer under the terms of the contract.
  Revenue from construction/project
related activity and contracts for supply/commissioning of complex plant and
equipment is recognized as follows:
  a)
                
                Cost
      plus contracts: Contract revenue is determined by adding the aggregate
      cost plus proportionate margin as agreed with the customer and expected to
      be realized.b)
                
                Fixed
      price contracts: Contract revenue is recognized using the percentage
      completion method. Percentage of completion is determined as a proportion
      of cost incurred-to-date to the total estimated contract cost. Changes in
      estimates for revenues, costs to complete and profit margins are
      recognized in the period in which they are reasonably
      determinable
  Full provision is made for any loss in
the period in which it is foreseen.
  Revenue from property development
activity is recognized when all significant risks and rewards of ownership in
the land and/or building are transferred to the customer and a reasonable
expectation of collection of the sale consideration from the customer
exists.
  Revenue from service related activities
and miscellaneous other contracts are recognized when the service is rendered
using the proportionate completion method or completed service contract
method.
  d)
Use of estimates
  The preparation of financial statements
in conformity with US GAAP requires the use of management estimates and
assumptions that affect the amounts reported. These estimates are based on
historical experience and information that is available to management about
current events and actions that the Company may take in the future. Significant
items subject to estimates and assumptions include revenue recognition, the
useful lives and the evaluation of impairment of property and equipment, the
income tax, the contingencies and the provision for impairment of receivables
and advances. Actual results could differ from these
estimates.
  e)
Joint venture
  The Company’s interest in jointly
controlled entities is initially recognized at cost.
  f)
Restricted cash
  Restricted cash consists of deposits
pledged with various government authorities and deposits restricted as to usage
under lien to banks for guarantees and letters of credit given by the Company.
The restricted cash is primarily invested in time deposits with
banks.
  g)
Cash and cash equivalents
  Cash includes cash in hand, cash with
banks and cash equivalents, which represent highly liquid deposits with an
original maturity of ninety days or less. All the investments which include
government securities are classified as non current investments (refer Note 2
(j)).
  h)
Accounts receivable
  Accounts receivables are recorded at
the invoiced amount. Account balances are written off when the company believes
that the receivables will not be recovered. The company’s bad debts are included
in selling and general administrative expenses. The company did not recognize
any bad debts during the year ended March 31, 2006, 2007 and March 7, 2008,
respectively.
  i)
Investments
  Investments are initially measured at
cost, which is the fair value of the consideration given for them, including
transaction costs. Investments generally comprises of fixed deposits with
banks.
  j)
Inventories
  Inventories primarily comprise finished
goods, raw materials, work in progress, stock at customer site, stock in
transit, components and accessories, stores and spares, scrap, residue and real
estate. Inventories are stated at the lower of cost or estimated net realizable
value.
  The Cost of various categories of
inventories is determined on the following basis:
  Raw Material are valued at weighted
average of landed cost (Purchase price, Freight inward and transit insurance
charges), Work in progress is valued as confirmed, valued & certified by the
technicians & site engineers and Finished Goods at material cost plus
appropriate share of labor cost and production overhead. Components and
accessories, stores erection, materials, spares and loose tools are valued on a
First-in-First out basis. Real Estate is valued at the lower of cost or net
realizable value.
  F-24
 Table of Contents
  k)
Property and equipment
  Property and equipment is stated at
historical cost, net of accumulated depreciation. All direct costs relating to
the acquisition and installation of property and equipment are
capitalized
  Depreciation is recorded on a
straight-line basis over the estimated useful lives of the assets as
follows:
  Category
                
                YearsBuildings
                
                
                25Plant
      and Machinery
                
                
                20Computer
      Equipment
                
                
                3Office
      Equipment
                
                
                5Furniture
      and Fixtures
                
                
                5Vehicles
                
                
                5Leasehold
      Improvements
                
                Over
      the period of lease or useful life (if
less)
 
 Assets individually costing INR 5
(equivalent to USD 0.124 as at March 7, 2008) or less are fully depreciated in
the year of purchase.
  Land is not
depreciated.
  The assets’ residual values and useful
lives are reviewed, and adjusted if appropriate, at each balance sheet
date.
  Gains and losses arising from
retirement or disposal of property and equipment are determined as the
difference between the net disposal proceeds and the carrying amount of the
asset and are recognized in the statement of operations on the date of
retirement and disposal.
  Costs of additions and substantial
improvements to property and equipment are capitalized. The costs of maintenance
and repairs of property and equipment are charged to operating
expenses.
  l)
Asset retirement obligations
  Asset retirement obligations associated
with the Company’s leasehold land are subject to the provisions of FAS No. 143
“Accounting for Asset Retirement Obligations” and related interpretation, FIN
No. 47, “Accounting for Conditional Asset Retirement Obligations, an
interpretation of FASB Statement No. 143” . The lease agreements entered into by
the Company may contain clauses requiring restoration of the leased site at the
end of the lease term and therefore create asset retirement obligations. The
Company records the fair value of a liability for an asset retirement obligation
in the period in which it is incurred and capitalizes the cost by increasing the
carrying amount of the related long-lived asset. Over time, the liability is
accreted to its present value of each period, and the capitalized cost is
depreciated over the estimated useful life of the related asset. Upon settlement
of the liability, the Company either settles the obligation for its recorded
amount or incurs a gain or loss upon settlement.
  m)
Foreign currency transactions
  Monetary assets and liabilities
denominated in foreign currencies are expressed in the functional currency
Indian Rupees at the rates of exchange in effect at the balance sheet date.
Transactions in foreign currencies are recorded at rates ruling on the
transaction dates. Gains or losses resulting from foreign currency transactions
are included in the statement of operations.
  n)
Operating leases
  Lease payments under operating leases
are recognized as an expense on a straight-line basis over the lease
term.
  F-25
 Table of Contents
  o)
Capital leases
  Assets acquired under capital leases
are capitalized as assets by the Company at the lower of the fair value of the
leased property or the present value of the related lease payments or where
applicable, the estimated fair value of such assets. Amortization of leased
assets is computed on straight line basis over the useful life of the assets.
Amortization charge for capital leases is included in depreciation
expense.
  p)
Impairment of long – lived assets
  The Company reviews its long-lived
assets, including identifiable assets with finite lives, for impairment whenever
events or changes in business circumstances indicate that the carrying amount of
assets may not be fully recoverable. Such circumstances include, though are not
limited to, significant or sustained declines in revenues or earnings and
material adverse changes in the economic climate. For assets that the Company
intends to hold for use, if the total of the expected future undiscounted cash
flows produced by the assets or asset Company is less than the carrying amount
of the assets, a loss is recognized for the difference between the fair value
and carrying value of the assets. For assets the Company intends to dispose of
by sale, a loss is recognized for the amount by which the estimated fair value
less cost to sell is less than the carrying value of the assets. Fair value is
determined based on quoted market prices, if available, or other valuation
techniques including discounted future net cash flows.
  q)
Borrowing costs
  (i)
Capitalized interest
  The interest cost incurred for funding
a qualifying asset during the construction period is capitalized based on actual
investment in the asset at the average interest rate. The capitalized interest
is included in the cost of the relevant asset and is depreciated over the
estimated useful life of the asset.
  (ii)
Debt issue expenses
  The Company defers and amortizes debt
issue expenses over the term of the related borrowing based on the effective
interest method.
  r)
Provision for Warranties and Liquidated Damages
  The company recognizes warranty claims
and liquidated damages as and when they are probable/ incurred. In past years
the company does not have any material warranty claims. The liquidated damages
recognized during year ended March 31, 2006, 2007 and for the period ended March
7, 2008 are USD 21, 21 and Nil respectively. The liquidated Damages are included
in cost of revenue.
  s)
Employee benefits
  (i)  Retirement
Plans (Gratuity Plan)
  In accordance with Indian law, the
Company provides for gratuity obligations through a defined benefit retirement
plan (the ‘Gratuity Plan’) covering all employees. Under the Gratuity Plan, a
lump sum payment to vested employees is made at retirement or termination of
employment based on the respective employee’s salary and the number of years of
employment with the Company. The Company provides for the Plan based on
actuarial valuations in accordance with FAS No. 87, “Employers’ Accounting for
Pensions”.
  (ii)
Provident Fund and employees’ state insurance schemes
  In accordance with Indian law, all
employees of the Company are entitled to receive benefits under the Provident
Fund, which is a defined contribution plan. Both the employees and the employer
make monthly contributions to the plan at a predetermined rate (presently 12.0%)
of the employees’ basic salary. These contributions are made to the fund
administered and managed by the Government of India (GoI). In addition some
employees of the Company are covered under the employees’ state insurance
schemes, which are also defined contribution schemes recognized by the Indian
Revenue Authorities, and are administered through the GoI.
  The Company’s contributions to both
these schemes are expensed in the statement of operations. The Company has no
further obligations under these plans beyond its monthly
contributions.
    F-26
 Table of Contents
  (iii)
Compensated absences
  The employees of the Company are
entitled to be compensated for absences based on the unused leave balance and
the last drawn salary of the respective employees. The Company has provided for
the liability on account of compensated absences in accordance with FAS No. 43,
“Accounting for Compensated Absences”.
  t)
Income taxes
  In accordance with the provisions of
FAS 109, “Accounting for Income Taxes”, income taxes for the years ended March
31, 2006, 2007 and for the period ended March 7, 2008 are accounted for under
the asset and liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of assets and liabilities and their
respective tax bases and operating loss carry-forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the statement of operations in the period
in which the change is enacted. Based on management’s judgment, the measurement
of deferred tax assets is reduced, if necessary, by a valuation allowance for
any tax benefits for which it is more likely than not that some portion or all
of such benefits will not be realized.
  u)
Pre-operating costs
  Pre-operating
costs represent certain marketing and administrative expenses incurred prior to
the commencement of commercial operations of the new line of business. These
costs are expensed as incurred.
  v)
Earnings per share
  In accordance with FAS 128, “Earnings
Per Share”, a basic earnings per equity share is computed using the weighted
average number of equity shares outstanding during the period. Diluted earnings
per equity share are computed using the weighted average number of common and
dilutive common equivalent equity shares outstanding during the period except
where the result would be anti-dilutive.
  w)
Recent accounting pronouncements
  The Company does not believe that any
recently issued, but not yet effective, accounting standards if currently
adopted would have a material effect on the accompanying financial
statements.
  x)
Reclassification
  Certain items previously reported in
specific captions of the financial statements have been reclassified to conform
to the current year’s presentation.
  3.
INVESTMENT IN JOINT VENTURES
  The
company has entered into a joint venture dated March 24, 2005 with Hindustan
Steel Works Limited having a participation of 49% and 51%, respectively for the
purpose of preparation and submitting the bids and executing the contract works
in the name of HSCL – SIPL (JV) for National Highway Authority of India. The
principal objective of joint venture is construction of a four lane highway from
km marker 94,000 to km 123,000 of the Nagpur – Hyderabad Section of NH-7 in the
State of Maharashtra.
  The above
said Joint Venture Agreement was amended by an agreement dated 28th September
2007 wherein the percentage of profit sharing was amended to 98.75 % for the
Company and 1.25% for HSCL and in case of any loss , the same shall be borne by
the Company in entirety .In view of the Company’s predominance in Joint Venture,
the audited financial statements of the Joint Venture for the period ended
7th
March 2008 was  in the Company’s statements. HSCL’s share of Joint
Venture profit amounting to USD 6 in thousands has not been provided pending the
completion of the project under Joint Venture.
    F-27
 Table of Contents
  4.
PROPERTY AND EQUIPMENT, NET
  Property and equipment consist of the
following:
  As
      of
                
                
                As
      ofParticulars
                
                March 31,
      2007
                
                
                March 7
      2008Land
                
                $
                45
                
                
                $
                17Buildings
                
                
                49
                
                
                
                290Plant
      & Machinery
                
                
                5,468
                
                
                
                6,005Computers
                
                
                58
                
                
                
                84Furniture
      and Fixture
                
                
                56
                
                
                
                76Office
      equipment
                
                
                25
                
                
                
                34Vehicles
                
                
                165
                
                
                
                173Leasehold
      Improvements
                
                
                160
                
                
                
                175Asset
      under Construction
                
                
                -
                
                
                
                16Total
                
                $
                6,026
                
                
                $
                6,870Less:
      Accumulated depreciation
                
                
                1,123
                
                
                
                1543Net
                
                $
                4,903
                
                
                $
                5,327
  Plant & Machinery included plant
& machinery and commercial vehicles acquired under capital leases amounting
to USD 2,372 and 2,530 as of March 31, 2007 and March 7, 2008,
respectively.
  The gross carrying amounts of fully
depreciated assets included in the overall balance of property and equipment
above, which were still in active use, are as follows:
  As
      of
                
                
                As
      ofParticulars
                
                March 31,
      2007
                
                
                March 7,
      2008Furniture and
      Fixture
                
                $
                19
                
                
                $
                28Office
      equipment
                
                
                11
                
                
                
                12Computers
                
                
                17
                
                
                
                33Vehicles
                
                
                86
                
                
                
                104Total
                
                $
                133
                
                
                $
                177
 
 All property and equipment of the
Company have been pledged as collateral for its secured
borrowings.
  5.
INCOME TAXES
  The Company accounted for the deferred
tax assets and liabilities as of March 31 2006, 2007 and March 7, 2008, on the
temporary differences.
  The primary components of the income
tax expense were:
  Year ended
      March 31,
                
                Period
      ended March 7,2006
                
                2007
                
                2008Current Tax
      Expense
                
                $
                145
                
                
                $
                278
                
                
                $
                716Deferred Tax Expenses /
      (Income)
                
                
                34
                
                
                
                79
                
                
                
                30Income Tax
      Expense / (Income)
                
                $
                179
                
                
                $
                357
                
                
                $
                746
 
 
 F-28
 Table of Contents
  The reconciliation between the
provisions for income tax to the amount computed by applying the statutory
income tax rate to the income before provision for income tax is summarized
below:
  Year ended
      March 31,
                
                Period
      ended March 7,2006
                
                
                2007
                
                2008Net Income
      before Taxes
                
                $
                668
                
                
                $
                779
                
                
                $
                3,144Enacted Tax Rates in
      India
                
                
                33.6600
                %
                
                
                33.9900
                %
                
                
                33.9900
                %Computed Tax Expense /
      (Income)
                
                
                (225
                )
                
                
                (265
                )
                
                
                1069Increase / (reduction) in taxes
      on account of:Effect of changes in tax
      rate
                
                
                (12
                )
                
                
                1
                
                
                
                ---Timing
      Differences
                
                
                416
                
                
                
                620
                
                
                
                (323
                )Income tax
      expense / (income) reported
                
                $
                (179
                )
                
                $
                (357
                )
                
                $
                746
 
 The components that gave rise to
deferred tax assets and liabilities included in the balance sheet were as
follows:
  As
      of
                
                
                As
      ofMarch 31,
      2007
                
                
                March
      7,
      2008Deferred Tax
      AssetsRetirement
      Benefits
                
                $
                11
                
                
                $
                1711
                
                
                
                17Deferred Tax
      LiabilitiesProperty and
      equipment
                
                
                (549
                )
                
                
                (620
                )(549
                )
                
                
                (620
                )Net deferred
      tax liability
                
                $
                (538
                )
                
                $
                (603
                )
 
 6.
SHORT TERM BORROWINGS AND CURRENT PORTION OF LONG TERM DEBT
  As
      of
                
                
                As
      ofMarch 31,
      2007
                
                
                March
      7,
      2008Secured
                
                $
                2,069
                
                
                $
                1,571Unsecured
                
                
                278
                
                
                
                351Total
                
                
                2,347
                
                
                
                1,922Add:Current portion of long term
      debt
                
                
                1,299
                
                
                
                3,810Total
                
                $
                3,646
                
                
                $
                5,732
  The above-secured borrowings were
secured by collateralization against the company’s inventory and
receivables.
  The details of unused lines of credit
(Cash credit) were as follows:
  As
      of
                
                
                As
      ofMarch 31,
      2007
                
                
                March 7,
      2008Secured
                
                $
                109
                
                
                $
                --
 
 
 F-29
 Table of Contents
  7.
EMPLOYEE BENEFITS
  Retirement(Gratuity
plan):
  The measurement dates for the Company’s
Gratuity Plan were March 31, 2007 and March 7, 2008. The following table sets
forth the changes in the projected benefit obligation and amounts recognized in
the Company’s balance sheet as of the respective measurement
dates:
  As
      of
                
                
                As
      ofMarch 31,
      2007
                
                
                March 7,
      2008Change in Projected Benefit
      ObligationAccumulated Benefit
      Obligation
                
                $
                13
                
                
                $
                22Projected Benefit obligation at
      the beginning of the year
                
                
                22
                
                
                
                31Current Service
      Cost
                
                
                3
                
                
                
                5Interest
      Cost
                
                
                2
                
                
                
                2Benefits
      paid
                
                
                —
                
                
                
                —Actuarial (gain)/
      loss
                
                
                2
                
                
                
                5Projected Benefit obligation at
      the end of the year
                
                
                29
                
                
                
                43Net amount
      recognized
                
                $
                29
                
                
                $
                43
  The components of the net gratuity cost
were as follows:
  For Year
      Ended
                
                
                For
      Period endedMarch 31,
      2006
                
                
                March 31,
      2007
                
                
                March 31,
      2007Current Service
      Cost
                
                $
                2
                
                
                $
                3
                
                
                
                5Interest
      Cost
                
                
                1
                
                
                
                2
                
                
                
                2Recognized actuarial
      (gain)/loss
                
                
                (5
                )
                
                
                (2
                )
                
                
                5Net Gratuity
      Cost
                
                $
                (1
                )
                
                $
                2
                
                
                
                12
 
 The net gratuity accrued liabilities,
were as follows:
  As
      of
                
                As
      ofMarch 31,
      2007
                
                March
      7,
      2008Net Gratuity
      Liability
                
                $
                29
                
                
                $
                43
  The weighted average assumptions used
to determine the benefit obligations and the net periodic cost were as
follows:
  Year
      ended
                
                Period
      endedMarch 31,
      2007
                
                March7,
      2008Discounting
      Rate
                
                $
                8.00
                %
                
                $
                8.00
                %Rate of Compensation
      increase
                
                
                5.50
                %
                
                
                5.50
                %
  
 F-30
 Table of Contents
  Actuarial gains and losses are
recognized as and when incurred. The Company has not recognized any of the
following as of March 31, 2006, 2007 and March 7, 2008:
  ·
                unamortized
      prior service cost
  ·
                unrecognized
      net gain or loss
  ·
                the
      remaining unamortized, unrecognized net obligation existing at the initial
      date of application of FAS87 or FAS 106;
      and
  ·
                any intangible asset and the
      amount of accumulated other comprehensive income recognized pursuant
      to paragraph 37 of
      FAS 87, as amended.
  The estimated amounts of gratuity
benefits expected to be paid in each of the next 5 years and in the aggregate
for 5 years thereafter, are as follows:
  As
      ofMarch 7,
      2008Year Ending March 31,
      2009
                
                $
                1Year Ending March 31,
      2010
                
                
                3Year Ending March 31,
      2011
                
                
                4Year Ending March 31,
      2012
                
                
                4Year Ending March 31,
      2013
                
                
                5Year Ending March 31, 2014 -
      18
                
                
                26Total
                
                $
                43
  Actuarial gains and losses are
recognized as and when incurred. The Company has not recognized any of the
following as of March 31, 2006, 2007 and March 7, 2008:
  ·
                unamortized
      prior service cost
  ·
                unrecognized
      net gain or loss
  ·
                the
      remaining unamortized, unrecognized net obligation or net asset existing
      at the initial date ofapplication of FAS
      87 or FAS 106; and
  ·
                any intangible asset and the
      amount of accumulated other comprehensive income recognized pursuant
      to paragraph 37 of
      FAS 87, as amended.
  c)
Provident Fund
  The Company’s contribution towards the
Provident Fund amounted to USD 14, 12 and 20 for the years ended March 31, 2006,
2007 and March 7, 2008, respectively.
    F-31
 Table of Contents
  3.
LONG TERM DEBT
  Long-term debt
comprises:
  As
      of
                
                
                As
      ofMarch 31,
      2007
                
                
                March
      7,
      2008Secured
                
                $
                
                
                
                $Term
      loans
                
                
                1,568
                
                
                
                3,522Loan for assets purchased under
      capital lease
                
                
                1,913
                
                
                
                1,552Total
                
                
                3,481
                
                
                
                5,074Less: Current portion (Payable
      within 1 year)
                
                
                1,299
                
                
                
                3,810Total
                
                $
                2,182
                
                
                $
                1,264
  The secured loans were collateralized
by:
  ·
                Unencumbered
      Net Asset Block of the Company
  ·
                Equitable
      mortgage of properties owned by promoter directors/
    guarantors
  ·
                Term
      Deposits
  ·
                Hypothecation
      of receivables, assignment of toll
rights
  ·
                First charge on Debt-Service
      Reserve Account
  The scheduled repayments of the long
term debts during the next 5 years and beyond are as
follows:
  As
      ofYear ended
      March 31,
                
                March
      7,
      20082009
                
                $
                3,8102010
                
                
                3852011
                
                
                232012
                
                
                242013 and
      beyond
                
                
                832Total
                
                $
                5,074
 
 The
details of unused secured term loans are as follows:
  As
      of
                
                
                As
      ofMarch 31,
      2007
                
                
                March
      7,
      2008Term
      Loans
                
                $
                2,376
                
                
                $
                ----
  The amounts payable for the capital
lease obligation would be 828, 385, 23, 24 and 27 for the years ending March 31,
2009, 2010, 2011, 2012 and 2013, respectively.
  Under the loan agreements, the company
must maintain, among other things, certain specified financial ratios, with
which the company was in compliance as of March 7, 2008.
   F-32
 Table of Contents
  4.
DIVIDENDS
  Final dividends proposed by the Board
of Directors will be payable when formally declared by the shareholders, who
have the right to decrease but not increase the amount of the dividend
recommended by the Board of Directors. Interim dividends will be declared by the
Board of Directors without the need for shareholders’
approval.
  Dividends payable to equity
shareholders will be based on the net income available for distribution as
reported in the Company’s financial statements prepared in accordance with
Indian GAAP. Dividends can only be declared and paid in Indian Rupees and/or
converted into foreign currency for an equivalent amount in cases where dividend
is permitted to be repatriated.
  Under the Indian Companies Act 1956,
dividends may be paid out of the profits of a company in the year in which the
dividend is declared or out of the undistributed profits of previous fiscal
years. Before declaring a dividend greater than 10% of the par value of its
equity shares, a company is required to transfer to its reserves a minimum
percentage of its profits for that year, ranging from 2.5% to 10 %, depending on
the dividend percentage to be declared in such year. Dividends can be
distributed out of the general reserve in case of a loss or inadequacy of
current distributable profits. Presently, the Company is required to pay
dividend tax on the total amount of the dividend declared, distributed or paid
at the specified tax rate including surcharge (applicable tax rate is 16.99% as
at March 7, 2008).
  The Company has not paid any dividends
from inception through March 7, 2008.
  Under the agreements with the lenders,
lender specific permission will be required in certain cases for distributing
dividends. The company has an outstanding secured loan of USD 2.83 million from
the Bank of India wherein as per the terms of sanction, the company has
submitted a stamped undertaking to the Bank; the company shall not without the
Banks written permission declare dividend for any year except out of the profits
relating to that year after meeting all the financial commitments to the bank
and making all dues and necessary provisions.
  5.
DONATIONS
  Donations were made to premier
educational institutions and others amounting to USD 5, 7 and 8 for the years
ended March 31, 2006, 2007 and March 7, 2008, respectively and were included in
selling, general and administration expenses in the statements of
operations.
  6.
RELATED PARTY TRANSACTIONS
  The Company has entered into
transactions with the following related parties.
  Key management
personnel:
  Mr. R.L Srivastava
  Mr. S.P Srivastava
  Mrs.I.R
Srivastava
  Mr.
Ram Mukunda
  Other related parties (entities which
are controlled or significantly influenced by the key management personnel and
their close relatives)
  Biharilal
Srivastava
  Gulablal Srivastava
  Ramdularidevi
Srivastava
  R.
D. Srivastava
  Vijayshaker
Srivastava
  Aurobindo Laminations
Limited
  Narbada Finance & Leasing Private
Limited.
  Vijay Engineering Enterprise Private
Limited
  Srivastava Construction
Company
  Reaselack Polymers Private
Limited
  Srivastava Hi-Tech Pro-Oil Complex
Priavte Limited
  Bhalchandra Finance & Leasing
Company Limited
  The transactions and balances with the
following related parties are described below:
  F-33
 Table of Contents
  Yearended March
      31, 2006Key
      Management
                
                Other
      RelatedRelationship
                
                Personnel
                
                PartiesFund
      Transferred
                
                $
                —
                
                
                $
                437Fund
      Received
                
                
                —
                
                
                
                (913
                )Purchase of
      Assets
                
                
                (39
                )
                
                
                (2
                )Sale/transfer of
      Assets
                
                
                —
                
                
                
                1Employee related transaction by
      the Company
                
                
                —
                
                
                
                1Employee related transaction for
      the Company
                
                
                —
                
                
                
                (2
                )Expenses incurred by the
      Company
                
                
                168
                
                
                
                818Expenses incurred for the
      Company
                
                
                (63
                )
                
                
                (9
                )
  Yearended March
      31, 2007Key
      Management
                
                Other
      RelatedRelationship
                
                Personnel
                
                PartiesFund
      Transferred
                
                $
                —
                
                
                $
                780Fund
      Received
                
                
                —
                
                
                
                (1,258
                )Purchase of
      Assets
                
                
                —
                
                
                
                —Sale/transfer of
      Assets
                
                
                —
                
                
                
                1Employee related transaction by
      the Company
                
                
                —
                
                
                
                —Employee related transaction for
      the Company
                
                
                —
                
                
                
                —Expenses incurred by the
      Company
                
                
                634
                
                
                
                150Expenses incurred for the
      Company
                
                $
                (172
                )
                
                $
                (73
                )
  Period
      ended March 7, 2008Key
      Management
                
                
                Other
      RelatedRelationship
                
                Personnel
                
                
                PartiesFund
      Transferred
                
                $
                1474
                
                
                $
                2,247Fund
      Received
                
                
                (879
                )
                
                
                (510
                )Purchase of
      Assets
                
                
                —
                
                
                
                —Sale/transfer of
      Assets
                
                
                —
                
                
                
                30Employee related transaction by
      the Company
                
                
                4
                
                
                
                5Employee related transaction for
      the Company
                
                
                —
                
                
                
                (31
                )Expenses incurred by the
      Company
                
                
                52
                
                
                
                58Expenses incurred for the
      Company
                
                $
                (76
                )
                
                $
                (38
                )
  Purchase & sale/ transfer of assets
– included primarily purchase & sale/ transfer of Plant and Machinery for
and by the key management personnel, joint venture and other related
parties.
  Employee related transactions –
included primarily salary, wages and other allowances to employees, traveling
and boarding expenses incurred for and by joint venture and other related
parties.
  Expenses incurred – included primarily
cost of sales and selling, general & administrative expenses incurred for
and by joint venture and other related parties.
  Transactions with related parties were
at competitive market prices as charged to unaffiliated customers for similar
services or charged by other suppliers.
   F-34
 Table of Contents
  7.
SEGMENT INFORMATION
  The Company follows the provisions of
SFAS No 131 “Disclosure about Segments of an Enterprise and Related
Information”. SFAS No 131 establishes standards for reporting information
regarding operating segments in annual financial statements and requires
selected information for those segments to be presented in interim financial
reports issued to stockholders. The Company operates in a single infrastructure
construction segment.
  13.
COMMITMENTS AND CONTINGENCIES
  The company has to observe the laws,
government orders and regulations of the state in which they operate. A number
of them are currently involved in administrative proceedings arising out of the
normal conduct of their business. In the opinion of management, however, the
outcome of these actions will not materially affect the financial position,
result of operations or cash flow.
  Commitments
  a)
Capital commitments
  The estimated amount of contracts
remaining to be executed on capital account not provided for as on March 31,
2006, March 31, 2007, March 7, 2008 are USD zero.
  b)
Guarantees
  The Company had outstanding financial /
performance bank guarantees of USD 4,116, USD 153 and USD 1,364 as of March 31,
2006, March 31, 2007 and March 7, 2008.
  Contingencies
  a)
                
                The
      company was awarded a contract from National Highway Authority of India
      (‘NHAI’) in 2004-05, for restoring the Jaipur – Gurgaon National Highway
      8. The total contract value was USD 5.10 million to be completed in 9
      months. The entire stretch of the site was handed over on piecemeal basis
      without any defined schedule in contravention with contractual provisions
      and approved construction program and methodology. This has resulted in
      additional costs due to additional deployment of resources for prolonged
      period. Thus, the company invoked the escalation clause of the contract
      and filed a claim of USD 8.16 million. The dispute has been referred to
      arbitration. The company has not recognized the claim amounts on its
      books.b)
                
                The
      company was awarded a contract from National Highway Authority of India
      (‘NHAI’) in 2001-02 for construction of a four lane highway on the Namkkal
      bypass on National Highway 7, in the state of Tamilnadu. The total
      contract value was USD 4 million and the construction was to have been
      completed by November 30, 2002. The escalation and variation claim of USD
      5.27 million is pending with NHAI. An arbitration process was initiated on
      July 3, 2007. The company has not recognized the claim amounts on its
      books.
  14.
CONCENTRATION OF CREDIT RISK
  The Company is concentrated on projects
undertaken by government and government enterprises.
  Company’s
business therefore requires that we continue to maintain pre-qualified status
with key clients and we are not disqualified from future projects that these
clients may award. Company’s major clients vary from period to period depending
on the demand and the completion schedule of projects. The loss of a significant
client or a number of significant clients or projects from such clients for any
reason, including as a result of disqualification or dispute, may have an
adverse effect on Company’s results of operations.
  15.
VENDOR RISK
  The Company is significantly affected
by the availability, cost and quality of the raw material  and fuel,
which we need to construct and develop Company’s projects. The prices and supply
of raw materials, bought out items and fuel depend on factors not under
Company’s control, including general economic conditions, competition,
production levels, transportation costs and import duties. Although we generally
provide for price contingencies in Company’s contracts to limit Company’s
exposure, if, for any reason, Company’s primary suppliers of raw materials,
bought out items and fuel should curtail or discontinue their delivery of such
materials to us in the quantities we need or at prices that are competitive or
expected by us, Company’s ability to meet Company’s material requirements for
our projects could be impaired, Company’s construction schedules could be
disrupted, or Company’s earnings and business could suffer. Additionally, we
rely on manufacturers and other suppliers and do not have control over the
quality of products they supply, which may adversely affect the quality and
workmanship of Company’s projects.
  16.
SUBSEQUENT EVENTS
  On March
14, 2008, the company has allotted 4,041,776 equity shares @ USD 6.30 per equity
share to India Globalization Capital, Mauritius (“IGC”) against the total
consideration of 25.48 million. IGC has also purchased 12% equity from the
promoters resulting in a 63% post investment ownership by IGC.
  F-35
 Table of Contents
 
 REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the
Board of Directors and Shareholders
  Techni
Bharathi Limited:
  We have
audited the accompanying  balance sheets of Techni Bharathi Limited as
of March 7, 2008, and as of March 31, 2007 and the related  statements
of operations, stockholders' equity and  cash flows for the period
ended March 7, 2008, and years ended March 31, 2007 and 2006.  These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
  We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
  In our
opinion, the  financial statements referred to above present fairly ,
in all material respects, the financial position of Techni Bharathi Limited,
Cochin, India as of March 7, 2008, and as of March 31, 2007 and the results of
its  operations, stockholders' equity and cash flows for the period
ended March 7, 2008, and years ended March 31, 2007 and 2006 in conformity with
United States generally accepted accounting principles.
  /s/ Yoganandh &
Ram
 YOGANANDH
& RAM
  Chartered
Accountants
 Independent
Auditors registered with
 Public
Company Accounting Oversight Board (USA)
  Chennai,
India, 2008
   F-36
 Table of Contents
 
 TechniBharathi Limited
 BALANCE
SHEETS
 (Amounts
in Thousand US Dollars)
 
 March
      31,
                
                
                March
      7,Assets
                
                2007
                
                
                2008Current
      AssetsCash & Cash
      Equivalents
                
                $
                1,208
                
                
                $
                736Accounts
      Receivable
                
                
                43
                
                
                
                1,663Inventories
                
                
                1,284
                
                
                
                1,428Restricted
      Cash
                
                
                ---
                
                
                
                5Prepaid and Other
      Assets
                
                
                1,231
                
                
                
                271Due from Related
      Parties
                
                
                218
                
                
                
                63Total Current
      Assets
                
                
                3,984
                
                
                
                4,166Investment-Others
                
                
                72
                
                
                
                74Property, Plant & Equipment
      (net)
                
                
                2,265
                
                
                
                1,979Deferred Tax
      Asset
                
                
                199
                
                
                
                126Restricted Cash & Cash
      Equivalents
                
                
                371
                
                
                
                185Other
      Assets
                
                
                207
                
                
                
                1,399Total
      Assets
                
                $
                7,098
                
                
                $
                7.929Liabilities
      and Shareholder’s EquityCurrent
      LiabilitiesShort Term Borrowings and current
      portion of long term loan
                
                
                6,079
                
                
                
                2,437Trade
      Payable
                
                
                1,502
                
                
                
                2,222Other Current
      Liabilities
                
                
                144
                
                
                
                740Total Current
      Liabilities
                
                
                7,725
                
                
                
                5,399Long Term Debts, net of current
      portion
                
                
                2,333
                
                
                
                ----Other
      Liabilities
                
                
                58
                
                
                
                2,103Advance from
      Customers
                
                
                1,877
                
                
                
                824Total
      Liabilities
                
                
                11,993
                
                
                
                8,326Share Holders
      EquityCommon
      Stock
                
                
                988
                
                
                
                988Preferred
      Stock
                
                
                ----
                
                
                
                1,182Money received pending
      Allotment
                
                
                ----
                
                
                
                1,940Additional Paid in
      Capital
                
                
                199
                
                
                
                199Retained
      Earnings
                
                
                (5,948
                )
                
                
                (3,960
                )Accumulated Other Comprehensive
      Income/(Loss)
                
                
                (134
                )
                
                
                (746
                )Total
      Stockholders Equity
                
                
                (4,895
                )
                
                
                (397
                )Total
      Liabilities and Shareholder’s Equity
                
                $
                7,098
                
                
                $
                7.929
 
  The
accompanying notes form an integral part of the financial
statements.
  F-37
 Table of Contents
  TechniBharathi Limited
 STATEMENTS
OF OPERATIONS
 (Amounts
in Thousand US Dollars)
 
 Year
      ended
                
                
                Year
      ended
                
                
                Year
      endedMarch
      31,
                
                
                March
      31,
                
                
                March
      7,2006
                
                
                2007
                
                
                2008Revenue
                
                $
                2,285
                
                
                $
                4,318
                
                
                $
                5,321Cost of
      Revenue
                
                
                (2,567
                )
                
                
                (2,656
                )
                
                
                (4,711
                )Gross (Loss) /
      Profit
                
                
                (282
                )
                
                
                1,662
                )
                
                
                (610
                )Selling, General &
      Administration Expenses
                
                
                (615
                )
                
                
                (458
                )
                
                
                (246
                )Depreciation
                
                
                (513
                )
                
                
                (207
                )
                
                
                (447
                )Operating
      (Loss) / Income
                
                
                (1,410
                )
                
                
                997
                )
                
                
                (83
                )Interest
      Income(net)
                
                
                49
                
                
                
                16
                
                
                
                40Interest
      Expenses(net)
                
                
                (1,524
                )
                
                
                (1,144
                )
                
                
                (473
                )Other
      Income
                
                
                516
                
                
                
                532
                
                
                
                2,761Net operating
      (loss) / income before income taxes
                
                
                (2,369
                )
                
                
                401
                )
                
                
                2,245Income Tax
      Income
                
                
                67
                
                
                
                140
                
                
                
                (86
                )Fringe Benefit Tax
      Expense
                
                
                (5
                )
                
                
                (5
                )
                
                
                ----Provision
      for Preference Dividend
                
                
                
                
                
                
                
                
                
                
                (152
                )Provision
      for Tax on Preference Dividend
                
                
                
                
                
                
                
                
                
                
                (19
                )Net (Loss) /
      Income
                
                $
                (2,307
                )
                
                $
                536
                
                
                $
                1,988(Loss) /
      Earnings per ShareBasic
                
                $
                (0.54
                )
                
                $
                0.13
                
                
                $
                0.46Diluted
                
                $
                (0.54
                )
                
                $
                0.13
                
                
                $
                0.22Weighted
      average number of common shares outstanding:Basic
                
                
                4,287,500
                
                
                
                4,287,500
                
                
                
                4,287,500Diluted
                
                
                4,287,500
                
                
                
                4,287,500
                
                
                
                9,089,928
 
  The
accompanying notes form an integral part of the financial
statements.
   F-38
 Table of Contents
  TechniBharathi Limited
 STATEMENTS
OF OPERATIONS
 (Amounts
in Thousand US Dollars)
 
 Year
      Ended
                
                
                Year
      Ended
                
                
                Year
      EndedMarch
      31,
                
                
                March
      31,
                
                
                March
      7,2006
                
                
                2007
                
                
                2008Cash flows
      from operating activitiesNet (Loss) /
      Income
                
                $
                (2,307
                )
                
                $
                536
                
                
                $
                1,988Adjustments to
      reconcile net Incometo net cash from operating activitiesDepreciation
                
                
                506
                
                
                
                207
                
                
                
                447Deferred Tax Expense /
      (Income)
                
                
                (87
                )
                
                
                (192
                )
                
                
                86Loss on sale on property and
      equipment-net
                
                
                119
                
                
                
                3
                
                
                
                --Loss on sale of
      Investment-net
                
                
                
                
                
                
                —
                
                
                
                —Other non cash
      expenditure
                
                
                268
                
                
                
                219Changes in
      Assets and liabilitiesRestricted
      cash
                
                
                279
                
                
                
                219
                
                
                
                207Accounts
      Receivable
                
                
                1,010
                
                
                
                261
                
                
                
                (1,629
                )Inventories
                
                
                274
                
                
                
                2,898
                
                
                
                (59
                )Prepaid and other
      Assets
                
                
                385
                
                
                
                —
                
                
                
                1,049Long term other
      assets
                
                
                (134
                )
                
                
                (12
                )
                
                
                (1,186
                )Accounts
      Payable
                
                
                (71
                )
                
                
                937
                
                
                
                625Other Current
      Liabilities
                
                
                -
                
                
                
                -
                
                
                
                591Advance from
      Customer
                
                
                (978
                )
                
                
                (214
                )
                
                
                (1,185
                )Other
      liabilities
                
                
                (21
                )
                
                
                85
                
                
                
                2,,056Net cash (used
      in) provided by operating activities
                
                
                (757
                )
                
                
                4,947
                
                
                
                2,990Cash flow from
      Investing ActivitiesPurchase of property and
      equipment
                
                
                (4
                )
                
                
                (3
                )
                
                
                (7
                )Proceeds from sale of property
      and equipment
                
                
                433
                
                
                
                13
                
                
                
                --Purchase of
      Investments
                
                
                —
                
                
                
                —
                
                
                
                ---Proceeds from Sale of
      Investments
                
                
                125
                
                
                
                401
                
                
                
                ----Net cash
      provided by Investing activities
                
                
                554
                
                
                
                411
                
                
                
                (7
                )Cash flow from
      Financing ActivitiesDebts –
      net
                
                
                199
                
                
                
                (4,275
                )
                
                
                (6,581
                )Due
      to related parties, net
                
                
                ---
                
                
                
                ----
                
                
                
                170Issue
      of Preferred Stock
                
                
                ---
                
                
                
                ----
                
                
                
                1,182Money
      received pending allotment
                
                
                ---
                
                
                
                ----
                
                
                
                1,940Net Cash
      provided by (used in) financing Activities
                
                
                199
                
                
                
                (4,275
                )
                
                
                (3,289
                )Effect of exchange rate on cash
      equivalents
                
                
                (9
                )
                
                
                56
                
                
                
                167,Net (decrease)
      increase in cash and cash equivalents during the
      year
                
                
                (4
                )
                
                
                1,083
                
                
                
                (472
                )Add: Balance at beginning of
      year
                
                
                82
                
                
                
                69
                
                
                
                1,208Balance at end
      of the year
                
                $
                69
                
                
                $
                1,208
                
                
                $
                736
 
  The
accompanying notes form an integral part of the financial
statements
   F-39
 Table of Contents
  TechniBharathi Limited
 STATEMENTS
OF OPERATIONS
 (Amounts
in Thousand US Dollars)
     CommonStock
                    
                    Preferred StockShares
                    
                    Par
      value
                    
                    Shares
                    
                    Par value
                    
                    Money received pending
      allotment
                    
                    Additional
                      Paid in
      Capital
                    
                    
                    Retained
                      Earnings
                    
                    Accumulated other
                      Comprehensive
                      Income/(Loss)
                    
                    TotalBalance as of
      March 31, 2005
                    
                    428,750
                    
                    $
                    988
                    
                    
                    
                    
                    
                    
                    
                    $
                    199
                    
                    
                    $
                    (4,177
                    )
                    $
                    (42
                    )
                    $
                    (3,032
                    )Net Loss for the
      period
                    
                    -
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    (2,307
                    )
                    
                    -
                    
                    
                    (2307
                    )Loss on Foreign Currency
      Translation
                    
                    -
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    (99
                    )
                    
                    (99
                    )Balance as of
      March 31, 2006
                    
                    428,750
                    
                    
                    988
                    
                    
                    
                    
                    
                    
                    
                    
                    199
                    
                    
                    
                    (6,484
                    )
                    
                    (141
                    )
                    
                    (5438
                    )Net Income for the
      period
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    536
                    
                    
                    -
                    
                    
                    536Gain
      on foreign currency translation
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    7
                    
                    
                    7Balance as of March 31,
      2007
                    
                    4,287,500
                    
                    
                    988
                    
                    
                    
                    
                    
                    
                    
                    
                    199
                    
                    
                    
                    (5,948
                    )
                    
                    (134
                    )
                    
                    (4,895
                    )Net Income for the
      period
                    
                    -
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    1,988
                    
                    
                    -
                    
                    1,988Gain
      on foreign currency translation
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    (612
                    )
                    
                    (612
                    )Issue of Preferred
      Stock
                    
                    
                    
                    
                    
                    
                    5,000,000
                    
                    
                    1,182
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,182Money
      received pending allotment
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,940
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,940Balance as of
      March 7, 2008
                    
                    4,287,500
                    
                    $
                    988
                    
                    5,000,000
                    
                    $
                    1,182
                    
                    $                                
      1,940
                    
                    $
                    199
                    
                    
                    $
                    (3,960
                    )
                    $
                    (746
                    )
                    $
                    (397
                    )
 
  The
accompanying notes form an integral part of the financial
statements.
   F-40
 Table of Contents
  TECHNI BHARATHILIMITED
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
  Amounts
in Thousand US Dollars, except share data and as stated otherwise
  1.
BACKGROUND
  a)
Incorporation and History:
  Techni Bharathi Limited (“TBL”) was
incorporated in the year 1982 by a team of enterprising technocrats who,
inspired by the revolutionary ideas in the field, started pursuing the goal of
becoming a world-class construction specialist. For TBL, the first decade was a
period of learning. The TBL team worked vigorously on projects of moderate size,
finding new ways to build without compromising on quality, designing innovative
building methods and charting out cost-effective construction
formulas.
  The Year 1991 witnessed the company’s
first foray into the strategic construction arena when Kudremukh Iron Ore
Company Limited (a leading Government of India Company) assigned TBL for the
construction of the Lakhya Dam. Since then TBL has been  engaged in
engineering construction contracts for national infrastructure development such
as highways, bridges, dams, hydro electric projects and rail
roads.
  b)
Description of Business:
  The various construction activities
taken up by the company are as follows:
  ·
                Roads
      and Bridges
  ·
                Mechanized
      Earthworks
  ·
                Hydro
      Electric Projects
  ·
                High
      Rise Building Complexes and
Townships
  ·
                Dams
      and Tunnels
  ·
                Irrigation
      Projects
  ·
                Rail Road
      Construction
  c)
Industry Overview
  India’s
construction industry is
estimated over $ 28 billion, which accounts for more than 6% of the country’s
Gross Domestic Product (GDP). This industry is the largest employer in India
which is almost 32 million workers. The sector is riding on a high growth
pattern, powered by large government subsidized expenditures, which is evidenced
by newly constructed highways, dams, power plant and pipelines. Ancillary
sectors such as power, transportation, petroleum and urban development are
contributing to the high growth rates in the infrastructure building industry.
are Power, Transport, Petroleum and urban Infrastructure.
  F-41
 Table of Contents
  To
illustrate India’s shared economic optimism among country leaders, Indian Prime
Minister Dr. Manmohan Singh, while addressing the Finance Ministers of ASEAN
countries at the Indo ASEAN Summit in New Delhi, forecasted  that
India requires  $150 billion at the rate of  $15 billion per
annum over the next 10 years. The current rate of U.S. Foreign Direct Investment
in India is estimated at $5 billion per year.. It is further estimated that more
than 50% of  future FDI’s will be earmarked for Infrastructure,
Telecom, and Power projects.
  Another
example of India’s infrastructural growth is the Golden Quadrilateral, which is
one of the largest highway projects under current development. It now has
approximately 4,500 miles with and an  impressive 13,300 miles of
north-south corridors.   Legislation is underway to build many
miles of East and West Coast corridors.
  The Nodal
Agencies (NHAI, NTPC, NHPC, and PGCL, which specializes in alternative energy
sources,  has ambitious development plans in the near future .The
value of overseas projects, under construction by Indian Companies are
conservatively estimated to be nearly $4.2 billion U.S. dollars , which covers
major markets including  Malaysia, Middle East, and East Africa. The
Industry is led by an intensely competitive environment, which is characteristic
of larger and mature markets such as the United States and Japan. No single
alternative energy company  controls  the overall
market.
  The
Infrastructure Budget of the Government for the 10th Plan (FY 02-07) is as
follows
  (USD in
      Millions)Sector
                
                FY20
      01-04
                
                
                FY20
      04-07Roads
                
                $
                7,656.61
                
                
                $
                14,617.16Power
                
                
                9,280.74
                
                
                
                19,721.57Oil &
      Gas
                
                
                8,816.70
                
                
                
                15,313.22Ports/ Airports/
      Shipping
                
                
                2,088.16
                
                
                
                3,712.29Railways
                
                
                7,424.59
                
                
                
                11,136.89Telecom
                
                
                15,313.22
                
                
                
                16,937.35Total
                
                $
                50,580.02
                
                
                $
                81,438.48
 
  The Outlay for the Central Sector Roads
alone is $12,642.69 million. The position of on-going Road Projects in India is
as under:
  Total
      ValueFunding
      Agency/Source
                
                No. of
      Projects
                
                
                USD in
      MillionsNHAI
                
                
                50
                
                
                $
                2,218.46World
      Bank
                
                
                15
                
                
                
                1,043.20Asian Development
      Bank
                
                
                8
                
                
                
                290.14Annuity
                
                
                8
                
                
                
                546.10BOT
                
                
                7
                
                
                
                768.90Total
                
                
                88
                
                
                $
                4,866.80
 
 d)
Business
  TBL has been in operations for more
than two decades, executing  engineering contracts throughout the
country. It’s primary  focus is large infrastructure contracts. The
company is led  by Mr. V. C. Antony and his son, Mr. Jortin
Anthony.
  TBL’s main objective is to establish a
strong presence in the infrastructure development market, engaging
in  Roads and highways, Earthen and Rock Fill Dam, Civil Works
including tunneling in Hydro Electric Projects, Construction of Canals, Civil
and structural works, Rail/Road construction, Airport Construction and Real
Estate development. The company has won  various NHAI projects and has
successfully completed all  contracts within time and cost
requirements.
  F-42
 Table of Contents
  TBL is a closely held Public Limited
Company incorporated under the Indian Companies Act
of  1956.  The  shares are largely held by V C
Anthony, Mr. Jortin Anthony and a close group of other investors. TBL often
participates in joint venture bids, namely, Tantia-TBL joint , BEL-TBL, and
Valecha-TBL joint ventures.
  e)
Risks and Threats
  ·
                The
      industry is highly governed by the political environment and economical
      policies prevalent within the country since significant portion of
      infrastructure spending originates from the Government. Any adverse change
      in the policies may slow down the Government’s commitment towards
      Infrastructure development.
  ·
                Competition:
  Foreign
      Competition – The Government has opened the sector to foreign companies
      who can bid on projects on their own, or through joint ventures with
      domestic companies. This could create more competition in the
      future.
  Domestic Competition - The
      Company faces two types of competition in the domestic
      sector:(i)
                
                Competition
      from the local players in and around their state, typically this is
      applicable to low value contracts.(ii)
                
                Marketing
      / Business Development - Construction contracts for infrastructure in
      India are offered by the Government sector, Central Government and the
      State Governments. Funds for these are allocated through their budgetary
      support as well as through international and domestic financial
      institutions such as World Bank, Asian Development Bank, Japan Bank for
      International co-operation, Housing & Urban Development Corporation,
      National Bank for Agricultural & Rural Development, etc. In view of
      the nature of our market, the major sources of information of ensuing
      tenders for construction contracts are newspapers and government gazettes.
      In addition to these, construction contracts are also offered by the
      private sector.
  f)
Strengths and Opportunities
  ·
                The Company is an integrated
      construction and infrastructure development company with front-end
      civil engineering
      and design skills.
  ·
                The Company has sufficient
      internal resources, technology and human capital that will. that enables
      us to pre-qualify for major contract
      solicitations.
  The Company has a diverse service
capability ranging from water and sewer management, to installing power
transmission lines, construction of roads, housing
complexes, airports and sea port construction, cement plant operations,
canal  excavation projects.
  2.
SIGNIFICANT ACCOUNTING POLICIES
  a)
Basis of preparation
  The financial statements for the years
ended March 31, 2006, 2007 and for the period ended March 7, 2008 have been
prepared in accordance with accounting principles generally accepted in the
United States of America (‘US GAAP’). The significant accounting policies
adopted by TBL, in respect of these financial statements, are set out
below.
  These
Financial statements have been prepared in US Dollars (USD), the national
currency of United States of America.
  b)
Foreign Currency Translation
  The accompanying financial statements
are reported in U.S. dollars. The Indian rupee is the functional currency of the
Company. The translation of the functional currencies into U.S. dollars is
performed for assets and liabilities using the exchange rates in effect at the
balance sheet date and for revenues, costs and expenses using average exchange
rates prevailing during the reporting periods. Adjustments resulting from the
translation of functional currency financial statements to reporting currency
are accumulated and reported as other comprehensive income/ (loss), a separate
component of shareholders’ equity.
  Transactions in foreign currency are
recorded at the exchange rate prevailing on the date of transaction. Monetary
assets and liabilities denominated in foreign currencies are expressed in the
functional currency at the exchange rates in effect at the balance sheet date.
Revenues, costs and expenses are recorded using exchange rates prevailing
on the date of transaction. Gains or losses resulting from foreign currency
transactions are included in the statement of income. Share Capital issued has
been recorded at historical rates whereas those existing on March 31, 2004 have
been translates at the rates prevailing on that date.
   F-43
 Table of Contents
  TECHNI
BHARATHI LIMITED
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
  Amounts
in Thousand US Dollars, except share data and as stated otherwise
  The exchange rates used for translation
purposes are as under:
  Year
                
                Month end
      Average Rate (P&L rate)
                
                Year end rate
      (Balance sheet rate)2005-06
                
                INR 44.18 per
      USD
                
                INR 44.48 per
      USD2006-07
                
                INR 45.11 per
      USD
                
                INR 43.10 per
      USD2007-08
                
                INR 40.13 per
      USD
                
                INR 40.42 per
      USD
 
 c)
Revenue Recognition
  For Revenue from construction
contracts, we recognize revenue on construction type of contracts using the
percentage of completion method of accounting where by revenue is recognized as
performance under contract progresses. The Company has also made requisite
adjustments in the recognized revenues under Indian GAAP (IGAAP) in order to
ensure conformity with the provisions of SOP 81-1. All infrastructure contracts
of TBL are in the nature of item rate contracts, where there is a Bill of
Quantity (BOQ) and item rate prescribed for each activity done. As on closing
date of all individual activities of the BOQ executed are jointly measured and
valued at the item quoted rate. Accordingly, percentage of completion is
determined in terms of the proportion of value added (the contract value of
total work performed to date) to the total contract value.
  d)
Use of estimates
  The preparation of financial statements
in conformity with US GAAP requires the use of management estimates and
assumptions that affect the amounts reported. These estimates are based on
historical experience and information that is available to management about
current events and actions that the Company may take in the future. Significant
items subject to estimates and assumptions include revenue recognition, the
useful lives and the evaluation of impairment of property and equipment, the
income tax, the contingencies and the provision for impairment of receivables
and advances. Actual results could differ from these
estimates.
  Estimated
losses on uncompleted contracts and changes in contract estimates
  The
Company records the provisions for estimated losses on uncompleted contracts in
the period in which such losses are identified. The cumulative effects of
revisions to contract revenue and estimated completion costs are recorded in the
accounting period in which the amounts became evident and can be reasonably
estimated. These revisions may include such items as
the effects of change orders, claims, warranty claims, liquidated damages or
other contractual penalties, adjustments for audit findings on government
contracts and contract closeout settlements.
  e)
Restricted Cash and Cash Equivalents
  The components of item are as
follows:
  ·
                Fixed
      Deposit with various banks in order to obtain Bank
    Guarantees
  ·
                Margin Money Deposit for Letter
      of Credit
  Restricted Cash has been deposited into
bank with specified period of time. Specified period is based on estimated time
taken by each project. The classification of restricted cash into current and
non-current is determined based on maturity date of the
deposit.
   F-44
 Table of Contents
   TECHNI
BHARATHI LIMITED
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
  Amounts
in Thousand US Dollars, except share data and as stated otherwise
   f)
Cash and Cash Equivalents
  The components of item are as
follows:
  ·
                Cash-in-hand
  ·
                Bank
      balance of Current Accounts
  ·
                Highly
      liquid investments which has maturity period less than 90 days and
      maturity value will not be affected significantly in accordance with
      interest rate changes.
  g)
Accounts receivable
  Accounts receivables are recorded at
the invoiced amount. Account balances are written off when the company believes
that the receivables will not be recovered. The company’s bad debts are included
in selling and general administrative expenses.
  h)
Investments
  Investments are initially measured at
cost, which is the fair value of the consideration given for them, including
transaction costs.
  Techni Soft India Ltd (TSIL) was a
subsidiary of TBL for the year 2003-04, 2004-05 & 2005-06. Another company
by name Techni Soft Inc, USA (TSA) is a subsidiary of TSIL and thus, TSA was a
subsidiary of TBL until 2006-07.
  In the year 2006-07, investment in the
TSIL were fully realized and on account of the fact that there were no
significant activity in TSIL and also on account of the fact that the entire
investment in TSIL stands realized in 2006-07, the accounts of TSIL have
not  with TBL.
  i)
Inventories
  Inventories consist primarily of
construction materials and trading goods valued at lower of Cost or Market
value.
  The following are major items of
inventory
  ·
                Work-in-progress-
      construction
  ·
                Work-in-progress-
      Real Estate
  ·
                Construction
      materials
  ·
                Scraps
  The cost of the above mentioned items
are valued on the following basis:
  Construction materials are valued at
weight average procurement cost which includes purchase price, fright inward and
insurance charges on transportation if applicable. Work-in-progress is valued by
cost incurred to that work and apportioned overheads to that project.
Construction materials and scraps are valued at FIFO (“First In First Out”)
basis. Work-in-progress of real estate is valued at cost or net realizable
value, whichever is less.
  j)
Property and equipment
  Property and equipment are stated at
cost less accumulated depreciation. Depreciation of computers, construction,
scrap processing and other equipments, buildings and other assets are provided
based on the Straight-line method over useful life of the
assets.
   F-45
 Table of Contents
  TECHNI
BHARATHI LIMITED
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
  Amounts
in Thousand US Dollars, except share data and as stated otherwise
  The value of plant and equipment that
are capitalized include the acquisition price and other direct attributable
expenses.
  The estimated useful life of various
categories of assets has been considered as under:
  Category
                
                Useful Life
      (years)Building
      (Flat)
                
                
                25Plant and
      Machinery
                
                
                20Computer
      Equipment
                
                
                3Office
      Equipment
                
                
                5Furniture and
      Fixtures
                
                
                5Vehicles
                
                
                5Leasehold
      Improvements
                
                Over the period of lease or
      useful life (if less)
  Upon disposition, cost and related
accumulated depreciation of the Property and equipment are removed from the
accounts and the gain or loss is reflected in the results of
operation.
  Cost of additions and substantial
improvements to property and equipment are capitalized in the books of accounts.
The cost of maintenance and repairs of the property and equipment are charged to
operating expenses.
  k)
Asset retirement obligations
  Asset retirement obligations associated
with the Company’s leasehold land are subject to the provisions of FAS No. 143
“Accounting for Asset Retirement Obligations” and related interpretation, FIN
No. 47, “Accounting for Conditional Asset Retirement Obligations, an
interpretation of FASB Statement No. 143” . The lease agreements entered into by
the Company may contain clauses requiring restoration of the leased site at the
end of the lease term and therefore create asset retirement obligations. The
Company records the fair value of a liability for an asset retirement obligation
in the period in which it is incurred and capitalizes the cost by increasing the
carrying amount of the related long-lived asset. Over time, the liability is
accreted to its present value of each period, and the capitalized cost is
depreciated over the estimated useful life of the related asset. Upon settlement
of the liability, the Company either settles the obligation for its recorded
amount or incurs a gain or loss upon settlement.
  l)
Foreign currency transactions
  Monetary assets and liabilities
denominated in foreign currencies are expressed in the functional currency
Indian Rupees at the rates of exchange in effect at the balance sheet date.
Transactions in foreign currencies are recorded at rates ruling on the
transaction dates. Gains or losses resulting from foreign currency transactions
are included in the statement of operations.
  m)
Operating leases
  Lease payments under operating leases
are recognized as an expense on a straight-line basis over the lease
term.
  n)
Capital leases
  Assets acquired under capital leases
are capitalized as assets by the Group at the lower of the fair value of the
leased property or the present value of the related lease payments or where
applicable, the estimated fair value of such assets. Amortization of leased
assets is computed on straight line basis over the useful life of the assets.
Amortization charge for capital leases is included in depreciation
expense.
   F-46
 Table of Contents
  TECHNI
BHARATHI LIMITED
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
  Amounts
in Thousand US Dollars, except share data and as stated otherwise
  o)
Impairment of long-lived assets
  The Company reviews its long-lived
assets, including identifiable assets with finite lives, for impairment whenever
events or changes in business circumstances indicate that the carrying amount of
assets may not be fully recoverable. Such circumstances include, though are not
limited to, significant or sustained declines in revenues or earnings and
material adverse changes in the economic climate. For assets that the Company
intends to hold for use, if the total of the expected future undiscounted cash
flows produced by the assets or asset Company is less than the carrying amount
of the assets, a loss is recognized for the difference between the fair value
and carrying value of the assets. For assets the Company intends to dispose of
by sale, a loss is recognized for the amount by which the estimated fair value
less cost to sell is less than the carrying value of the assets. Fair value is
determined based on quoted market prices, if available, or other valuation
techniques including discounted future net cash flows.
  p)
Borrowing costs
  (i)
Capitalized interest
  The interest cost incurred for funding
a qualifying asset during the construction period is capitalized based on actual
investment in the asset at the average interest rate. The capitalized interest
is included in the cost of the relevant asset and is depreciated over the
estimated useful life of the asset.
  (ii)
Debt issue expenses
  The Company defers and amortizes debt
issue expenses over the term of the related borrowing based on the effective
interest method.
  q)
Provision for Warranties and Liquidated Damages
  The company recognizes warranty claims
and liquidated damages as and when they are probable/ incurred. The company did
not have any material warranty claims in 2005 and 2006. The liquidated damages
recognized during year ended March 31, 2007 is $ 119. The liquidated damages are
included in selling, and general and administrative
expenses.
  r)
Retirement Benefits to employees
  (i)
Retirement Plans(Gratuity)
  In accordance with the Payment of
Gratuity Act, 1972, TBL provides for gratuity under a defined contribution plan
covering eligible employees of TBL. Liabilities with regard to the Gratuity plan
have not been provided for on Actuarial Basis . The Gratuity plan provides a
lump-sum payment to vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective employee’s
salary and tenure of the employment.
  (ii)
Provident Fund
  Eligible employees of TBL receive
benefits from a provident fund, which is a defined contribution plan. Both the
employees and the company make monthly contributions to the provident fund plan
equal to a specified percentage of the covered employee’s salary. The company
deposits contributions to the Government administrated provident fund. The rate
at which the annual interest is payable to the beneficiaries by the fund is
administrated by the Indian Government.
  The Company has no further obligations
under this plan beyond its monthly contributions.
    F-47
 Table of Contents
  TECHNI
BHARATHI LIMITED
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
  Amounts
in Thousand US Dollars, except share data and as stated otherwise
  (iii)
Compensated absences
  The employees of the Company are
entitled to compensate absences based on the unavailed leave balance and the
last drawn salary of the respective employees. The Company has provided for the
liability on account of compensated absences in accordance with FAS No. 43,
“Accounting for Compensated Absences”.
  s)
Income Taxes
  Income Taxes are accounted using the
asset and liability method . Deferred income tax assets and liabilities are
recognized for future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities, and the
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years on which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
the statement of operations in the period in which the change is enacted. Based
on management’s judgment, the measurement of deferred tax assets is reduced, if
necessary, by a valuation allowance for any tax benefits for which it is more
likely than not that some portion or all of such benefits will not be realized.
Tax credits are generally recognized in the year they arise.
  t)
Pre-operating costs
  Pre-operating costs represent certain
marketing and administrative expenses incurred prior to the commencement of
commercial operations of the new circles. These costs are expensed as
incurred.
  u)
Earnings per share
  In accordance with FAS 128, “Earnings
Per Share”, a basic earnings per equity share is computed using the weighted
average number of equity shares outstanding during the period. Diluted earnings
per equity share are computed using the weighted average number of common and
dilutive common equivalent equity shares outstanding during the period except
where the result would be anti-dilutive.
  v)
Recent accounting pronouncements
  The Company does not believe that any
recently issued, but not yet effective, accounting standards if currently
adopted would have a material effect on the accompanying financial
statements.
  w)
Reclassification
  Certain items previously reported in
specific captions of the financial statements have been reclassified to conform
to the current year’s presentation.
  3.
SHAREHOLDERS STOCK
  On January 15, 2007, the company split
its common stock from par value INR 100 per share (equivalent to $2.32 per share
at a conversion of INR 43.10 per USD) to par value of INR 10 per share
(equivalent to $.0232 per share) and increased its authorized capital to total
limit of 15 million common stock of par value INR 10 per share. This resulted in
an increase of issued and outstanding common stock from 428,750 shares of par
value INR 100 per share to 4,287,500 shares of par value INR 10 per
share.
  On March
30, 2007, the company restructured its authorized common stock to eight million
equity stock of par value INR 10 per share and seven million of preference stock
with par value INR 10 per share. All the relevant filings along with fees have
been made with the Registrar of Companies on April 15, 2007.
  During
Q1, 2007, the company has issued 5,000,000 preference shares with par value INR
10 per share.
  The
Company has signed a Letter of Intent with India Globalization Capital, Inc.
(USA), (“IGC”), dated 5th
September 2007 to accept investment through its subsidiary IGC (Mauritius) by
allotment of new equity shares leading to post investment ownership of
approximately 74% by IGC and or its assignee. On September 16, 2007 the Company
signed a Share Subscription Agreement with IGC to 1) agree to the sale of the
convertible preference stock held by Odeon, 2) the subscription of shares and 3)
sell a convertible preference stock instrument.
  F-48
 Table of Contents
  4.
PROPERTY AND EQUIPMENT
  The Cost, Depreciation to date and the
Net value of Assets of the company are as follows:
  Asset
                
                March 31,
      2007
                
                
                March 7,
      2008Land
                
                $
                2
                
                
                $
                2Building
      (Apartment)
                
                
                23
                
                
                
                24Machineries &
      Equipment
                
                
                4,177
                
                
                
                4,462Furniture &
      Fixtures
                
                
                75
                
                
                
                80Vehicles
                
                
                698
                
                
                
                744Total
                
                
                4,975
                
                
                
                5,312Less: Accumulated
      Depreciation
                
                
                2,710
                
                
                
                3,333Net
                
                $
                2,265
                
                
                $
                1,979
  5.
INCOME TAXES
  The Company accounted for the deferred
tax assets and liabilities as of March 31 2006, 2007 and March 7, 2008, on the
temporary differences.
  Unabsorbed depreciation represented
depreciation in excess of the currently deductible amounts that could be carried
forward and utilized as tax deductions in future periods.
  6.
SHORT TERM BORROWINGS & CURRENT PORTION OF LONG-TERM DEBT
  As
      of
                
                
                As
      ofParticulars
                
                March 31,
      2007
                
                
                March
      7,
      2008SecuredCash Credit Loan & WCTL from
      Bank
                
                $
                6,079
                
                
                $
                2,436Total
                
                
                6,079
                
                
                
                2,436
 
 The above secured by hypothecation of
materials/stock of spares, WIP, Receivables and property plant &
machinery  in addition to personal guarantee of three directors &
collaterally secured by mortgage of company’s land & other immovable
properties of directors and their relatives.
  7.
EMPLOYEE BENEFITS
  As
      of
                
                
                As
      ofParticulars
                
                March 31,
      2007
                
                
                March
      7,
      2008Earned
      leave
                
                $
                11
                
                
                $
                28Provident
      Fund
                
                
                13
                
                
                
                --Gratuity
                
                
                34
                
                
                
                32Total
                
                $
                58
                
                
                $
                60
  8.
LONG TERM DEBTS
  As
      at
                
                March 31,
      2007
                
                
                March
      7, 2008Term
      loan
                
                $
                1,656
                
                
                
                ---Loan for assets purchased under
      Capital lease
                
                
                —
                
                
                
                —Unsecured Loan –
      Directors
                
                
                1
                
                
                
                ----Unsecured Loan –
      Others
                
                
                676
                
                
                
                ----Total
                
                $
                2,333
                
                
                
                ----
 
  F-49
 Table of Contents
  These loans are secured by
hypothecation of machineries and vehicles and collaterally secured by deposit of
title deeds of land
  9.
DIVIDENDS
  Final dividends proposed by the Board
of Directors will be payable when formally declared by the shareholders, who
have the right to decrease but not increase the amount of the dividend
recommended by the Board of Directors. Interim dividends will be declared by the
Board of Directors without the need for shareholders’
approval.
  Dividends payable to equity
shareholders will be based on the net income available for distribution as
reported in the Company’s financial statements prepared in accordance with
Indian GAAP. Dividends can only be declared and paid in Indian Rupees and/or
converted into foreign currency for an equivalent amount in cases where dividend
is permitted to be repatriated.
  Under the Indian Companies Act 1956,
dividends may be paid out of the profits of a company in the year in which the
dividend is declared or out of the undistributed profits of previous fiscal
years. Before declaring a dividend greater than 10% of the par value of its
equity shares, a company is required to transfer to its reserves a minimum
percentage of its profits for that year, ranging from 2.5% to 10 %, depending on
the dividend percentage to be declared in such year. Dividends can be
distributed out of the general reserve in case of a loss or inadequacy of
current distributable profits. Presently, the Company is required to pay
dividend tax on the total amount of the dividend declared, distributed or paid
at the specified tax rate including surcharge (Applicable tax rate is 16.99% as
at March 07).
  The Company has not paid any dividends
from the year 2004 through March 7, 2008.
  10.
INTENTIONALLY LEFT BLANK
  11.
RELATED PARTY TRANSACTIONS DISCLOSURE
  List
of Related Parties
  Key Management
Personal
  V
C Anthony  – Executive Chairman
  Jortin
Anthony - Managing Director
  Ram
Mukunda - Director
  Associate Companies
  Bhagheeratha
Engineering Limited
  Kairali
Orchids Private Limited
  Bhagheeratha
Electricals & Structurals Limited
  VC
Homes Limited
  Mares
Steel Casting Limited
   F-50
 Table of Contents
  Related Party
Transactions:
  Financial
Year 2005-06:
  Techni
Soft India Limited was paid USD 2 by TBL. Amount outstanding at end of the year
was USD 102.
  Financial
Year 2006-07:
  TBL has
given advance to M/s Bhagheeratha Engineering limited amounting to USD 147 in
which Directors are interested. The company has also mortgaged 1.44 Acres of its
land as security for a loan taken by M/s Bhagheeratha Engineering Limited in
which Director is interested.
  Financial
Year 2007-08:
  TBL has
transferred funds to VC Homes Limited, Mares Steel Casting Limited and Techni
Soft Limited amounting to USD 482, 3 and 3 respectively
  12.
SEGMENT INFORMATION
  The Company follows the provisions of
SFAS No 131 “Disclosure about Segments of an Enterprise and Related
Information”. SFAS No 131 establishes standards for reporting information
regarding operating segments in annual financial statements and requires
selected information for those segments to be presented in interim financial
reports issued to stockholders. The Company operates in a single infrastructure
construction segment.
  13.
COMMITMENTS AND CONTINGENCIES
  The company has to observe the laws,
government orders and regulations of the state in which they operate. A number
of them are currently involved in administrative proceedings arising out of the
normal conduct of their business. In the opinion of management, however, the
outcome of these actions will not materially affect the financial position,
result of operations or cash flow.
  Commitments
  a)
Capital commitments
  The estimated amount of contracts
remaining to be executed on capital account not provided for as on March 31,
2006, March 31, 2007 and March 7, 2008 are $0.
  b)
Guarantees
  The Company had outstanding financial /
performance bank guarantees of  $4,783,  $3,804
and  $1,898 as of March 31, 2006,  March 31, 2007 and March
7, 2008.
  Contingencies
  The Company is contingently liable to
pay  $4 towards interest and penalty towards Provident Dues as per the
orders of the competent authorities.
  14.
CONCENTRATION OF CREDIT RISK
  The Company is concentrated on projects
undertaken by government and government enterprises.
  Company’s business therefore requires
that we continue to maintain pre-qualified status with key clients and that we
are not disqualified from future projects that these clients may award.
Company’s major clients vary from period to period depending on the demand and
the completion schedule of projects. The loss of a significant client or a
number of significant clients or projects from such clients for any reason,
including as a result of disqualification or dispute, may have an adverse effect
on Company’s results of operations.
   F-51
 Table of Contents
  15.
VENDOR RISK
  The Company is significantly affected
by the availability, cost and quality of the raw material and fuel, which we
need to construct and develop Company’s projects. The prices and supply of raw
materials, bought out items and fuel depend on factors not under Company’s
control, including general economic conditions, competition, production levels,
transportation costs and import duties. Although we generally provide for price
contingencies in Company’s contracts to limit Company’s exposure, if, for any
reason, Company’s primary suppliers of raw materials, bought out items and fuel
should curtail or discontinue their delivery of such materials t us in the
quantities we need or at prices that are competitive or expected by us,
Company’s ability to meet Company’s material requirements for our projects could
be impaired, Company’s construction schedules could be disrupted, or Company’s
earnings and business could suffer. Additionally, we rely on manufacturers and
other suppliers and do not have control over the quality of products they
supply, which may adversely affect the quality and workmanship of Company’s
projects.
  16.
SUBSEQUENT EVENTS
  The
Company has received USD 11,224 against issue of 7.15 million equity stock and
12,5 million preference stock with par value of INR 10 (equivalent to USD 0.247)
from India Globalization Capital, Inc. (USA), (“IGC”) through its subsidiary
India Globalization Capital, Mauritius (IGC-M). Further, IGC has purchased 5
million shares from the shareholders for USD 2 million through its subsidiary
IGC-M.. All the preference stock has been converted into equity stock leading to
post investment ownership of approximately 77% by IGC-M.
 F-52
 Table of Contents
  Item9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
 
 None.
 
 Item9A. Controls and Procedures
 
 The
Company maintains disclosure controls and procedures that are designed to ensure
that information requiring disclosure in our reports filed pursuant to the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the time periods specified in the SEC’s rules, regulations
and related forms, and that such information is accumulated and communicated to
our principal executive officer and principal financial officer, as appropriate,
to allow timely decisions regarding required disclosure.
 
 The
Company, under the supervision of our principal executive officer and principal
financial officer, carried out an evaluation of the effectiveness of the design
and operation of its disclosure controls and procedures, excluding the
recentSricon
and TBL acquisitions as of March 31, 2008.  Based upon that
evaluation, management, including our principal executive officer and principal
financial officer, concluded that the Company’s disclosure controls and
procedures were effective in alerting it in a timely manner to information
relating to the Company required to be disclosed in this report.
 
 Management’s Annual
Report on Internal Control over Financial Reporting
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. As defined in Exchange Act Rule 13a-15(f),
internal control over financial reporting is a process designed by, or under the
supervision of, our principal executive officer and principal financial officer
and effected by our board of directors, management and other personnel, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles.
 
 Under the supervision and with the
participation of our management, including our principal executive officer and
principal financial officer, we carried out an evaluation of the effectiveness
of our internal control over financial reporting, excluding the
recent Sricon and TBL acquisitions, as of
March 31, 2008 based on the criteria in “Internal Control - Integrated
Framework” issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”). Based upon this evaluation, our management concluded that
our internal control over financial reporting was effective as of March 31,
2008.
 
 Prior to the consummation of the Sricon
and TBL acquisitions on March 7, 2008, we were a blank check
company.  Our wholly owned subsidiary, IGC-M, acquired 63% of Sricon
and 77% of TBL.  Management has excluded IGC-M, Sricon and TBL from
its evaluation of the effectiveness of our internal control over financial
reporting as of March 31, 2008, due to the limited time from the dates of such
acquisitions on March 7, 2008 through March 31, 2008, in which to perform such
evaluations. Management plans to assess the internal controls over financial
reporting for all of our 2008 acquisitions in 2009.
  This
annual report does not include an attestation report of the Company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the company to provide only management's report
in this annual report.
  Changes  in  Internal  Control  Over  Financial  Reporting
 
 No  change  in  the
Company's internal control over financial reporting occurred during the year
ended March 31, 2008, that materially affected, or is reasonably
likely  to  materially  affect,  the  Company's  internal
control over financial reporting.
  Item9B. Other Information
 
 None.
   25
 Table of Contents
  PART
III
 
 Item10.
Directors and Executive Officers of the Companyand
CorporateGovernanance
  The board
of directors, executive officers, advisors and key employees of IGC, Sricon and
TBL are as follows:
 
 Directors,
Executive Officers and Special Advisors of IGC
 
 Name
                Age
                PositionDr.
      Ranga Krishna
                43
                Chairman
      of the BoardRam
      Mukunda
                49
                Chief
      Executive Officer, Executive Chairman, President and
    DirectorJohn
      Selvaraj
                63
                TreasurerSudhakar
      Shenoy
                60
                DirectorRichard
      Prins
                50
                DirectorSuhail
      Nathani
                42
                DirectorLarry
      Pressler
                65
                Special
      AdvisorHoward
      Gutman
                50
                Special
      AdvisorP.G.
      Kakodkar
                71
                Special
      AdvisorShakti
      Sinha
                50
                Special
      AdvisorDr.
      Prabuddha Ganguli
                58
                Special
      AdvisorDr.
      Anil K. Gupta
                58
                Special
      Advisor
  Directors,
and Executive Officers of Sricon
  Name
              Age
              PositionRavindralal
      Srivastava
              54
              Chairman
      and Managing DirectorAbhay
      Wakhare
              37
              CFO,
      GM Finance and AccountingRam
      Mukunda
              49
              Director


Directors,
and Executive Officers of TBL
  Name
                Age
                PositionJortin
      Antony
                40
                Managing
      DirectorM.
      Santhosh Kumar
                41
                CFO,
      GM Finance and AccountingRam
      Mukunda
                49
                Director
   26
 Table of Contents
 
 Ranga Krishna, has served as
our Chairman of the Board since December 15, 2005. Dr. Krishna previously served
as a Director from May 25, 2005 to December 15, 2005 and as our Special Advisor
from April 29, 2005 through June 29, 2005.  In 1998, he founded Rising
Sun Holding, LLC, a $120 million construction and land banking
company.  In September 1999, he co-founded Fastscribe, Inc., an
Internet-based medical and legal transcription company with its operations in
India with over 200 employees. He has served as a director of Fastscribe since
September 1999. He is currently the Managing Partner.  In February
2003, Dr. Krishna founded International Pharma Trials, Inc., a company with
operations in India and over 150 employees, which assists U.S. pharmaceutical
companies performing Phase II clinical trials in India. He is currently the
Chairman and CEO of that company.  In April 2004, Dr. Krishna founded
Global Medical Staffing Solutions, Inc., a company that recruits nurses and
other medical professionals from India and places them in U.S. hospitals. Dr.
Krishna is currently serving as the Chairman and CEO of that company. Dr.
Krishna is a member of several organizations, including the
American Academy of Neurology and the Medical Society of the State of New
York. He is also a member of the Medical Arbitration panel for the New York
State Worker’s Compensation Board. Dr. Krishna was trained at New York’s Mount
Sinai Medical Center (1991-1994) and New York University
(1994-1996).
 
 Ram Mukunda has served as our
Chief Executive Officer, President and a Director since our inception on April
29, 2005 and was Chairman of the Board from April 29, 2005 through December 15,
2005. Since September 2004 Mr. Mukunda has served as Chief Executive Officer of
Integrated Global Networks, LLC, a communications contractor in the U.S.
Government.. From January 1990 to May 2004, Mr. Mukunda served as Founder,
Chairman and Chief Executive Officer of Startec Global Communications, an
international telecommunications carrier focused on providing voice over
Internet protocol (VOIP) services to the emerging economies. Startec was among
the first carriers to have a direct operating agreement with India for the
provision of telecom services. Mr. Mukunda was responsible for the organizing,
structuring, and integrating  a number of companies owned by Startec.
Many of these companies provided strategic investments in  India-based
operations or  provided services to India-based companies. Under Mr.
Mukunda’s tenure at Startec, the company made an initial public offering of its
equity securities in 1997 and conducted a public high-yield debt offering in
1998. Mr. Mukunda  was responsible for the restructuring of Startec
after the company filed for protection under Chapter 11 in December 2001.
Startec emerged from Chapter 11 in 2004. Ferris, Baker Watts, Incorporated, the
representative of the underwriters for the IPO, acted as the managing
underwriter in connection with the initial public offering of Startec in 1997,
and one of its executives is also a member of our board of
directors.
 
 From June
1987 to January 1990, Mr. Mukunda served as Strategic Planning Advisor at
INTELSAT, a provider of satellite capacity. Mr. Mukunda serves on the Board of
Visitors at the University of Maryland School of Engineering. From 2001-2003, he
was a Council Member at Harvard’s Kennedy School of Government Belfer Center of
Science and International Affairs. Mr. Mukunda is the recipient of several
awards, including the University of Maryland’s 2001 Distinguished Engineering
Alumnus Award and the 1998 Ernst & Young, LLP’s Entrepreneur of the Year
Award. He holds B.S. degrees in electrical engineering and mathematics and a MS
in Engineering from the University of Maryland.
 
 John B. Selvarajhas served as our
Treasurer since November 27, 2006.  From November 15, 1997 to August
10, 2007, Mr. Selvaraj served in various capacities with Startec, Inc.,
including from January 2001 to April 2006 as Vice President of Finance and
Accounting where he was responsible for SEC reporting and international
subsidiary consolidation.  Prior to joining Startec, from July 1984 to
December 1994, Mr. Selvaraj served as the Chief Financial and Administration
Officer for the US office of the European Union.  In 1969, Mr.
Selvaraj received a BBA in Accounting from Spicer Memorial College India,
and an Executive MBA, in 1993, from Averette University,
Virginia.  Mr. Selvaraj is a Charted Accountant (CA,
1971).
 
 Sudhakar Shenoy, has served as
our Director since May 25, 2005. Since January 1981, Mr. Shenoy has been the
Founder, Chairman and CEO of Information Management Consulting, Inc., a business
solutions and technology provider to the government, business, health and life
science sectors. Mr. Shenoy is a member of the Non Resident Indian Advisory
Group that advises the Prime Minister of India on strategies for attracting
foreign direct investment. Mr. Shenoy was selected for the United States
Presidential Trade and Development Mission to India in 1995. From 2002 to June
2005 he served as the chairman of the Northern Virginia Technology
Council.  In 1970, Mr. Shenoy received a B. Tech (Hons.) in electrical
engineering from the Indian Institute of Technology. In 1971 and 1973, he
received an M.S. in electrical engineering and an M.B.A. from the University of
Connecticut Schools of Engineering and Business Administration,
respectively.
 
 Richard Prins, has served as
our Director since May 2007.  Since March 1996, he has been the
Director of Investment Banking at Ferris, Baker Watts, Incorporated (FBW was the
lead underwriter for our IPO).  Prior to Ferris, Baker Watts, from
July 1988 to March 1996, Mr. Prins was Senior Vice President and Managing
Director for the Investment Banking Division of Crestar Financial Corporation
(SunTrust Banks).  From 1993 to 1998, he was with the leveraged buy
out firm of Tuscarora Corporation. Since February 2003, he has been on the board
of Amphastar Pharma and since April 2006 he has been on the board of Advancing
Native Missions, a non-profit. Mr. Prins holds a B.A. degree from
Colgate University (1980), and an M.B.A. from
Oral Roberts University (1983).
 
 Suhail Nathani, has served as
our Director since May 25, 2005. Since September 2001, he has served as a
partner at the Economics Laws Practice in India, which he co-founded. The
25-person firm focuses on consulting, general corporate law, tax regulations,
foreign investments and issues relating to the World Trade Organization (WTO).
From December 1998 to September 2001, Mr. Nathani was the Proprietor of the
Strategic Law Group, also in India, where he practiced telecommunications law,
general litigation and licensing.
 
 Mr.
Nathani earned a LLM in 1991 from Duke University School of Law. In 1990 Mr.
Nathani graduated from Cambridge University with a MA (Hons) in Law. In
1987, he graduated from Sydenham College of Commerce and Economics, Bombay,
India.
 
 
 27
 Table of Contents
 
 Sricon
Management
 
 Rabindralal B. Srivastava is
Founder and Chairman of Sricon. In 1974, he started his career at Larsen and
Toubro (L&T), one of India’s premier engineering and construction
companies.   In 1994, his company,  Vijay Engineering,
became a civil engineering sub-contractor to L&T.  He worked as a
sub-contractor for L&T in Haldia, West Bengal and Tuticorin in South India
among others.  Under his leadership, Vijay Engineering expanded to
include civil engineering and construction of power plants, water treatment
plants, steel mills, sugar plants and mining.  In 1996, Mr. Srivastava
founded Srivastava Construction Limited, which in 2004 changed its name to
Sricon Infrastructure to address the larger infrastructure needs in India like
highway construction. He merged Vijay Engineering and Sricon in
2004.  Mr. Srivastava graduated with a BS from Banaras University
in 1974.  Mr. Srivastava founded Hi-tech Pro-Oil Complex in
1996.  The company is involved in the extraction of soy bean
oil.  He founded Aurobindo Laminations Limited in 2003.  The
company manufactures laminated particleboards.
 
 Abhay Wakhare has been the
General Manager of Finance and Accounting of Sricon since 2004, where he is
responsible for finance, accounting, human resources, and is the corporate
secretary of the company. Mr. Wakhare has broad experience having worked in
several industries. From 2002-2004, he was the General Manager Finance, for the
ammunitions manufacturing division of the Eros Group of companies. From
1999-2002, he became an entrepreneur having founded a perfume company. From
1996-1999, he was the chief executive officer of Disani Agro Limited, a
$50million pesticide and herbicide manufacturer. From 1994-1996, he was the
Assistant General Manager Finance, at Hindustan Lever.  Mr. Wakhare’s
education and qualifications are as follows:  BCom (Bachelor of
Commerce), 1990, M.Com, 1992, Nagpur University. IICA, 1993 (Indian
Institute of Cost Accountants).  CFA, 1993 (Chartered Financial
Analyst).  LLB 1993, (Bachelor of Law),
Pune University.  MBA, 1994, Symbosis Institute of Management,
Pune (ranked as the 4th  best business
school in India in 2007, according to a survey conducted by Indian Institute of
Management, Ahemdabad ) LLM, 1996, (Masters in Law), Osmaniya
University.  M.Sc. Finance, 1997, Business School of
Hyderabad.
 
 TBL
Management
 
 Jortin Antony  has
been the Managing Director of TBL since 2000.  Prior to that, he held
various positions at Bhagheeratha starting as a management trainee in
1991.  From 1997 to 2000, he was the Director of Projects at
Bhagheeratha. In 2003, Mr. Jortin Antony was awarded the Young Entrepreneur
Award from the Rashtra Deepika.  He graduated with a B.Eng, in 1991,
from Bangalore Institute of Technology, University of Bangalore.
 
 M Santhosh Kumar, has been
with TBL since 1991. Since 2008 he has been the CFO and General Manager of
Accounting and Finance.  From  2002 to January 2008 he has
been the Deputy Manager (Finance and Accounting).  From 2000 to 2002,
he was the Marketing Executive for Techni Soft (India) Limited, a subsidiary of
Techni Bharathi Limited.  From 1991 to 2000, he held various positions
at TBL in the Finance and Accounting department.  From 1986 to 1991,
he worked as an accountant in the Chartered Account firm of Balan and
Company.  In 1986 Mr. Santhosh Kumar graduated with a BA in Commerce
from, Gandhi University, Kerala, India.
 
 Special
Advisors
 
 Senator Larry Pressler has
served as our Special Advisor since February 3, 2006. Since leaving the U.S.
Senate in 1997, Mr. Pressler has been a combination of businessman, lawyer,
corporate board director and lecturer at universities. From March 2002 to
present, he has been a partner in the New York firm, Brock Law Partners. He was
a law partner with O’Connor & Hannan from
 March
1997 to March 2002.
 From 1979
to 1997, Mr. Pressler served as a member of the United States Senate. He served
as the Chairman of the Senate Commerce Committee on Science and Transportation,
and the Chairman of the Subcommittee on Telecommunications (1994 to 1997). From
1995 to 1997, he served as a Member of the Committee on Finance and from 1981 to
1995 on the Committee on Foreign Relations. From 1975 to 1979, Mr. Pressler
served as a member of the United States House of  Representatives.
Among other bills, Senator Pressler authored the Telecommunications Act of 1996.
As a member of the Senate Foreign Relations Committee, he authored the “Pressler
Amendment,” which became the parity for nuclear weapons in Asia from 1980 to
1996.
 
 In 2000,
Senator Pressler accompanied President Clinton on a visit to India. He is a
frequent traveler to India where he lectures at universities and business
forums. He is a member of several boards of Indian and US companies including
the board of directors for Infosys Technologies, Inc. (INFY). He serves on the
board of directors for The Philadelphia Stock Exchange and Flight Safety
Technologies, Inc. (FLST). From 2002 to 2005 he served on the board of advisors
at Chrys Capital, a fund focused on investments in India. He was on the board of
directors of Spectramind from its inception in 1999 until its sale to WIPRO, Ltd
(WIT) in 2003.
 
 In 1971,
Mr. Pressler earned a Juris Doctor from Harvard Law School and a
Masters in Public Administration from the Kennedy School of Government at
Harvard. From 1964 to 1965 he was a Rhodes Scholar at Oxford University, England
where he earned a diploma in public administration. Mr. Pressler is a Vietnam
war veteran having served in the U.S. Army in Vietnam in 1967-68. He is an
active member of the Veterans of Foreign Wars Association.
 
 Howard Gutman has served as
our Special Advisor since April 5, 2007.   Although he is not
serving as an attorney for the Company, Mr. Gutman has been a lawyer in
Washington D.C. for twenty-five years.  Mr. Gutman rejoined
Williams & Connolly in October 1986 and became a partner in
1988.  He remains a partner at the firm today (although the firm has
no role with the Company), where he is a business litigator.
 
 From May
1985 to October 1986, he was Special Assistant to the Director William H.
Webster of the Federal Bureau of Investigation.  From October 1982 to
May 1985, Mr. Gutman was an associate at the law firm of Williams &
Connolly.   Mr. Gutman has been active in Democratic politics for
20 years having served as an advisor to candidates for President, Governor, and
Congress.  He assisted the Gore campaign in Florida in
2000.    Since 1983, Mr. Gutman has been an Associate Editor of
Litigation Magazine and an active participant in the ABA’s Litigation
Section.  He has also appeared on several episodes of the HBO series
“K Street.”
 
 Mr.
Gutman graduated from Columbia University with a B.A. Summa Cum Laude in
1977 and from the Harvard Law School, Magna Cum Laude in
1980.  From September 1980-September 1981, he served as a Law Clerk to
The Honorable Irving L. Goldberg of the United States Court of Appeals for the
Fifth Circuit.  From September 1981-September 1982, Mr. Gutman served
as Law Clerk to The Honorable Potter Stewart,(retd), United States Supreme
Court.
  28
 Table of Contents
 P. G. Kakodkar has served as
our Special Advisor since February 3, 2006. Mr. Kakodkar serves on the boards of
several Indian companies, many of which are public in India. Since January of
2005 he has been a member of the board of directors of State Bank of India (SBI)
Fund Management, Private Ltd., which runs one of the largest mutual funds in
India. Mr. Kakodkar’s career spans 40 years at the State Bank of India. He
served as its Chairman from October 1995 to March 1997. Prior to his
Chairmanship, he was the Managing Director of State Bank of India (SBI) Fund
Management Private Ltd., which operates the SBI Mutual Fund.
 
 Since
July 2005, he has served on the board of directors of the Multi Commodity
Exchange of India. Since April 2000, he has been on the board of Mastek, Ltd, an
Indian software house specializing in client server applications. In June 2001,
he joined the board of Centrum Capital Ltd, a financial services company. Since
March 2000, he has been on the board of Sesa Goa Ltd., the second largest mining
company in India. In April 2000, he joined the board at Uttam Galva Steel and in
April 1999 he joined the board of Goa Carbon Ltd, a manufacturer-exporter of
petcoke. Mr. Kakodkar received a BA from Karnataka University and an MA
from Bombay University in economics, in 1954 and 1956, respectively. Mr.
Kakodkar currently is an advisor to Societe Generale, India, which is an
affiliate of SG Americas Securities, LLC and one of the underwriters of the our
IPO.
 
 Shakti Sinha, has served as
our Special Advisor since May 25, 2005. Since July 2004, Mr. Sinha has been
working as a Visiting Senior Fellow, on economic development, with the
Government of Bihar, India. From January 2000 to June 2004, he was a Senior
Advisor to the Executive Director on the Board of the World Bank. From March
1998 to November 1999, he was the Private Secretary to the Prime Minister of
India. He was also the Chief of the Office of the Prime Minister. Prior to that
he has held high level positions in the Government of India, including from
January 1998 to March 1998 as a Board Member responsible for Administration in
the Electricity Utility Board of Delhi. From January 1996 to January 1998, he
was the Secretary to the Leader of the Opposition in the lower house of the
Indian Parliament. From December 1995 to May 1996, he was a Director in the
Ministry of Commerce. In 2002, Mr. Sinha earned a M.S. in International Commerce
and Policy from the George Mason University, USA. In 1978 he earned a M.A. in
History from the University of Delhi and in 1976 he earned a BA (Honors) in
Economics from the University of Delhi.
 
 Prabuddha Ganguli has served
as our Special Advisor since May 25, 2005. Since September 1996, Dr. Ganguli has
been the CEO of Vision-IPR. The company offers management consulting on the
protection of intellectual property rights. His clients include companies in the
pharmaceutical, chemical and engineering industries. He is an adjunct professor
of intellectual property rights at the Indian Institute of Technology, Bombay.
Prior to 1996, from August 1991 to August 1996, he was the Head of Information
Services and Patents at the Hindustan Lever Research Center. In
1986, he was elected as a fellow to the Maharashtra Academy of Sciences. In
1966, he received the National Science Talent Scholarship (NSTS). In 1977, he
was awarded the Alexander von Humboldt Foundation Fellow (Germany). He is
Honorary Scientific Consultant to the Principal Scientific Adviser to the
Government of India. He is a Member of the National Expert Group on Issues
linked to Access to Biological materials vis-à-vis TRIPS and CBD Agreements
constituted by the Indian Ministry of Commerce and Industry. He is also a Member
of the Editorial Board of the intellectual property rights journal “World Patent
Information” published by Elsevier Science Limited, UK. He is a Consultant to
the World Intellectual Property Organization (WIPO), Geneva in intellectual
property rights capability building training programs in various parts of the
world. In 1976, Dr. Ganguli received a PhD from the Tata Institute of
Fundamental Research, Bombay in chemical physics. In 1971, he received a M.Sc.
in Chemistry from the Indian Institute of Technology (Kanpur) and in 1969 he
earned a BS from the Institute of Science (Bombay University).
 
 Anil K. Gupta has served as
our Special Advisor since May 25, 2005.  Dr. Gupta has been Professor
of Strategy and Organization at the University of Maryland since
1986.  He has been Chair of the Management & Organization
Department, Ralph J. Tyser Professor of Strategy and Organization, and Research
Director of the Dingman Center for Entrepreneurship at the Robert H. Smith
School of Business, The University of Maryland at College Park, since July
2003.  Dr. Gupta earned a Bachelor of Technology from the Indian
Institute of Technology in 1970, an MBA from the Indian Institute of Management
in 1972, and a Doctor of Business Administration from the
Harvard Business School in 1980.  Dr. Gupta has served on
the board of directors of NeoMagic Corporation (NMGC) since October 2000 and has
previously served as a director of Omega Worldwide (OWWP) from October 1899
through August 2003 and Vitalink Pharmacy Services (VTK) from July 1992 through
July 1999.
 
 Board
of Directors
 
 Our board
of directors is divided into three classes (Class A, Class B and Class C) with
only one class of directors being elected in each year and each class serving a
three-year term. The term of office of the Class A directors, consisting of Mr.
Nathani and Mr. Shenoy, will expire at our fourth annual meeting of
stockholders. The term of office of the Class B directors, consisting of Mr.
Prins and Dr. Krishna, will expire at the second annual meeting of stockholders.
The term of office of the Class C director, consisting of Mr. Mukunda, will
expire at the third annual meeting of stockholders.  These individuals
have played a key role in identifying and evaluating prospective acquisition
candidates, selecting the target businesses, and structuring, negotiating and
consummating the acquisition. The American Stock Exchange, where we are listed,
has rules mandating that the majority of the board be
independent.  Our board of directors will consult with counsel to
ensure that the boards of directors’ determinations are consistent with those
rules and all relevant securities laws and regulations regarding the
independence of directors. The Amex listing standards define an “independent
director” generally as a person, other than an officer of a company, who does
not have a relationship with the company that would interfere with the
director’s exercise of independent judgment. Consistent with these standards,
the board of directors has determined that Messrs. Krishna, Shenoy and Nathani
are independent directors.
 
 Committee
of the Board of Directors
 
 Our Board
of Directors has established an Audit Committee currently composed of two
independent directors who report to the Board of Directors.  Messrs.
Krishna and Shenoy, each of whom is an independent director under the American
Stock Exchange’s listing standards, serve as members of our Audit
Committee.  In addition, we have determined that Messrs. Krishna and
Shenoy are “audit committee financial experts” as that term is defined under
Item 407 of Regulation S-B of the Securities Exchange Act of 1934, as
amended.  The Audit Committee is responsible for meeting with our
independent accountants regarding, among other issues, audits and adequacy of
our accounting and control systems.  We intend to locate and appoint
at least one additional independent director to our Audit Committee to increase
the size of the Audit Committee to three members.
 
 The Audit
Committee will monitor our compliance on a quarterly basis with the terms of our
initial pubic offering.  If any noncompliance issues are identified,
then the Audit Committee is charged with the responsibility to take immediately
all action necessary to rectify such noncompliance or otherwise cause compliance
with our initial pubic offering.  The Board currently does not have a
nominating and corporate governance committee. However, the majority of the
independent directors of the Board make all nominations.
 
 29
 Table of Contents
 
 Audit
Committee Financial Expert
 
 The Audit
Committee will at all times be composed exclusively of “independent directors”
who are “financially literate” as defined under the American Stock Exchange
listing standards.  The American Stock Exchange listing standards
define “financially literate” as being able to read and understand fundamental
financial statements, including a company’s balance sheet, income statement and
cash flow statement.
 
 In
addition, we must certify to the American Stock Exchange that the Audit
Committee has, and will continue to have, at least one member who has past
employment experience in finance or accounting, requisite professional
certification in accounting, or other comparable experience or background that
results in the individual’s financial sophistication.  The Board of
Directors has determined that Messrs. Krishna and Shenoy satisfy the American
Stock Exchange’s definition of financial sophistication and qualify as “audit
committee financial experts,” as defined under rules and regulations of the
Securities and Exchange Commission.
 
 Compensation
Committee
 
 Our Board
of Directors has established a Compensation Committee composed of two
independent directors, Messrs. Krishna and Shenoy and one non-independent
director Richard Prins.   The Board determined that Richard Prins
is not a current officer or employee or an immediate family member of such
person.  The Board deemed Mr. Prins to be non-independent because his
firm Ferris Baker Watts received compensation for the IPO and bridge
financing.  The Board, however, determined that the best interests of
the Company and its shareholders require his membership on the compensation
committee, as Mr. Prins brings a great deal of prior experience with memberships
on public compensation committees.  The Board used the exception
provided under Section 805 (b) of the Amex Company Guide in appointing Richard
Prins to the Compensation Committee.  The compensation committee’s
purpose will be to review and approve compensation paid to our officers and
directors and to administer the Stock Plan.
 
 Nominating
and Corporate Governance Committee
 
 We intend
to establish a nominating and corporate governance committee. The primary
purpose of the nominating and corporate governance committee will be to identify
individuals qualified to become directors, recommend to the board of directors
the candidates for election by stockholders or appointment by the board of
directors to fill a vacancy, recommend to the board of directors the composition
and chairs of board of directors committees, develop and recommend to the board
of directors guidelines for effective corporate governance, and lead an annual
review of the performance of the board of directors and each of its
committees.
 
 We do not
have any formal process for stockholders to nominate a director for election to
our board of directors. Currently, nominations are selected or recommended by a
majority of the independent directors as stated in Section 804 (a) of the Amex
Company Guide.   Any stockholder wishing to recommend an
individual to be considered by our board of directors as a nominee for election
as a director should send a signed letter of recommendation to the following
address: India Globalization Capital, Inc. c/o Corporate Secretary, 4336
Montgomery Avenue, Bethesda, MD 20817. Recommendation letters must state
the reasons for the recommendation and contain the full name and address of each
proposed nominee as well as a brief biographical history setting forth past and
present directorships, employments, occupations and civic activities. Any such
recommendation should be accompanied by a written statement from the proposed
nominee consenting to be named as a candidate and, if nominated and elected,
consenting to serve as a director. We may also require a candidate to furnish
additional information regarding his or her eligibility and qualifications. The
board of directors does not intend to evaluate candidates proposed by
stockholders differently than it evaluates candidates that are suggested by our
board members, execution officers or other sources.
 
 Code
of Conduct and Ethics
 
 We have
adopted a code of conduct and ethics applicable to our directors, officers and
employees in accordance with applicable federal securities laws and the rules of
the American Stock Exchange.  We have filed the code of conduct and
ethics as Exhibit 99.1 to our Registration Statement on Form S-1/A, filed with
the Securities and Exchange Commission on March 2, 2006.
 
 Board
Meetings
 
 During
the fiscal year ended March 31, 2008, our board of directors held fivemeetings. Although we do
not have any formal policy regarding director attendance at our annual meetings,
we will attempt to schedule our annual meetings so that all of our directors can
attend. During the fiscal year ended March 31, 2008, all of our directors
attended 100% of the meetings of the board of directors.
 
 
 30
 Table of Contents
  Compensation
of Directors
 
 Our
directors do not currently receive any cash compensation for their service as
members of the board of directors. We anticipate that in the near future we will
pay varying levels of compensation to the current and newly elected non-employee
directors of the Company for their services as directors in the future based on
their eligibility to be members of our audit and compensation committees. We
anticipate determining director compensation in accordance with industry
practice and standards.
 
 We pay
IGN, LLC, an affiliate of Mr. Mukunda, $4,000 per month for office space and
certain general and administrative services.  Mr. Mukunda is the Chief
Executive Officer of IGN, LLC.  We believe, based on rents and fees
for similar services in the Washington, DC metropolitan area that the fee
charged by IGN LLC was at least as favorable as we could have obtained from an
unaffiliated third party. The agreement with IGN with respect to such services
initially provided that payments would cease upon the acquisition of Sricon and
TBL.  However, as our independent directors have approved the
continuation of the agreement on a month-to-month basis having determined that
the space and services are of benefit to the Company and, as noted above, they
believe that the rates are at least as favorable as we could have obtained from
an unaffiliated third party.
  Section
16 (a) Beneficial Ownership Reporting Compliance
 
 Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our
directors, executive officers and persons who beneficially own more than 10% of
our common stock to file reports of their ownership of shares with the
Securities and Exchange Commission.  Such executive officers,
directors and stockholders are required by SEC regulation to furnish us with
copies of all Section 16(a) reports they file.  Based solely upon
review of the copies of such reports received by us, our senior management
believes that all reports required to be filed under Section 16(a) for the
fiscal year ended March 31, 2008 were filed in a timely manner.
  Item11.  Executive Compensation
  Compensation
Discussion and Analysis
  Overview
of Compensation Policy
  The
Company’s Compensation Committee is empowered to review and approve, or in some
cases recommend for the approval of the full Board of Directors the annual
compensation for the executive officers of the Company. This Committee has the
responsibility for establishing, implementing, and monitoring the Company’s
compensation strategy and policy. Among its principal duties, the Committee
ensures that the total compensation of the executive officers is fair,
reasonable and competitive.
  Objectives
and Philosophies of Compensation
  The
primary objective of the Company’s compensation policy, including the executive
compensation policy, is to help attract and retain qualified, energetic managers
who are enthusiastic about the Company’s mission and products. The policy is
designed to reward the achievement of specific annual and long-term strategic
goals aligning executive performance with company growth and shareholder value.
In addition, the Board of Directors strives to promote an ownership mentality
among key leaders and the Board of Directors.
  Setting
Executive Compensation
  The
compensation policy is designed to reward performance. In measuring executive
officers’ contribution to the Company, the Compensation Committee considers
numerous factors including the Company’s growth and financial performance as
measured by revenue, gross margin and net income before taxes among other key
performance indicators.
  Regarding
most compensation matters, including executive and director compensation,
management provides recommendations to the Compensation Committee; however, the
Compensation Committee does not delegate any of its functions to others in
setting compensation. The Compensation Committee does not currently engage any
consultant related to executive and/or director compensation
matters.
  Stock
price performance has not been a factor in determining annual compensation
because the price of the Company’s common stock is subject to a variety of
factors outside of management’s control. The Company does not subscribe to an
exact formula for allocating cash and non-cash compensation. However, a
significant percentage of total executive compensation is performance-based.
Historically, the majority of the incentives to executives have been in the form
of non-cash incentives in order to better align the goals of executives with the
goals of stockholders.
   31
 Table of Contents
  Elements
of Company’s Compensation Plan
  The
principal components of compensation for the Company’s executive officers
are:
  ·
              base
      salary·
              performance-based
      incentive cash compensation·
              right
      to purchase the company’s stock at a preset price (stock
      options)·
              retirement
      and other benefits
  Base
Salary
  The
Company provides named executive officers and other employees with base salary
to compensate them for services rendered during the fiscal year. Base salary
ranges for named executive officers are determined for each executive based on
his or her position and responsibility.
  During
its review of base salaries for executives, the Committee primarily
considers:
  ·
              market
      data;·
              internal
      review of the executives’ compensation, both individually and relative to
      other officers; and·
              individual
      performance of the executive.
  Salary
levels are typically evaluated annually as part of the Company’s performance
review process as well as upon a promotion or other change in job
responsibility.
  Performance-Based
Incentive Compensation
  The
management incentive plan gives the Committee the latitude to design cash and
stock-based incentive compensation programs to promote high performance and
achievement of corporate goals, encourage the growth of stockholder value and
allow key employees to participate in the long-term growth and profitability of
the Company. So that stock-based compensation may continue to be a viable part
of the Company’s compensation strategy, management is currently seeking
shareholder approval of a proposal to increase the number of shares of Company
common stock reserved for issuance pursuant to the Company’s Stock
Plan.
  Ownership
Guidelines
  To
directly align the interests of the Board of Directors with the interests of the
stockholders, the Committee recommends that each Board member maintain a minimum
ownership interest in the Company. Currently, the Compensation Committee
recommends that each Board member own a minimum of 5,000 shares of the Company’s
common stock with such stock to be acquired within a reasonable time following
election to the Board.
  Stock
Option Program
  The Stock
Option Program assists the Company to:
  ·
              enhance
      the link between the creation of stockholder value and long-term executive
      incentive compensation;·
              provide
      an opportunity for increased equity ownership by executives;
      and·
              maintain
      competitive levels of total
compensation.
  Stock
option award levels will be determined based on market data and will vary among
participants based on their positions within the Company and are granted at the
Committee’s regularly scheduled meeting. We anticipate that options will be
awarded at the AMEX’s closing price of the Company’s Common Stock on the date of
the grant. As of March 31, 2008, we had not granted any stock options under our
Stock Plan.
   32
 Table of Contents
  Perquisites
and Other Personal Benefits
  The
Company provides some executive officers with perquisites and other personal
benefits that the Company and the Committee believe are reasonable and
consistent with its overall compensation program to better enable the Company to
attract and retain superior employees for key positions. The Committee
periodically reviews the levels of perquisites and other personal benefits
provided to named executive officers.
  Some
executive officers are provided use of company automobiles and all employees can
participate in the plans and programs described above.
  Each
employee of the Company is entitled to term life insurance, premiums for which
are paid by the Company. In addition, each employee is entitled to receive
certain medical and dental benefits and part of the cost is funded by the
employee.
  Accounting
and Tax Considerations
  The
Company’s stock option grant policy will be impacted by the implementation of
SFAS No. 123R, which was adopted in the first quarter of fiscal year 2006. Under
this accounting pronouncement, the Company is required to value unvested stock
options granted prior to the adoption of SFAS 123 under the fair value method
and expense those amounts in the income statement over the stock option’s
remaining vesting period.
  Section
162(m) of the Internal Revenue Code restricts deductibility of executive
compensation paid to the Company’s chief executive officer and each of the four
other most highly compensated executive officers holding office at the end of
any year to the extent such compensation exceeds $1,000,000 for any of such
officers in any year and does not qualify for an exception under Section 162(m)
or related regulations. The Committee’s policy is to qualify its executive
compensation for deductibility under applicable tax laws to the extent
practicable. In the future, the Committee will continue to evaluate the
advisability of qualifying its executive compensation for full
deductibility.
 
 Compensation
for Executive Officers of the Company
 
 Prior to
the acquisition of Sricon and TBL by the Company on March 8, 2008, we did not
pay any cash compensation to our executive officers or their affiliates except
as follows.   As described above in “Directors, Executive
Officers And Special Advisors of the Company – Director Compensation”, we pay
IGN, LLC, an affiliate of Mr. Mukunda, $4,000 per month for office space and
certain general and administrative services, an amount which is not intended as
compensation for Mr. Mukunda.   On or around November 27, 2006,
we engaged SJS Associates, an affiliate of Mr. Selvaraj, which provides the
services of Mr. John Selvaraj as our Treasurer.  We have agreed to pay
SJS Associates $5,000 per month for these services.  Mr. Selvaraj is
the Chief Executive Officer of SJS Associates.  Effective November 1,
2007 the Company and SJS Associates terminated the agreement.  We
subsequently entered into a new agreement with SJS Associates on identical terms
subsequent to the acquisition of Sricon and TBL. On May 22, 2008, the
Company and its subsidiary India Globalization Capital
Mauritius  (“IGC-M”) entered into an employment agreement (the
“Employment Agreement”) with Ram Mukunda, pursuant to which he will receive a
salary of $300,000 per year for services to IGC and IGC-M as Chief Executive
Officer.   The Employment Agreement was approved in May 2008 and
made effective as of March 8, 2008.  For fiscal year 2008, Mr. Mukunda
was paid $15,000.
 
 The
annual executive compensation for the Chief Executive Officer and Chief
Financial Officer of the Company is set out below.
  Summary
compensation of executive of Sricon
 FY
      2006
              
              
              FY
      2007
              
              
              FY
      2008Ram
      Mukunda
              
              $
              0
              
              
              $
              0
              
              
              $
              15,000
              (1)John
      Selvaraj (2)
              
              $
              0
              
              
              $
              15,000
              
              
              $
              35,000
              (3)
  (1)
              Excludes
      an additional $4,355 due to Mr. Mukunda for the period ended March 31,
      2008 as a result of the approval of his employment agreement in May 2008,
      which amount was paid to Mr. Mukunda in fiscal year
  2009.(2)
              Paid
      to Mr. Selvaraj’s affiliated company SJS Associates.(3)
              Excludes
      an additional $3,871 due to SJS Associates for the period ended March 31,
      2008 as a result of the approval of the new agreement with SJS Associates,
      which amount was paid to SJS Associates in fiscal year
    2009.
   33
 Table of Contents
  Compensation
for Executive Officers of Sricon
 
 The
annual executive compensation for the Chairman and Managing Director of Sricon
is set out below.  The USD amounts are shown at a conversion rate of
INR 40 to USD 1.
  Summary
compensation of executive of Sricon
 FY
      2006
              FY
      2007
              FY
      2008Mr.
      R Srivastava
              INR
      600,000
              INR
      600,000
              INR
      600,000USD
      15,000
              USD
      15,000
              USD
      15,000
 
 Compensation
for Executive Officers of TBL
 
 The
annual executive compensation for the Managing Director of TBL is set out
below.  The USD amounts are shown at a conversion rate of INR 40 to
USD 1.
  Summary
compensation of executive of TBL
 
  FY
      2006
              FY
      2007
              FY
      2008Mr.
      Jortin Antony
              INR
      480,000
              INR
      480,000
              INR
      480,000USD
      12,000
              USD
      12,000
              USD
      12,000
  Compensation
of Directors
  No
compensation was paid to the Company’s Board of Directors for the one-year
period ended March 31, 2008.
  Certain
Relationships and Related Transactions
  As of
March 31, 2008, there were no related party transactions other than the
agreements with IGN, an affiliate of Ram Mukunda, and SJS Associates, an
affiliate of John Selvaraj, described above. We are party to indemnification
agreements with each of the executive officers and directors. Such
indemnification agreements require us to indemnify these individuals to the
fullest extent permitted by law.
  Employment
Contracts
  Ram
Mukunda has served as President and Chief Executive Officer of the Company since
its inception.  The Company, IGC-M and Mr. Mukunda entered into the
Employment Agreement on May 22, 2008, which agreement was made effective as of
March 8, 2008, the date on which the Company completed its acquisition of Sricon
and TBL. A copy of this agreement was filed with the SEC in the Company’s Report
on Form 8-K filed May 23, 2008 and is incorporated here by
reference.
  Pursuant
to the agreement, the Company pays Mr. Mukunda a base salary of $300,000 per
year. Mr. Mukunda is also entitled to receive a $150,000 bonus upon filing of
the Company’s Form 10-K for the fiscal year ended March 31, 2008 and additional
bonuses of at least $225,000 for meeting certain targets for net income (before
one time charges including charges for employee options, warrants and other
items) for fiscal year 2009 and of at least $150,000 for meeting targets with
respect to obtaining new contracts.  The Agreement further provides
that the Board of Directors of the Company may review and update the targets and
amounts for the net revenue and contract bonuses on an annual
basis.  The Agreement also provides for benefits, including insurance,
20 days of paid vacation, a car (subject to partial reimbursement by Mr. Mukunda
of lease payments for the car) and reimbursement of business expenses. The term
of the Employment Agreement is five years, after which employment will become
at-will. The Employment Agreement is terminable by the Company and IGC-M for
death, disability and cause.  In the event of a termination without
cause, the Company would be required to pay Mr. Mukunda his full compensation
for 18 months or until the term of the Employment Agreement was set to expire,
whichever was earlier.
   34
 Table of Contents
  In
partial consideration for the equity shares in Sricon purchased by the Company,
pursuant to the terms of a Shareholders Agreement dated as of September 15, 2007
by and among IGC, Sricon and the Promoters or Sricon, the stockholders of Sricon
as of the date of the acquisition, including Ravindra Lal Srivastava, who
currently serves as the Chairman and Managing Director of Sricon, shall have the
right to receive up to an aggregate of 418,431 equity shares of Sricon over a
three-year period if Sricon achieves certain profit after tax targets for its
2008-2010 fiscal years.  The maximum number of shares the Promoters
may receive in any given fiscal year is 139,477 shares.  If Sricon’s
profits after taxes for a given fiscal year are less than 100% of the target for
that year but are equal to at least 85% of the target, the Promoters shall
receive a pro rated portion of the maximum share award for that fiscal
year.  A copy of this agreement was filed with the SEC in the
Company’s definitive proxy statement filed February 8, 2008 and is incorporated
here by reference.
 
 In
partial consideration for the equity shares in TBL purchased by the Company,
pursuant to the terms of a Shareholders Agreement dated as of September 16, 2007
by and among IGC, TBL and the Promoters of TBL, Jortin Anthony, who currently
serves as the Managing Director of TBL, shall have the right to
receive  up to an aggregate of 1,204,000 equity shares of TBL over a
five-year period if TBL achieves certain profit after tax targets for its
2008-2012 fiscal years.   The maximum number of shares Mr.
Anthony may receive is 140,800 shares for fiscal year 2008 and 265,800 shares
for each of the following fiscal years.  If TBL’s profits after taxes
for a given fiscal year are less than 100% of the target for that year but are
equal to at least 85% of the target Mr. Anthony shall receive a pro rated
portion of the maximum share award for that fiscal year.  A copy of
this agreement was filed with the SEC in the Company’s definitive proxy
statement filed February 8, 2008 and is incorporated here by
reference.
  Compensation
Committee Interlocks and Insider Participation
  A
Compensation Committee comprised of two independent members of the Board of
Directors, Ranga Krishna and Sudhakar Shenoy, and a non-independent director
Richard Prins administers executive compensation.  No executive
officer of the Company served as a director or member of the compensation
committee of any other entity.
  Item12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
 
 The
following table sets forth information regarding the beneficial ownership of our
common stock as of July 10, 2008 by:
 
 •
              each
      person known by us to be the beneficial owner of more than 5% of our
      outstanding shares of common stock;
  •
              each
      of our executive officers, directors and our special advisors;
      and
  •
              all
      of our officers and directors as a
group.
 
 Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and does not necessarily indicate beneficial ownership for
any other purpose. Under these rules, beneficial ownership includes those shares
of common stock over which the stockholder has sole or shared voting or
investment power. It also includes shares of common stock that the stockholder
has a right to acquire within 60 days through the exercise of any option,
warrant or other right. The percentage ownership of the outstanding common
stock, which is based upon 8,570,107 shares of common stock outstanding as of
May 29, 2008, is based on the assumption, expressly required by the rules of the
Securities and Exchange Commission, that only the person or entity whose
ownership is being reported has converted options or warrants into shares of our
common stock.
 
 Unless
otherwise indicated, we believe that all persons named in the table have sole
voting and investment power with respect to all shares of common stock
beneficially owned by them. Unless otherwise noted, the nature of the ownership
set forth in the table below is common stock of the Company.
 
 The table
below sets forth as of March 31, 2008, except as noted in the footnotes to the
table, certain information with respect to the beneficial ownership of the
Company’s Common Stock by (i) all persons known by the Company to be the
beneficial owners of more than 5% of the outstanding Common Stock of the
Company, (ii) each director and director-nominee of the Company, (iii) the
executive officers named in the Summary Compensation Table, and (iv) all such
executive officers and directors of the Company as a group.
   35
 Table of Contents
  Shares
      OwnedName and Address of Beneficial
      Owner(1)
              Number
      of Shares
              
              Percentage
      of ClassWachovia
      Corporation (2)
                One
      Wachovia Center
                Charlotte,
      North Carolina 28288-0137
              1,770,977
              
              
              20.66
              %Brightline
      Capital Management, LLC (3)
                1120
      Avenue of the Americas, Suite 1505
                New
      York, New York 10036
              750,000
              
              
              8.75
              %Pine River
      Capital Management L.P. (4)
                601
      Carlson Parkway, Suite 330
                Minnetonka,
      MN 55305
              2,099,800
              
              
              24.50
              %Steven
      Michael Oliveira (5)
                18
      Fieldstone Court
                New
      City, NY 10956
              3,348,093
              
              
              33.62
              %Steven
      S. Taylor, Jr. (6)
                1376
      N. Doheny Drive
                Los
      Angeles, CA 90069
              815,390
              
              
              8.71
              %Professional
      Offshore Opportunity Fund, Ltd. (7)
                1400
      Old Country Road, Suite 206
                Westbury,
      New York 11590
              452,267
              
              
              5.28
              %Ranga
      Krishna (8)
              2,460,977
              
              
              27.78
              %Ram
      Mukunda (9)
              1,775,002
              
              
              20.55
              %Sudhakar
      Shenoy
              50,000
              
              
              *Suhail
      Nathani
              50,000
              
              
              *Larry
      Pressler
              25,000
              
              
              *P.G.
      Kakodkar
              12,500
              
              
              *Shakti
      Sinha
              12,500
              
              
              *Dr.
      Prabuddha Ganguli
              12,500
              
              
              *Dr.
      Anil K. Gupta
              25,000
              
              
              *All
      Executive Officers and Directors as a group (6 persons)(10)
              4,335,979
              
              
              48.57
              %
 
 *
Represents less than 1%
   36
 Table of Contents
  (1)
              Unless
      otherwise indicated, the address of each of the individuals listed in the
      table is: c/o India Globalization Capital, Inc., 4336 Montgomery Avenue,
      Bethesda, MD 20814.(2)
              Based
      on a Schedule 13G filed with the SEC on July 10, 2008 by Wachovia
      Corporation.   Wachovia Corporation is the direct parent of
      Wachovia Bank, NA, the owner of the shares.  Dr. Ranga Krishna
      is entitled to 100% of the economic benefits of the
  shares.(3)
              Based
      on an amended Schedule 13G jointly filed with the SEC on May 28, 2008 by
      Brightline Capital Management, LLC (“Management”), Brightline Capital
      Partners, LP (“Partners”), Brightline GP, LLC (“GP”), Nick Khera (“Khera”)
      and Edward B. Smith, III (“Smith”).  As disclosed in the amended
      Schedule 13G, Management and Khera are each the beneficial owners of
      750,000 shares of common stock (8.75%), Smith is the beneficial owner of
      1,031,500 shares of common stock (12.04%) including 281,500 shares over
      which he holds sole control of their voting and disposition, and Partners
      and GP are each the beneficial owners of 592,560 shares of common stock
      (6.91%), respectively.  The address for
      each of the foregoing parties is 1120 Avenue of the Americas, Suite 1505,
      New York, New York 10036.(4)
              Based
      on a Schedule 13G jointly filed with the SEC on July 8, 2008 by Pine River
      Capital Management L.P. (“Pine River”),  Brian Taylor
      (“Taylor”) and Nisswa Master Fund Ltd. (“Nisswa”).  As disclosed
      in the Schedule 13G, Pine River and Taylor are each the beneficial
      owners of 2,099,800 shares of common stock  (24.50%) and Nisswa is
      the beneficial owner of 1,284,300 shares of common
      stock  (14.99%), respectively.  The address for
      each of the foregoing parties is c/o Pine River Capital Management
      L.P., 601 Carlson Parkway, Suite 330, Minnetonka,
      MN 55305.(5)
              Includes
      warrants to purchase 1,389,320 shares of common stock which are
      exercisable within sixty (60) days of July 10, 2008, all of which are
      currently exercisable.  Includes  1,000,000 shares
      required to be transferred to Mr. Oliveira by Ranga Krishna, Ram Mukunda,
      John Cherin and Ferris, Baker Watts, Incorporated on September 8, 2008
      pursuant to the terms of a certain Share Redistribution Agreement dated
      March 7, 2008.  Mr. Oliveira holds the shares and warrants
      through Oliveira Capital, LLC (“Capital”) and the Steven Oliveira IRA (the
      “IRA”).  Mr. Oliveira is President and sole managing member of
      Capital and trustee of the IRA.  The business address of Capital
      is 18 Fieldstone Court, New City, NY 10956.(6)
              Based
      on an amended Schedule 13D filed with the SEC on June 4, 2008 by Mr.
      Taylor.  Includes warrants to purchase 795,390 shares of common
      stock which are exercisable within sixty (60) days of July 10, 2008, all
      of which are currently exercisable.   Includes 5,000 shares
      of common stock and 444,431 warrants held by Mr. Taylor in an individual
      retirement account for his benefit.(7)
              Based
      on a Schedule 13G filed with the SEC on June 4, 2008 by Professional
      Offshore Opportunity Fund, Ltd.
  (8)
              Includes
      236,450 shares required to be transferred by Dr. Krishna to third parties
      on September 8, 2008 pursuant to the terms of certain Share Redistribution
      Agreements and includes warrants to purchase 290,000 shares of common
      stock which are exercisable within sixty (60) days of July 10, 2008, all
      of which are currently exercisable.  Includes 1770,977 shares
      beneficially owned by Wachovia Corporation, which has sole voting and
      dispositive control over the shares.   Dr. Krishnais entitled to
      100% of the economic benefits of the shares.  Giving effect to
      the share transfer, Dr. Krishna would be the beneficial owner
      of  2,224,527 shares
(25.11%).
 (9)
              Includes
      425,000 shares owned by Mr. Mukunda’s wife, Parveen
      Mukunda.   Includes 1,131,581 shares required to be
      transferred by Mr. Mukunda to third parties on September 8, 2008 pursuant
      to the terms of certain Share Redistribution Agreements and includes
      warrants to purchase 66,668 shares of common stock which are exercisable
      within sixty (60) days of July 10, 2008, all of which are currently
      exercisable.  Giving effect to the share transfer, Mr. Mukunda
      would be the beneficial owner of 643,421 shares
    (7.45%).(10)
              Includes
      1770,977 shares beneficially owned by Wachovia Corporation, which has sole
      voting and dispositive control over the shares.   Dr.
      Krishnais
      entitled to 100% of the economic benefits of the shares and 425,000 shares
      owned by Mr. Mukunda’s wife, Parveen Mukunda.  Includes
      1,368,031 shares required to be transferred by Mr. Mukunda and Dr. Krishna
      to third parties on September 8, 2008 and includes warrants to purchase
      356,668 shares of common stock which are exercisable within sixty (60)
      days of July 10, 2008, all of which are currently
      exercisable.  Giving effect to the share transfers to be made by
      Dr. Krishna and Mr. Mukunda, the executive officers and directors would be
      the beneficial owners of 2,967,948 shares
  (33.25%).
 
 Messrs.
Mukunda and Krishna may be deemed our “parent,” “founder” and “promoter,” as
these terms are defined under the Federal securities laws.
 
 
 37
 Table of Contents
  Securities
Authorized for Issuance Under Equity Compensation Plans
 
 As of
March 31, 2008 there were 300,000 shares authorized for issuance under the 2008
Omnibus Incentive Plan.  No shares or options have been granted as of
the date of this filing.
 
 Item13. Certain Relationships and Related Transactions, and
Director Independence
  Review,
Approval or Ratification of Related Party Transactions
 
 We do not
maintain a formal written procedure for the review and approval of transactions
with related persons.  It is our policy for the disinterested members
of our board to review all related party transactions on a case-by-case
basis.  To receive approval, a related-party transaction must have a
business purpose for IGC and be on terms that are fair and reasonable to IGC and
as favorable to IGC as would be available from non-related entities in
comparable transactions.
 
 Prior
Share Issuances
 
 On May 5,
2005, we issued 1,750,000 shares for an aggregate consideration of $17,500 in
cash, at an average purchase price of approximately $.01 per share, as
follows:
  Name
                
                Number
      of Shares (1)
                
                Relationship
      to UsDr.
      Ranga Krishna
                
                
                250,000
                
                Chairman
      of the BoardRam
      Mukunda
                
                
                1,250,000
                
                Chief
      Executive Officer, President and DirectorJohn
      Cherin
                
                
                250,000
                
                Chief
      Financial Officer and Director
(2)
 
 On June
20, 2005, we issued 750,000 shares for an aggregate consideration of $7,500 in
cash, at a purchase price of approximately $.01 per share, as
follows:
 
 Name
                
                Number
      of Shares (1) (3)
      (4)
                
                Relationship
      to UsParveen
      Mukunda (5)
                
                
                425,000
                
                SecretarySudhakar
      Shenoy
                
                
                37,500
                
                DirectorSuhail
      Nathani
                
                
                37,500
                
                DirectorShakti
      Sinha
                
                
                12,500
                
                Special
      AdvisorPrabuddha
      Ganguli
                
                
                12,500
                
                Special
      AdvisorAnil
      K. Gupta
                
                
                25,000
                
                Special
      Advisor
 
 (1)         The
share numbers and per share purchase prices in this section reflect the effects
of a 1-for-2 reverse split effected September 29, 2005.
 
 (2)         John
Cherin resigned as our CFO, Treasurer, and Director on November 27,
2006.
 
 (3)         The
shares were issued to our officers, directors and Special Advisors in
consideration of services rendered or to be rendered to us.
 
 (4)         On
September 7, 2005, one stockholder surrendered to us 62,500 shares, and on
February 3, 2006, a stockholder surrendered to us 137,500 shares. These were
reissued as set forth below.
 
 (5)         Parveen
Mukunda is the wife of Ram Mukunda.
   38
 Table of Contents
 
 On
February 3, 2006, we reissued the 200,000 shares for an aggregate consideration
of $2,000 in cash at a price of approximately $.01 per share as
follows:
 Name
                
                Number
      of Shares
                
                Relationship
      to UsDr.
      Ranga Krishna
                
                
                100,000
                
                Chairman
      of the BoardJohn
      Cherin
                
                
                37,500
                
                Chief
      Financial Officer, Treasurer and DirectorLarry
      Pressler
                
                
                25,000
                
                Special
      AdvisorP.G.
      Kakodkar
                
                
                12,500
                
                Special
      AdvisorSudhakar
      Shenoy
                
                
                12,500
                
                DirectorSuhail
      Nathani
                
                
                12,500
                
                Director
  The
holders of the majority of these shares will be entitled to make up to two
demands that we register these shares pursuant to an agreement to be signed
prior to or on the date of this prospectus. The holders of the majority of these
shares can elect to exercise these registration rights at any time after the
date on which the lock-up period expires. In addition, these stockholders have
certain “piggy-back” registration rights on registration statements filed
subsequent to such date. We will bear the expenses incurred in connection with
the filing of any such registration statements.
 
 Mr.
Mukunda and certain of our other officers and directors collectively purchased
in the aggregate 170,000 units in a private placement immediately prior to the
IPO of IGC’s units at a price equal to the offering price of the IPO, $6.00 per
unit.
 
 Dr.
Krishna, our Chairman of the Board, entered into a Note Purchase Agreement with
us pursuant to which we agreed to issue him 446,226 shares of our common stock
within 10 days of the consummation of the Acquisition as partial consideration
for a $4,300,000 loan made by Dr. Krishna to the Company.   Pursuant to the
consummation of the Acquisitions, Dr. Krishna was issued the
shares.  These shares are entitled to the registration rights
described above.
 
 On March
7, 2008 Messrs. Mukunda and Krishna entered into an agreement with third parties
to transfer on September 8, 2008 pursuant to the terms of certain Share
Redistribution Agreements an aggregate of 1,368,031
shares.  Specifically, Mr. Mukunda agreed to transfer 1,131,581 shares
and Dr. Krishna agreed to transfer 236,450 shares.   The purpose
of the agreements were to induce such third parties to acquire shares of the
Company's common stock and to cause such shares to be voted in favor of the
Company’s acquisition.
 
 As of
March 31, 2008, there were no related party transactions other than the
agreements with IGN, an affiliate of Ram Mukunda, and SJS Associates, an
affiliate of John Selvaraj. We are party to indemnification agreements with each
of the executive officers and directors. Such indemnification agreements require
us to indemnify these individuals to the fullest extent permitted by
law.
  Director
Independence
 
 We are
listed on an exchange that requires its listed companies to have independent
directors.  The Board of Directors has made the determination that
Messrs. Krishna, Shenoy and Nathani are independent directors
  Messrs.
Mukunda and Krishna may be deemed to be our “parent,” “founder” and “promoter,”
as these terms are defined under the Federal securities laws.
  Item14. Principal Accountant Fees and Services.
 
 Effective
May 5, 2008.  The Firm of Yoganandh & Ram (“Y & R”), Chartered
Accountants, independent registered public accounting firm, in India, registered
with the Public Company Accounting Oversight Board (PCAOB) acts as our principal
accountant.
 
 The
balance sheets of Sricon as of March 31, 2007 and 2006, and the related
statements of income, changes in stockholders’ equity and cash flows for the
periods ended March 31, 2007, 2006 and 2005, included in our proxy statement,
were audited by Y & R.  The balance sheets of TBL as of March 31,
2007 and 2006, and the related statements of income, changes in stockholders’
equity and cash flows for the periods ended March 31, 2007, 2006 and 2005,
included in our proxy statement, were also audited by Y & R.
 
 Through
January 25, 2008, the firm of Goldstein Golub Kessler LLP (“GGK”) acted as our
principal accountant. On January 25, 2008 we were notified by GGK that their
partners had become partners of McGladrey and Pullen, LLP (“McGladrey”), and we
engaged McGladrey as our new principal accountant.  On March 7, 2008
IGC’s shareholders approved the acquisitions of Sricon and TBL.  With
these acquisitions, most of our operations are now based in India and our Board
of Directors made the decision to retain an auditor based in
India.  Effective May 5, 2008, the Audit Committee of IGC dismissed
McGladrey and appointed Y & R.
   39
 Table of Contents
  Audit Related and
Other Fees
 
 The Audit
and other fees paid are below:
 
 March
      31, 2007
                
                
                March
      31, 2008Audit
      Fees – GGK
                
                $
                84,725
                
                
                
                65,019Audit
      Fees – McGladrey
                
                
                0
                
                
                
                31,343Audit
      Related Fees
                
                
                0
                
                
                
                0Tax
      Fees (1)
                
                
                3,837
                
                
                
                5,095All
      other Fees (2)
                
                
                0
                
                
                
                0Total
                
                $
                88,562
                
                
                
                101,457
 
 (1) Tax
Fees relate to tax compliance, tax planning and advice.  These
services include tax return preparation and advice on state and local tax
issues.
 
 (2) There
were no services rendered other than those identified in the above
categories.
 
 Prior to
FYE 2008 Y&R did not render any services, including audit, tax, and others
to IGC, IGC-M, Sricon, TBL or any related company of ours.  The Audit
and other Fees paid to Y&R on a consolidated basis are set out
below:
  March
      31, 2007
                
                
                March
      31, 2008Audit
      Fees
                
                $
                0.0
                
                
                
                60,684Audit
      Related Fees
                
                
                0.0
                
                
                
                0Tax
      Fees (1)
                
                
                0.0
                
                
                
                0All
      other Fees (2)
                
                
                0.0
                
                
                
                0Total
                
                $
                0.0
                
                
                
                60,684
 
 (1)
Y&R did not render any tax planning or advise.
 
 (2) There
were no services rendered other than those identified in the above
categories.
  Audit
Committee Approval
  Policy on Pre-Approval of Audit and Permissible
Non-audit Services of Independent Auditors
  Consistent with SEC policies regarding auditor
independence,  the audit committee of our board of directors has
responsibility for appointing, setting compensation and overseeing the work of
the independent auditor. In recognition of this responsibility, our board of
directors has established a policy to pre-approve all audit and permissible
non-audit services provided by the independent auditor.
  Prior to
engagement of the independent auditor for the next year’s audit, management will
submit an aggregate of services expected to be rendered during that year for
each of the following four categories of services to our audit committee for
approval.
  1. Audit services include
audit work performed in the preparation of financial statements, as well as work
that generally only the independent auditor can reasonably be expected to
provide, including comfort letters, statutory audits, and attest services and
consultation regarding financial accounting and/or reporting
standards.
  2. Audit-Related services
are for assurance and related services that are traditionally performed by the
independent auditor, including due diligence related to mergers and
acquisitions, employee benefit plan audits, and special procedures required to
meet certain regulatory requirements.
  3. Tax services include all
services performed by the independent auditor’s tax personnel except those
services specifically related to the audit of the financial statements, and
includes fees in the areas of tax compliance, tax planning, and tax
advice.
  Other Fees are those
associated with services not captured in the other
categories.
  Prior to
engagement, our audit committee pre-approves these services by category of
service. The fees are budgeted and our audit committee requires the independent
auditor and management to report actual fees versus the budget periodically
throughout the year by category of service. During the year, circumstances may
arise when it may become necessary to engage the independent auditor for
additional services not contemplated in the original pre-approval. In those
instances, our audit committee requires specific pre-approval before engaging
the independent auditor.
  Our audit
committee may delegate pre-approval authority to one or more of its members. The
member to whom such authority is delegated must report, for informational
purposes only, any pre-approval decisions to our board of directors at its next
scheduled meeting.
  40
 Table of Contents
  PART
IV
 Item15. Exhibits
  The
following exhibits are filed as part of, or are incorporated by reference into,
this report:
 
 (a)
Financial Statements
 
 Our
financial statements as set forth in the Index to Financial Statements attached
hereto commencing on page F-1 are hereby incorporated by reference.
 
 (b)
Exhibits.
  The
exhibits listed in the accompanying index to exhibits are filed or incorporated
by reference as part of this Annual Report on Form 10-K.
  3.1
                  
                  Amended
      and Restated Articles of Incorporation. (1)3.2
                  
                  By-laws.
      (2)4.1
                  
                  Specimen
      Unit Certificate. (3)4.2
                  
                  Specimen
      Common Stock Certificate. (3)4.3
                  
                  Specimen
      Warrant Certificate. (3)4.4
                  
                  Form
      of Warrant Agreement between Continental Stock Transfer & Trust
      Company and the Registrant. (1)4.5
                  
                  Form
      of Purchase Option to be granted to the Representative.
  (1)10.1
                  
                  Amended
      and Restated Letter Agreement between the Registrant, Ferris, Baker Watts,
      Inc. and Ram Mukunda. (4)10.2
                  
                  Amended
      and Restated Letter Agreement between the Registrant, Ferris, Baker Watts,
      Inc. and John Cherin. (4)10.3
                  
                  Amended
      and Restated Letter Agreement between the Registrant, Ferris, Baker Watts,
      Inc. and Ranga Krishna. (4)10.4
                  
                  Form
      of Investment Management Trust Agreement between Continental Stock
      Transfer & Trust Company and the Registrant. (5)10.5
                  
                  Promissory
      Note issued by the Registrant to Ram Mukunda. (2)10.5.1
                  
                  Extension
      of Due Date of Promissory Note issued to Ram Mukunda.
  (2)10.6
                  
                  Form
      of Stock and Unit Escrow Agreement among the Registrant, Ram Mukunda, John
      Cherin and Continental Stock Transfer & Trust Company.
    (2)10.7
                  
                  Form
      of Registration Rights Agreement among the Registrant and each of the
      existing stockholders. (3)10.8
                  
                  Form
      of Unit Purchase Agreement among Ferris, Baker Watts, Inc. and one or more
      of the Initial Stockholders. (5)10.9
                  
                  Form
      of Office Service Agreement between the Registrant and Integrated Global
      Networks, LLC. (5)10.10
                  
                  Amended
      and Restated Letter Advisory Agreement between the Registrant, Ferris,
      Baker Watts, Inc. and SG Americas Securities, LLC. (5)10.11
                  
                  Form
      of Letter Agreement between Ferris, Baker Watts, Inc. and certain officers
      and directors of the Registrant. (4)10.12
                  
                  Form
      of Letter Agreement between Ferris, Baker Watts, Inc. and each of the
      Special Advisors of the Registrant. (4)10.13
                  
                  Form
      of Letter Agreement between the Registrant and certain officers and
      directors of the Registrant. (4)10.14
                  
                  Form
      of Letter Agreement between the Registrant and each of the Special
      Advisors of the Registrant. (4)10.15
                  
                  Promissory
      Note issued by the Registrant to Ranga Krishna. (2)10.15.1
                  
                  Extension
      of Due Date of Promissory Note issued to Ranga Krishna.
  (2)10.16
                  
                  Form
      of Promissory Note to be issued by the Registrant to Ranga Krishna.
      (2)10.17
                  
                  Share
      Subscription Cum Purchase Agreement dated February 2, 2007 by and
      among India Globalization Capital, Inc., MBL Infrastructures Limited and
      the persons “named as Promoters therein”. (6)10.18
                  
                  Debenture
      Subscription Agreement dated February 2, 2007 by and among India
      Globalization Capital, Inc., MBL Infrastructures Limited and the persons
      named as Promoters therein. (6)10.19
                  
                  Note
      and Warrant Purchase Agreement dated February 5, 2007 by and among
      India Globalization Capital, Inc. and Oliviera Capital, LLC.
      (6)10.20
                  
                  Promissory
      Note dated February 5, 2007 in the initial principal amount for
      $3,000,000 issued by India Globalization Capital, Inc. to Oliviera
      Capital, LLC. (6)10.21
                  
                  Warrant
      to Purchase Shares of Common Stock of India Globalization Capital, Inc.
      issued by India Globalization Capital, Inc. to Oliviera Capital, LLC.
      (6)10.22
                  
                  First
      Amendment to Share Subscription Cum Purchase Agreement dated February 2,
      2007 by and among India Globalization Capital, Inc., MBL Infrastructures
      Limited and the persons named as Promoters therein. (7)10.23
                  
                  First
      Amendment to the Debenture Subscription Agreement dated February 2, 2007
      by and among India Globalization Capital, Inc., MBL Infrastructures
      Limited and the persons named as Promoters therein. (7)10.24
                  
                  Contract
      Agreement dated April 29, 2007 between IGC, CWEL, AMTL and MAIL.
      (7)10.25
                  
                  First
      Amendment dated August 20, 2007 to Agreement dated April 29, 2007 between
      IGC, CWEL, AMTL and MAIL. (8)10.26
                  
                  Share
      Subscription Cum Purchase Agreement dated September 16, 2007 by and among
      India Globalization Capital, Inc., Techni Barathi Limited and the persons
      named as Promoters therein (9).10.27
                  
                  Shareholders
      Agreement dated September 16, 2007 by and among India Globalization
      Capital, Inc., Techni Barathi Limited and the persons named as Promoters
      therein. (9)10.28
                  
                  Share
      Purchase Agreement dated September 21, 2007 by and between India
      Globalization Capital, Inc. and Odeon Limited. (9)10.29
                  
                  Share
      Subscription Cum Purchase Agreement dated September 15, 2007 by and among
      India Globalization Capital, Inc.,  Sricon Infrastructure
      Private Limited and the persons named as Promoters therein.
      (9)10.30
                  
                  Shareholders
      Agreement dated September 15, 2007 by and among India Globalization
      Capital, Inc.,  Sricon Infrastructure Private Limited and the
      persons named as Promoters therein. (9)10.31
                  
                  Form
      of Amendment to the Share Subscription Cum Purchase Agreement Dated
      September 15, 2007, entered into on December 19, 2007 by and among India
      Globalization Capital, Inc., Sricon Infrastructure Private Limited and the
      persons named as Promoters therein.
(10)
 10.32
                  
                  Form
      of Amendment to the Share Subscription Agreement Dated September 16, 2007,
      entered into on December 21, 2007 by and among India Globalization
      Capital, Inc., Techni Bharathi Limited and the persons named as Promoters
      therein. (10)10.33
                  
                  Note
      Purchase Agreement, effective as of December 24, 2007, by and among India
      Globalization Capital, Inc. and the persons named as Lenders therein.
      (10)10.34
                  
                  Form
      of India Globalization Capital, Inc. Promissory Note.
  (10)
 10.35
                  
                  Form
      of Registration Rights Agreement by and among India Globalization Capital,
      Inc. and the persons named as Investors therein. (10)10.36
                  
                  Form
      of Pledge Agreement, effective as of December 24, 2007, by and among India
      Globalization Capital, Inc. and thepersons  named
      as Secured Parties therein. (10)10.37
                  
                  Form
      of Lock up Letter Agreement, dated December 24, 2007 by and between India
      Globalization Capital, Inc.and Dr. Ranga
      Krishna. (10)10.38
                  
                  Form
      of Letter Agreement, dated December 24, 2007, with Dr. Ranga Krishna.
      (10)10.39
                  
                  Form
      of Letter Agreement, dated December 24, 2007, with Oliveira Capital, LLC.
      (10)10.40
                  
                  Form
      of Warrant Clarification Agreement, dated January 4, 2008, by and between
      the Company and Continental Stock Transfer & Trust Company.
      (11)10.41
                  
                  Form
      of Amendment to Unit Purchase Options, dated January 4, 2008, by and
      between the Company and the holders of Unit Purchase Options.
      (11)10.42
                  
                  Second
      Amendment to the Share Subscription Cum Purchase Agreement Dated September
      15, 2007, entered into on January 14, 2008 by and among India
      Globalization Capital, Inc., Sricon Infrastructure Private Limited and the
      persons named as Promoters therein. (12)10.43
                  
                  Letter
      Agreement dated January 8, 2008 by and among India Globalization Capital,
      Inc., Odeon Limited, and Techni Bhararti Limited with respect to the Share
      Purchase Agreement dated September 21, 2007 by and among India
      Globalization Capital, Inc. and  Odeon Limited.
  (12)10.44
                  
                  Employment
      Agreement between India Globalization Capital, Inc., India Globalization
      Capital Mauritius and Ram Mukunda dated as of March 8, 2008.
      (13)10.45
                  
                  2008
      Omnibus Incentive Plan. (14)31.1
                  
                  Certificate
      pursuant to 17 CFR 240.13a-14(a).31.2
                  
                  Certificate
      pursuant to 17 CFR 240.13a-14(a).32.1
                  
                  Certificate
      pursuant to 18 U.S.C. § 1350.32.2
                  
                  Certificate
      pursuant to 18 U.S.C. § 1350.
 
 (1)
                  Incorporated
      by reference to the Registrant’s Registration Statement on Form S-1 (SEC
      File No. 333-124942), as amended and filed on September 22,
      2006.
 (2)
                  Incorporated
      by reference to the Registrant’s Registration Statement on Form S-1 (SEC
      File No. 333-124942), as amended and filed on February 14,
      2006.
 (3)
                  Incorporated
      by reference to the Registrant’s Registration Statement on Form S-1 (SEC
      File No. 333-124942), as originally filed on May 13,
  2005.
 (4)
                  Incorporated
      by reference to the Registrant’s Registration Statement on Form S-1 (SEC
      File No. 333-124942), as amended and filed on July 11,
    2005.
 (5)
                  Incorporated
      by reference to the Registrant’s Registration Statement on Form S-1 (SEC
      File No. 333-124942), as amended and filed on March 2,
    2006.
 (6)
                  Incorporated
      by reference to the Registrant’s Current Report on Form 8-K (SEC File No.
      333-124942), as originally filed on February 12,
  2007.
 (7)
                  Incorporated
      by reference to the Registrant’s Current Report on Form 8-K (SEC File No.
      333-124942), as originally filed on May 2, 2007.(8)
                  Incorporated
      by reference to the Registrant’s Current Report on Form 8-K (SEC File No.
      333-124942), as originally filed on August 23, 2007.(9)
                  Incorporated
      by reference to the Registrant’s Current Report on Form 8-K (SEC File No.
      333-124942), as originally filed on September 27, 2007.(10)
                  Incorporated
      by reference to the Registrant’s Current Report on Form 8-K (SEC File No.
      333-124942), as originally filed on December 27, 2007.(11)
                  Incorporated
      by reference to the Registrant’s Current Report on Form 8-K (SEC File No.
      333-124942), as originally filed on January 7, 2008.(12)
                  Incorporated
      by reference to the Registrant’s Current Report on Form 8-K (SEC File No.
      333-124942), as originally filed on January 16, 2008.(13)
                  Incorporated
      by reference to the Registrant’s Current Report on Form 8-K (SEC File No.
      333-124942), as originally filed on May 23, 2008.(14)
                  Incorporated
      by reference to the Registrant’s Definitive Proxy Statement on Schedule
      14A (SEC File No. 333-124942), as originally filed on February 8,
      2008.


41
 Table of Contents




SIGNATURES
  In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
   INDIA GLOBALIZATION CAPITAL,
      INC.Date:
      July 15, 2008
              By:
              /s/ Ram
      MukundaRam
      MukundaChief
      Executive Officer and President (Principal Executive
    Officer)
  Date:
      July 15, 2008
              By:
              /s/ John
      B.
      SelvarajJohn
      B. SelvarajTreasurer,
      Principal Financial and Accounting Officer
  In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
 
 Date:
      July 15, 2008
              By:
              /s/ Dr.
      Ranga
      KrishnaDr.
      Ranga KrishnaDirector
  Date:
      July 15, 2008
              By:
              /s/ Sudhakar
      ShenoySudhakar
      ShenoyDirector
  Date:
      July 15, 2008
              By:
              /s/ Ram
      Mukunda,Ram
      MukundaDirector
  Date:
      July 15, 2008
              By:
              /s/ Richard
      PrinsRichard
      PrinsDirector
   42
 Table of Contents