UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 
 
 
 FORM
10-Q
 
 
 
 
 þ
              
              Quarterly
      report pursuant to Section 13 or 15(d) of the Securities Exchange Act
      of 1934.For
      the quarterly period ended September 30,
      2009
 
 o
              
              Transition
      report under Section 13 or 15(d) of the Exchange Act of
      1934.
 
 Commission
file number000-1326205
 
 INDIA
GLOBALIZATION CAPITAL, INC.
 (Exact
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
              NYSE
      Amexand
      two WarrantsCommon
      Stock
              NYSE
      AmexCommon
      Stock Purchase Warrants
              NYSE
      Amex
 
 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
 
 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
 
 Indicate
the number of shares outstanding for each of the issuer’s classes of common
equity as of the latest practicable date.
 
 
 Class
              Shares Outstanding as of October 12,
      2009Common
      Stock, $.0001 Par Value
              12,363,991
 
 1
 Table of Contents





India
Globalization Capital
 QUARTERLY
REPORT ON FORM
10-Q
 FOR
THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009
 
 Table of
Contents
 
 
 PagePART
      I – FINANCIAL INFORMATIONItem
      1.
              Financial
      Statements
              3Consolidated Balance Sheets as of September 30, 2009
      (unaudited) and March 31, 2009
              3Consolidated Statements of Operations (unaudited) for the
      three months ended September 30, 2009 and 2008.
              4Consolidated
      Statements of Operations (unaudited) for the six months ended September
      30, 2009 and 2008.
              5Consolidated Statements of
      Comprehensive income (loss) for the three and  six months ended
      September 30, 2009 and 2008 (unaudited)
              6Consolidated
      Statements of Stockholders (Deficit) Equity for the three months ended
      September 30, 2009 (unaudited)
              6Consolidated Statements of Cash Flows (unaudited) for the six
      months ended September 30, 2009 and 2008
              7Notes to
      Consolidated Financial Statements (unaudited)
              8Item
      2.
              Management’s
      Discussion and Analysis
              17Item
      3.
              Quantitative and
      Qualitative Disclosures About Market Risk
              25Item
      4.
              Controls and
      Procedures
              25PART
      II – OTHER INFORMATIONItem
      1.
              Legal
      Proceedings
              26Item
      2.
              Unregistered Sales
      of Equity Securities and Use of Proceeds
              26Item
      3.
              Defaults Upon
      Senior Securities
              26Item
      4.
              Submission of
      Matters to a Vote of Security Holders
              26Item
      5.
              Other
      Information
              26Item
      6.
              Exhibits
              2626Signatures27
   2
 Table of Contents
 
 PART
I  - Financial Information
 
 Item 1.Financial Statements
 
 India Globalization Capital, Inc.
 CONSOLIDATED
BALANCE SHEETS
 
 September
      30,
                2009
                (unaudited)
              
              
              March
      31,
                2009
                (audited)ASSETSCurrent
      Assets:Cash
      and cash equivalents
              
              $
              2,434,656
              
              
              $
              2,129,365Accounts
      Receivable
              
              
              9,455,722
              
              
              
              9,307,088Unbilled
      Receivables
              
              
              2,547,743
              
              
              
              2,759,632Inventories
              
              
              2,309,029
              
              
              
              2,121,837Prepaid
      taxes
              
              
              88,683
              
              
              
              88,683Restricted
      cash
              
              
              273,643Prepaid
      expenses and other current assets
              
              
              2,795,900
              
              
              
              2,801,148Due
      from related parties
              
              
              294,919
              
              
              
              290,831Total
      Current Assets
              
              
              20,200,295
              
              
              
              19,498,584Property
      and equipment, net
              
              
              6,749,647
              
              
              
              6,601,394Accounts
      Receivable – Long Term
              
              
              2,929,279
              
              
              
              2,769,196Goodwill
              
              
              17,483,501
              
              
              
              17,483,501Investment
              
              
              74,833
              
              
              
              70,743Deposits
      towards acquisitions
              
              
              261,479
              
              
              
              261,479Restricted
      cash, non-current
              
              
              1,635,102
              
              
              
              1,430,137Deferred
      tax assets, net of valuation allowance
              
              
              852,673
              
              
              
              898,792Other
      Assets
              
              
              3,007,476
              
              
              
              2,818,687Total
      Assets
              
              $
              53,194,285
              
              
              $
              51,832,513LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      Liabilities:Short-term
      borrowings and current portion of long-term debt
              
              $
              3,418,063
              
              
              $
              3,422,239Trade
      payables
              
              
              694,534
              
              
              
              462,354Advance
      from Customers
              
              
              217,970
              
              
              
              206,058Accrued
      expenses
              
              
              640,326
              
              
              
              555,741Taxes
      payable
              
              
              76,569
              
              
              
              76,569Notes
      Payable to Oliveira Capital, LLC
              
              
              2,000,000
              
              
              
              1,517,328Due
      to related parties
              
              
              1,285,046
              
              
              
              1,214,685Other
      current liabilities
              
              
              1,291,048
              
              
              
              1,991,371Total
      current liabilities
              
              $
              9,623,556
              
              
              $
              9,446,345Long-term
      debt, net of current portion
              
              
              812,191
              
              
              
              1,497,458Deferred
      taxes on income
              
              
              653,588
              
              
              
              590,159Other
      liabilities
              
              
              2,326,496
              
              
              
              2,440,676Total
      Liabilities
              
              $
              13,415,831
              
              
              $
              13,974,638Minority
      Interest
              
              
              14,327,631
              
              
              
              14,262,606COMMITMENTS
      AND CONTINGENCYSTOCKHOLDERS’
      EQUITYCommon
      stock — $.0001 par value; 75,000,000 shares authorized; 11,783,991 issued
      and outstanding at September 30, 2009 and 10,091,171 issued and
      outstanding at March 31, 2009.
              
              
              1,179
              
              
              
              1,009Additional
      paid-in capital
              
              
              34,968,817
              
              
              
              33,186,530Retained
      Earnings (Deficit)
              
              
              (5,778,878
              )
              
              
              (4,662,689
              )Accumulated
      other comprehensive (loss) income
              
              
              (3,740,295
              )
              
              
              (4,929,581
              )Total
      stockholders’ equity
              
              
              25,450,823
              
              
              
              23,595,269Total
      liabilities and stockholders’ equity
              
              $
              53,194,285
              
              
              $
              51,832,513
 
 The
accompanying notes should be read in connection with the financial
statements.
  3
 Table of Contents
 
 IndiaGlobalization Capital, Inc.
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (unaudited)
 
 Three
      Months
              
              
              Three
      MonthsEnded
              
              
              EndedSeptember
      30, 2009
              
              
              September
      30, 2008Revenues:
              
              $
              5,362,138
              
              
              $
              10,498,870Cost
      of revenues:
              
              
              (4,710,718
              )
              
              
              (7,890,252
              )Gross
      Profit
              
              
              651,420
              
              
              
              2,608,618Selling,
      General and Administrative
              
              
              (665,720
              )
              
              
              (1,141,751
              )Depreciation
              
              
              (209,479
              )
              
              
              (235,725
              )Total
      operating expenses
              
              
              (875,199
              )
              
              
              (1,377,476
              )Operating
      income (loss)
              
              
              (223,779
              )
              
              
              1,231,142Other
      income (expense):Interest
      and miscellaneous income
              
              
              38,994
              
              
              
              57,520Interest
      expense
              
              
              (355,586
              )
              
              
              (327,775
              )Total
      other income (expense)
              
              
              (316,592
              )
              
              
              (270,255
              )Income
      (loss) before provision for income taxes
              
              
              (540,371
              )
              
              
              960,887(Provision)
      benefit for income taxes
              
              
              (51,350
              )
              
              
              (273,515
              )Income
      (loss) after provision for income tax
              
              
              (591,721
              )
              
              
              687,372Minority
      interest
              
              
              11,529
              
              
              
              (614,948
              )Net
      income (loss)
              
              $
              (580,192
              )
              
              $
              72,425Weighted
      average number of shares outstanding:Basic
              
              
              11,783,991
              
              
              
              8,780,107Diluted
              
              
              12,291,208
              
              
              
              8,780,107Net
      income per share:Basic
              
              $
              (0.05
              )
              
              $
              0.01Diluted
              
              $
              (0.05
              )
              
              $
              0.01
 
 The
accompanying notes should be read in connection with the financial
statements
 
 
 4
 Table of Contents
 
 India Globalization
Capital, Inc.
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (unaudited)
 
 Six
      Months
              
              
              Six
      MonthsEnded
              
              
              EndedSeptember
      30, 2009
              
              
              September
      30, 2008Revenues:
              
              $
              8,085,480
              
              
              $
              28,427,252Cost
      of revenues:
              
              
              (6,503,046
              )
              
              
              (21,045,950
              )Gross
      Profit
              
              
              1,582,434
              
              
              
              7,381,302Selling,
      General and Administrative (including $130,407 stock based
                compensation for the six months ended  September 30,
      2009)
              
              
              (1,396,535
              )
              
              
              (2,089,257
              )Depreciation
              
              
              (417,822
              )
              
              
              (467,308
              )Total
      operating expenses
              
              
              (1,814,357
              )
              
              
              (2,556,565
              )Operating
      income (loss)
              
              
              (231,923
              )
              
              
              4,824,737Other
      income (expense):Interest
      and other miscellaneous income
              
              
              105,593
              
              
              
              186,399Interest
      expense
              
              
              (767,068
              )
              
              
              (802,085
              )Total
      other income (expense)
              
              
              (661,475
              )
              
              
              (615,686
              )Income
      (loss) before provision for income taxes
              
              
              (893,398
              )
              
              
              4,209,051(Provision)
      benefit for income taxes
              
              
              (157,766
              )
              
              
              (1,362,605
              )Income
      (loss) after provision for income tax
              
              
              (1,051,164
              )
              
              
              2,846,446Minority
      interest
              
              
              (65,025
              )
              
              
              (1,487,203
              )Net
      income (loss)
              
              $
              (1,116,189
              )
              
              $
              1,359,243Weighted
      average number of shares outstanding:Basic
              
              
              11,783,991
              
              
              
              8,780,107Diluted
              
              
              12,291,208
              
              
              
              8,780,107Net
      income per share:Basic
              
              $
              (0.09
              )
              
              $
              0.15Diluted
              
              $
              (0.09
              )
              
              $
              0.15
 
  5
 Table of Contents
 
 
 India Globalization Capital, Inc.
 CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 (unaudited)
 
 Three
              
              
              Three
              
              
              Six
              
              
              SixMonths
      Ended
              Months
      Ended
              
              Months
      Ended
              Months
      Ended30-Sep-09
              30-Sep-08
              
              30-Sep-09
              30-Sep-08Net
      income / (loss)
              
              $
              (580,192
              )
              
              $
              72,425
              
              
              $
              (1,116,189
              )
              
              $
              1,359,243Foreign
      currency translation adjustments
              
              
              (75,137
              )
              
              
              (629,303
              )
              
              
              1,189,286
              
              
              
              (3,373,467
              )Comprehensive
      income (loss)
              
              $
              (655,329
              )
              
              $
              (556,878
              )
              
              $
              73,097
              
              
              $
              (2,014,224
              )
 
 
  India Globalization Capital, Inc.
 CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY
 (unaudited)
 
 Common
      Stock
              
              
              Additional
                Paid-in
              
              
              Accumulated
      Retained
                Earnings
              
              
              Accumulated
                Other
                Comprehensive
      Income
              
              
              Total
                Stockholders'Shares
              
              
              Amount
              
              
              Capital
              
              
              (Deficit)
              
              
              /
      Loss
              
              
              EquityBalance
      at March 31, 2009
              
              
              10,091,171
              
              
              $
              1,009
              
              
              $
              33,186,530
              
              
              $
              (4,662,689
              )
              
              $
              (4,929,581
              )
              
              $
              23,595,269Stock
      Option Based Compensation
              
              
              
              
              
              
              
              
              
              
              90,997
              
              
              
              
              
              
              
              
              
              
              
              90,997Stock
      Based Compensation
              
              
              78,820
              
              
              
              8
              
              
              
              39,402
              
              
              
              
              
              
              
              
              
              
              
              39,410Issue
      of Common Stock
              
              
              15,000
              
              
              
              2
              
              
              
              13,198
              
              
              
              
              
              
              
              
              
              
              
              13,200Registered
      Direct
              
              
              1,599,000
              
              
              
              160
              
              
              
              1,638,690
              
              
              
              
              
              
              
              
              
              
              
              1,638,850Net
      Income (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,116,189
              )
              
              
              
              
              
              
              (1,116,189
              )Foreign
      currency translation adjustments
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,189,286
              
              
              
              1,189,286Balance
      at September 30, 2009
              
              
              11,783,991
              
              
              $
              1,179
              
              
              $
              34,968,817
              
              
              $
              (5,778,878
              )
              
              $
              (3,740,295
              )
              
              $
              25,450,823
 
 The
accompanying notes should be read in connection with the financial
statements.
 
 
 6
 Table of Contents
  India Globalization Capital, Inc.
 CONSOLIDATED
STATEMENT OF CASH FLOWS
 (unaudited)
 
 Six
      months endedSeptember
      30, 2009
              
              
              September
      30, 2008Cash
      flows from operating activities:Net
      income
              
              $
              (1,116,189
              )
              
              $
              1,359,243Adjustment
      to reconcile net income to net cash used in operating
      activities:Non-cash
      compensation expense
              
              
              130,407
              
              
              
              450,850Issue
      of 15,000 shares of common stock to RedChip
              
              
              13,200Deferred
      taxes
              
              
              75,363
              
              
              
              196,232Depreciation
              
              
              417,822
              
              
              
              467,308Loss/(Gain)
      on sale of property, plant and equipment
              
              
              
              
              
              
              (53,257
              )Amortization
      of debt discount on Oliveira loan
              
              
              482,672
              
              
              
              2,652Changes
      in:Accounts
      receivable
              
              
              386,021
              
              
              
              (6,053,309
              )Unbilled
      Receivable
              
              
              368,202
              
              
              
              192,888Inventories
              
              
              (63,974
              )
              
              
              (486,631
              )Prepaid
      expenses and other current assets
              
              
              (98,152
              )
              
              
              2,104,019Interest
      receivable - convertible debenture
              
              
              
              
              
              
              277,479Accrued
      expenses
              
              
              84,584
              
              
              
              (976,024
              )Taxes
      payable
              
              
              
              
              
              
              34,497Trade
      Payable
              
              
              210,689
              
              
              
              2,112,994Other
      Current Liabilities
              
              
              (957,451
              )
              
              
              (1,215,283
              )Advance
      from Customers
              
              
              
              
              
              
              (1,370,592
              )Non
      current assets
              
              
              139,780
              
              
              
              (1,244,397
              )Other
      non-current liabilities
              
              
              (258,865
              )
              
              
              (5,056,129
              )Minority
      Interest
              
              
              65,025
              
              
              
              1,487,203Net
      cash used in operating activities
              
              
              (120,866
              )
              
              
              (7,770,257
              )Cash
      flows from investing activities:Net
      proceeds from purchase and sale of property and equipment
              
              
              (186,481
              )
              
              
              (1,927,745
              )Purchase
      of investments
              
              
              
              
              
              
              (1,720,788
              )Restricted
      Cash
              
              
              (330,664
              )
              
              
              (8,261
              )Redemption
      of convertible debenture
              
              
              
              
              
              
              3,000,000Net
      cash used in investing activities
              
              
              (517,145
              )
              
              
              (656,794
              )Cash
      flows from financing activities:Net
      movement in cash credit and bank overdraft
              
              
              (342,932
              )
              
              
              993,974Proceeds
      from other short-term and long-term borrowings
              
              
              65,478
              
              
              
              1,607,247Repayment
      of  long-term borrowings
              
              
              (687,956
              )
              
              
              (975,137
              )Due
      to related parties
              
              
              181,650
              
              
              
              2,301,874Net
      proceeds from issue of equity shares
              
              
              1,638,850Repayment
      of note payable to Oliveira Capital, LLC
              
              
              
              
              
              
              (3,000,000
              )Proceeds
      from note payable to Oliveira Trust
              
              
              
              
              
              
              2,000,000Net
      cash provided by financing activities
              
              
              855,090
              
              
              
              2,927,958Effect
      of exchange rate changes on cash and cash equivalents
              
              
              88,212
              
              
              
              (420,216
              )Net
      increase in cash and cash equivalent
              
              
              305,291
              
              
              
              (5,919,309
              )Cash
      and cash equivalent at the beginning of the period
              
              
              2,129,365
              
              
              
              8,397,440Cash
      and cash equivalent at the end of the period
              
              $
              2,434,656
              
              
              $
              2,478,131
 
 The
accompanying notes should be read in connection with the financial
statements.
 
  7
 Table of Contents
 
 Background of India Globalization Capital, Inc.
(IGC)
 
 Notes
to Consolidated Financial Statements (unaudited)
 
 Note
1 - Nature of Operations and Basis of Presentation
 
 The
operations of IGC are based in India. IGC owns 100% of a subsidiary in Mauritius
called IGC-Mauritius (IGC-M).  This company in turn operates through
five subsidiaries in India.   We own sixty three percent of
Sricon Infrastructure Private Limited (“Sricon”) and seventy seven percent of
Techni Bharathi, Limited (“TBL”).  We also beneficially own one
hundred percent of IGC India Mining and Trading, Private Limited, IGC Logistic,
Private Limited, and IGC Materials, Private Limited. Through our subsidiaries we
operate in the infrastructure industry.  Operating as a fully
integrated infrastructure company, IGC, through its subsidiaries, has expertise
in road building, mining and quarrying and engineering of high temperature
plants. The Company’s medium term plans are to expand each of these core
competencies while offering an integrated suite of service offerings to each of
our customers.
 
 The
Company’s operations are subject to certain risks and uncertainties, including
among others, dependency on India’s economy and government policies, seasonal
business factors, competitively priced raw materials, dependence upon key
members of the management team and increased competition from existing and new
entrants.
 
 India
Globalization Capital, Inc.
 
 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).   On February 19, 2009 IGC-M beneficially
purchased 100% of IGC Mining and Trading, Limited based in Chennai
India.
 
 On July
4, 2009 IGC-M beneficially purchased 100% of IGC Materials, Private Limited, and
100% of IGC Logistics, Private Limited.  Both these companies are
based in Nagpur, India.
 
 Merger
and Accounting Treatment
 
 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. 
Ownership interest of the founders and management, in these two companies, is
reflected in the financial statements as “Minority Interest”.
 
 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, TBL IGC-IMT, IGC-LPL, and IGC-MPL).
 
 IGC’s
organizational structure is as follows:
 
 
 
 8
 Table of Contents
 
 Securities
 
 We have
three securities listed on NYSE Amex : (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).    Each Unit consists of one share of common stock
and two warrants.  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 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
January 9, 2009 we completed an exchange of 11,943,878 public and private
warrants for 1,311,064 new shares of common stock.  Following the
issuance of the shares relating to the warrant exercise, we had 10,091,971
shares of common stock and 11,855,122 warrants outstanding as of March
31, 2009.  On May 13, 2009, we issued 78,820 shares of common stock to
certain of our officers and directors pursuant to our 2008 Omnibus Incentive
Plan.  Subsequent to this issuance, as of June 30, 2009 we had
10,169,991 shares of common stock issued and outstanding.
 
 On July
13, 2009, we issued 15,000 shares of common stock to RedChip Companies Inc. for
services rendered.  The stock price on the date of the transaction was
$0.88 per share.
 
 On
September 15, 2009, we entered into a securities purchase agreement with
institutional investors relating to the sale and issuance by our company to the
investors of an aggregate of 1,599,000 shares of our common stock and warrants
to purchase up to 319,800 shares of our common stock, for a total purchase price
of $1,998,750. The common stock and warrants were sold on a per unit basis at a
purchase price of $1.25 per unit. The shares of common stock and warrants were
issued separately. Each investor received one warrant representing the right to
purchase, at an exercise price of $1.60 per share, a number of shares of common
stock equal to 20% of the number of shares of common stock purchased by the
investor in the offering. The sales were made pursuant to a shelf registration
statement.  On September 30, 2009 we had 11,783,991 shares of common
stock issued and outstanding.
 
 Unaudited
Interim Financial Statements
 
 The
unaudited consolidated balance sheet as of September 30, 2009, consolidated
statements of operations and cash flows for the three and six months ended
September 30, 2009 and 2008 and consolidated statements of stockholders’ equity
(deficit) for the six months ended September 30, 2009 include the accounts of
the Company and its subsidiaries. The unaudited financial statements include all
adjustments (consisting of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of such financial
statements.  Operating results for the interim periods presented are
not necessarily indicative of the results to be expected for a full fiscal
year.
 
 Prior
Pro Forma Results of Operations
 
 We
previously disclosed Pro Forma results of Operations in our Quarterly Reports’
Management’s Discussion and Analysis sections. These Pro Forma statements were
reported as if the acquisition of Sricon and TBL occurred on April 1, 2007 and
April 1, 2008 respectively.  We felt that this was a more meaningful
presentation of our results of operations since we acquired both Sricon and TBL
on March 7, 2008.  Since all of the operation results for Sricon and
TBL are included for the three and six month periods ending September 30, 2009
and September 30, 2008, we no longer believe that Pro Forma results of
operations as reported in filings prior to the June 30, 2009 quarterly filings
present a meaningful discussion of our results of
operations.  Therefore, the quarterly filing for the three and six
month periods ended September 30, 2009 contains no pro forma results as
well.
 
 Note
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Principles
of Consolidation:
 
 The
consolidated financial statements include the accounts of the Company and its
subsidiaries. All material intercompany balances and transactions have been
eliminated.
 
 Minority
interest in subsidiaries consists of equity securities issued by a subsidiary of
the Company. No gain or loss was recognized as a result of the issuance of these
securities, and the Company owned a majority of the voting equity of the
subsidiary both before and after the transactions. The Company reflects the
impact of the equity securities issuances in its investment in subsidiary and
additional paid-in-capital accounts for the dilution or anti-dilution of its
ownership interest in the subsidiary.
 
 Reclassifications
 
 Certain
prior year balances have been reclassified to the presentation of the current
year.  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.
  9
 Table of Contents
  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.
  Revenue
Recognition
 
 The
majority of the revenue recognized for the three and six month periods
ended September 30, 2009 was derived from the Company’s subsidiaries and as
follows:
 
 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.
  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.
 
 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.
 
 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.
 
 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.
 
 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 6 month period ended
September 30, 2009 and September 30, 2008, respectively.
 
 10
 Table of Contents
 
 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.
 
 Accounts
Receivable – Long Term:
 
 Known in
India as Build-Operate-Transfer (BOT). It is money due to the company by the
private or public sector to finance, design, construct, and operate a facility
stated in a concession contract over an extended period of time.
 
 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.
 
 Property,
Plant 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.
 
 The value
of plant and equipment that are capitalized include the acquisition price and
other direct attributable expenses.
 
 The
estimated useful life of various assets and associated historical costs are as
follows:
 
 Category
              
              Useful
      Life (years)
              
              
              As
      of September 30, 2009
              
              
              As
      of March 31, 2009Land
              
              N/A
              
              $
              36,213
              
              $
              34,234Building
      (Flat)
              
              
              25
              
              
              309,937
              
              
              230,428Plant
      and Machinery
              
              
              20
              
              
              9,745,302
              
              
              9,374,001Computer
      Equipment
              
              
              3
              
              
              283,841
              
              
              261,099Office
      Equipment
              
              
              5
              
              
              184,905
              
              
              160,728Furniture
      and Fixtures
              
              
              5
              
              
              150,159
              
              
              127,680Vehicles
              
              
              5
              
              
              793,183
              
              
              740,886Leasehold
      Improvements
              
              Over
      the period of lease or useful life (if less)
              
              
              147,231
              
              
              139,185Assets
      under construction
              
              N/A
              
              
              13,818
              
              
              13,063Total
              
              
              
              
              11,664,589
              
              
              11,081,304Less:
      Accumulated Depreciation
              
              
              
              
              (4,914,942
              )
              
              (4,479,910
              )Net
      Assets
              
              
              
              $
              6,749,647
              
              $
              6,601,394
 
 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.
 
 11
 Table of Contents
 
 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.
 
 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.
 
 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. 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.
 
 Operating
leases:
 
 Lease
payments under operating leases are recognized as an expense on a straight-line
basis over the lease term.
 
 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.
 
 12
 Table of Contents
 
 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.
 
 On April
1, 2009, the Company adopted SFAS No. 123 (revised 2004), Share Based
Payment.  SFAS No 123(R) requires all share-based payments to
employees, including grants of employee stock options, to be recognized in the
financial statements based on their fair values.
  In
September 2006, the FASB issued FAS No.157, “Fair Value Measurements” (FAS No.
157). FAS No. 157 clarifies the principle that fair value should be based on the
assumptions market participants would use when pricing an asset or liability and
establishes a fair value hierarchy that prioritizes the information used to
develop those assumptions. The Company’s adoption of this Standard on January 1,
2008 did not have a material effect on its financial statements. Relative to FAS
157, the FASB issued FASB Staff Positions (FSP) FAS 157-1, FAS 157-2, and FAS
157-3. FSP FAS 157-1 amends SFAS 157 to exclude SFAS No. 13,“Accounting for
Leases” (SFAS 13), and its related interpretive accounting pronouncements that
address leasing transactions, while FSP FAS 157-2 delays the effective date of
the application of SFAS 157 to fiscal years beginning after November 15, 2008
for all nonfinancial assets and nonfinancial liabilities that are recognized or
disclosed at fair value in the financial statements on a non-recurring basis.
FSP FAS 157-3 clarifies the application of FAS 157 as it relates to the
valuation of financial assets in a market that is not active for those financial
assets. This FSP is effective immediately and includes those periods for which
financial statements have not been issued. We currently do not have any
financial assets that are valued using inactive markets, and as such are not
impacted by the issuance of this FSP.
 
 In
February 2007, the FASB issued FAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities—  Including an amendment of FASB Statement
No. 115” (FAS No. 159). FAS No. 159 provides companies with a choice to measure
certain financial assets and liabilities at fair value that are not currently
required to be measured at fair value (the “Fair Value Option”). Election of the
Fair Value Option is made on an instrument-by-instrument basis and is
irrevocable. The Company’s adoption of this Standard on January 1, 2008 did not
have a material effect on its financial statements.
 
 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.
 
 Segment
and Geographic Reporting:
 
 India
Globalization Capital, Inc. and its subsidiaries are significantly engaged in
one fully integrated segment, infrastructure construction.  Since
there is no Chief Officer who allocates resources as described in FAS No. 131,
the Company is not required to report its operations by business segment
reporting.  All revenue reporting in the periods ending September 30,
2009 and September 30, 2008 were earned solely in Asia.  Therefore, no
disclosures indicating source country revenue is provided in this
report.
 
 13
 Table of Contents
 
 Note
3 – SHORT TERM BORROWINGS & CURRENT PORTION OF LONG-TERM DEBT
 (Amounts
in thousand US Dollars)
 
 Short
term debt for the consolidated companies consists of the following:
 
 As
      of
              
              
              As
      ofSeptember
      30, 2009
              
              
              March
      31,
                2009Secured
              
              $
              2,459
              
              
              $
              2,502Unsecured
              
              
              125
              
              
              
              249Total
              
              
              2,584
              
              
              
              2,751Add:Current
      portion of long term debt
              
              
              834
              
              
              
              671Total
              
              $
              3,418
              
              
              $
              3,422
 
 The above
debt is secured by hypothecation of materials/stock of spares, Work in Progress,
receivables and property & equipment in addition to personal guarantee of
three directors & collaterally secured by mortgage of company’s land &
other immovable properties of directors and their relatives.
 
 Long term
debt for the consolidated companies consists of the following:
 
 As
      of
              
              
              As
      ofSeptember
      30, 2009
              
              
              March
      31,
                2009Secured
              
              $
              -
              
              
              $
              -Term
      loansLoan
      for assets purchased under capital lease
              
              
              1,647
              
              
              
              2,168Total
              
              
              1,647
              
              
              
              2,168Less:
      Current portion (Payable within 1 year)
              
              
              835
              
              
              
              671Total
              
              $
              812
              
              
              $
              1,497
 
 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, machineries and vehicles and
      collaterally secured by deposit of  title deeds of
      land•
                First
      charge on Debt-Service Reserve
Account
 NOTE
4 - RELATED PARTY TRANSACTIONS
 
 For the
three month period ended September 30, 2009, $13,000 was paid to SJS Associates
for Mr. Selvaraj’s consulting services.
 
 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.  A total $16,000 (including $4,000 for October 2009) was
paid to IGN, LLC for the period.  The Company and IGN, LLC have agreed
to continue the agreement on a month-to-month basis.
 
 NOTE
5 -COMMITMENTS AND CONTINGENCY
 
 No
significant commitments and contingencies were made during the 3 month and 6
month periods ended September 30, 2009.
 
 14
 Table of Contents
  NOTE
6 - INVESTMENT ACTIVITIES
 
 No
significant investment activities occurred during the 3 month and 6 month
periods ended September 30, 2009.
 
 NOTE
7 - COMMON STOCK
 
 See
Securities Section.
 
 NOTE
8 – STOCK-BASED COMPENSATION
 
 On April
1, 2009 the Company adopted SFAS No. 123 (revised 2004), Share Based
Payment.  SFAS No 123(R) requires all share-based payments to
employees, including grants of employee stock options, to be recognized in the
financial statements based on their fair values.  No stock based
compensation was awarded during the 3 month period ended September 30,
2009.   On May 13, 2009, the Company granted 78,820 shares of
common stock and 1,413,000 stock options.   The options vested
immediately.  The exercise date of the options was May 13, 2009 ($1.00
per share) and will expire on May 13, 2014.  The fair value of the
stock was $39,410 on the exercise date and the fair value of stock options
was $90,997.  Total share-based compensation expense, related to all
of the Company’s share-based awards, recognized for the 6 month period ended
September 30, 2009 is $130,407. Under the 2008 Omnibus Plan, 290,263 options
remain issuable under the plan.
 
 The fair
value of stock option awards is estimated on the date of grant using a
Black-Scholes Pricing Model with the following weighted average assumptions for
options awarded during the three and six months ended September 30,
2009:
 
 Three
      Months Ended
                  September
      30,2009
                
                
                2008Expected
      life of options (years)
                
                
                None
                
                
                
                NoneVested
      Options
                
                None
                
                
                NoneRisk
      free interest rate
                
                None
                
                
                NoneExpected
      volatility of stock
                
                None
                
                
                NoneExpected
      dividend yield
                
                None
                
                
                None
 Six
      Months Ended
                    September
      30,2009
                  
                  
                  
                  2008Expected
      life of options (years)
                  
                  
                  5
                  
                  
                  
                  NoneVested
      Options
                  
                  
                  100
                  %
                  
                  
                  NoneRisk
      free interest rate
                  
                  
                  1.98
                  %
                  
                  
                  NoneExpected
      volatility of stock
                  
                  
                  35.35
                  %
                  
                  
                  NoneExpected
      dividend yield
                  
                  None
                  
                  
                  None
 The
volatility estimate was derived using historical data for the IGC stock and
for  public companies in the related
industry.
 
 
 15
 Table of Contents
 
 NOTE
9 -  BUSINESS COMBINATIONS
 
 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.  We paid full price for the stock of Sricon, and
we subsequently borrowed $17.9 million (computed at an exchange rate of
approximately 40 INR to $1 USD) from Sricon.    Failure to
repay the note or negotiate a settlement could result in IGC having to decrease
its ownership in Sricon by tendering all or a portion of the Sricon shares it
owns to Sricon to repay the note. The Sricon Acquisition was consummated on
March 7, 2008.
 
 NOTE
10 - SUBSEQUENT EVENTS
 
 Oliveira
Note
 
 On
October 5, 2009, we consummated the exchange of an outstanding promissory note
in the total principal amount of $2,000,000 (the “Original Note”) initially
issued to the Steven M. Oliveira 1998 Charitable Remainder Unitrust (“Oliveira”)
for a new promissory note (the “New Note”) on substantially the same terms as
the original note except that the principal amount of the New Note is
$2,120,000. The New Note reflects the accrued but unpaid interest on the
Original Note and the New Note is due and payable on October 4, 2010 (the
“Maturity Date”). There is no interest payable on the New Note.  As is
the case with the Original Note, we can pre-pay the New Note at any time without
penalty or premium, and the New Note is unsecured.
 
 The New
Note is not convertible into shares of our common stock (the “Common Stock”) or
other securities of the Company. However, under the Note and Share Purchase
Agreement (the “Note and Share Purchase Agreement”), effective as of October 4,
2009, by and among us and Oliveira, as additional consideration for the exchange
of the Original Note, we agreed to issue 530,000 shares of Common Stock to
Oliveira.  If we fail to repay the Notes by the Maturity Date,
Oliveira would be entitled to receive 200,000 shares of Common
Stock.
 
 Pursuant
to the Note and Share Purchase Agreement, we have also agreed that if the Note
is not repaid by the Maturity Date we will use reasonable best efforts to ensure
that no later than October 4, 2010, we will have a registration statement
effective with a sufficient number of shares of Common Stock based on the then
fair market value of the shares registered in excess of the amount due under the
New Note.
  ATM
Agency Agreement
 
 On
October 13, 2009, we entered into an ATM Agency Agreement (the “Agreement”) with
Enclave Capital LLC (“Enclave”). Pursuant to the terms of the Agreement, we may
offer and sell shares of common stock, par value $0.0001 per share (the
“Shares”) having aggregate gross proceeds of up to $4 million from time to
time through Enclave, as its sales agent. Sales of the Shares, if any, would be
made by means of ordinary brokers’ transactions on the NYSE Amex at market
prices, privately negotiated transactions, crosses or block transactions and
such other transactions as may be agreed between us and Enclave, including a
combination of any of these transactions. Enclave will receive from us a
commission equal to 3% of the gross sales price per share of the Shares sold
through it as sales agent under the Agreement.  We have commenced
selling Shares under the Agreement.
 
 Bricoleur
note
 
 On
October 16, 2009, we consummated the sale of a promissory note in the principal
amount of $2,000,000 (the “Note”) to Bricoleur Partners, L.P. (“Bricoleur”) for
$2,000,000. There is no interest payable on the Note and the Note is due and
payable on October 16, 2010 (the “Maturity Date”).  We can pre-pay the
Note at any time without penalty or premium, and the Note is
unsecured.
 
 The Note
is not convertible into shares of our Common Stock or other securities of the
Company. However, under the Note and Share Purchase Agreement (the “Note and
Share Purchase Agreement”), effective as of October 16, 2009, by and among us
and Bricoleur, as additional consideration for the investment in the Note, we
issued 530,000 shares of Common Stock to Bricoleur.  If we fail to
repay the Note by the Maturity Date, Bricoleur is entitled to receive an
additional 200,000 shares of Common Stock for no additional
consideration.
 
 Pursuant
to the Note and Share Purchase Agreement, we have also agreed that if the Note
is not repaid by the Maturity Date we will use reasonable best efforts to ensure
that no later than October 30, 2010, we will have a registration statement
effective with a sufficient number of shares of Common Stock based on the then
fair market value of the shares registered reasonably in excess of the amount
due under the Note.
 
 In
connection with the Note and Share Purchase Agreement, we have entered into a
Registration Rights Agreement (the “Registration Rights Agreement”) effective as
of October 16, 2009, with Bricoleur, pursuant to which Bricoleur will have the
right to have their shares of Common Stock registered with the Securities and
Exchange Commission following their issuance, as well as customary piggyback
registration rights, as further described in the Registration Rights Agreement
filed as Exhibit 10.3 to our Form 8-K filed on October 21, 2009. If we fail to
meet the filing or effectiveness deadlines set forth in the Registration Rights
Agreement, Bricoleur would be entitled, for each $1,000,000 of principal
outstanding, to 25,000 shares of Common Stock plus an additional 5,000 shares of
Common Stock for each 60-day period such filing or effectiveness is delayed
beyond the initial late period.
 
 16
 Table of Contents
 
 Item 2.  Management’s Discussion and
Analysis
 
 The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed financial
statements and related notes that appear elsewhere in this Quarterly Report on
Form 10-Q.  In addition to historical consolidated financial
information, the following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward-looking statements. Factors that
could cause or contribute to these differences include those discussed below and
elsewhere in this Quarterly Report on Form 10-Q, as well as in our Annual Report
on Form 10-K filed on July 14, 2009.
 
 Overview
 
 In
response to India’s rapidly expanding economy, our primary focus is to
execute infrastructure projects through our subsidiaries such as
constructing interstate highways, rural roads, mining and quarrying, and
construction of high temperature cement and steel plants.
 
 Company
Overview
 
 We are a
construction and materials company engaged in the following core competencies:
1) civil construction of roads and highways, 2) the construction and maintenance
of high temperature cement and steel plants, 3) operations and supply of rock
aggregate and 4) the export of iron ore to China.   Our present
and past clients include various Indian government
organizations.   Including our subsidiaries, we have
approximately 400 employees and contractors.  Our construction
subsidiary, Sricon, has the capacity and prior experience to bid on contracts
priced at a maximum of about $116 million.  We are focused on winning
construction contracts, building out rock aggregate quarries and setting up
relations and export hubs for the export of iron ore to
China.
 
 The
Indian government has articulated plans to modernize the Indian
Infrastructure.  It expects to spend around $22 billion in the next 12
months on roads and highways. We believe that these initiatives will continue to
be favorable to our business.  Our model is three fold: 1) we bid on
construction and engineering contracts which provide us with a backlog which
translates into greater revenues and earnings, 2) we are in the process of
building rock quarries and selling rock aggregate to the infrastructure industry
and 3) we export iron ore to China.  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 GDP surpassed $1 Trillion in fiscal 2007.  According to the
World Bank, only nine economies at the close of 2005 generated more than $1
Trillion in GDP.  According to the CIA World Fact Book, India’s growth
rates have been ranging from 6.2% to 9.6% since 2003;  The GDP growth
rate for fiscal year ending March 31, 2008 was 7.4% (estimated).  The
Indian stock markets experienced significant growth with the SENSEX peaking at
21,000 (January 8, 2008).   The current global financial crisis
created a liquidity crunch starting in October 2008, which
continues.
 
 India’s
GDP growth for fiscal year ended March 31, 2009 is estimated to be lower than
2008’s growth rate.  The slowing of the GDP was caused by the global
financial crisis. However, it does indicate that India has withstood the global
downturn better than many nations. The factors contributing to maintaining the
relatively high growth included growth 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.
  To
sustain India’s fast growing economy, the share of infrastructure investment in
India is expected to increase to 9 per cent of GDP by 2014, 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 is
required for Infrastructure build out and modernization.  This
industry is one of the largest employers 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%.
 
 This
ambitious infrastructure development mandate by the Indian Government will
require 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 support
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.
  17
 Table of Contents
  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.  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:
 
 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.
 
 Our
operations are subject to certain risks and uncertainties, including among
others, dependency on the Indian and Asian economy and government policies,
competitively priced raw materials, dependence upon key members of the
management team and increased competition from existing and new
entrants.
 
 Sricon
Infrastructure Private Limited
 
 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: 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.  Sricon’s present and past clients include various Indian
government organizations.   It has the prior experience to bid on
contracts that are priced at a maximum of about $116
million.   As indicated in previous press releases and quarterly
reports, in October 2008 lack of available credit drove Sricon to curtail much
of its construction activity, as it was unable to provide Bank Guarantees for
construction contracts, and to focus on long term recurring contracts such as
maintenance of high temperature cement factories.  This led to a sharp
decline in overall revenue.  Sricon took several steps to curtail its
expenses including lay offs.  Sricon also turned its attention to
pursuing claims against the contracting agencies for delays it had suffered on
some of its contracts.  Due to arbitration requirements in our
contract agreements, we expect our claims to be resolved in arbitration. Sricon
claims losses from having to maintain equipment and personnel during the delay
period, as well as opportunity costs.  There can be no assurance that
Sricon will be successful in its claims.  While the cost associated
with delays is accounted in the relevant period, any revenue from claims is not
accounted until and unless they are paid.
 
 Techni
Bharathi Limited
 
 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.  The overall lack of liquidity led TBL to curtail its
construction contracts and cut its costs through layoffs.  TBL is
re-focused on smaller construction contracts and the settlement of
claims.
  18
 Table of Contents
  IGC-M
 
 IGC-M,
through its subsidiaries in India, is also involved in the building of rock
quarries and the export of iron ore.  IGC-M operates a shipping hub in
the Krishnapatnam port on the west coast of India.   We aggregate
ore from smaller mines before shipping to China.  We are also engaged
in the production of rock aggregate.  Rock aggregate is used in the
construction of roads, railways, dams, and other infrastructure
development.  We are in the process of developing several quarries
through partnerships with landowners.
  Core
Business Competencies
 
 We offer
an integrated approach in our customer service delivery based on core
competencies that we have demonstrated over the years.  This
integrated approach provides us with an advantage over our
competitors.
 Our core
business competencies include the following:
 
 Highway and heavy
construction:
 
 The
Indian government has articulated a plan to build and modernize Indian
infrastructure.  The government’s plan, calls for spending over $475
billion over the next five years for the expansion and construction of rural
roads, major highways, airports, seaports, freight corridors, railroads and
townships.  A significant number of our customers involve highway and
heavy construction contracts.
 
 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.  We are in the
process of teaming with landowners to build out rock quarries; in addition we
have licenses for the installation and production of rock aggregate
quarries.   Our mining and trading activity centers on the export
of Iron ore to China.   India is the fourth largest producer of
ore.
 
 Construction
and maintenance of high temperature plants
 
 We have
an expertise in the civil engineering, construction and maintenance of high
temperature plants.  This requires specialized skills to build and maintain
high temperature chimneys and kilns.
 
 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.  For the export of iron ore from India, we are developing
customers in Asia including China.
 
 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.
 
 19
 Table of Contents
  Our
Growth Strategy and Business Model
 
 Our
business model for the construction business is simple.  We bid on
construction, over burden removal at mining sites 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 one bid team.    In the
next year we will focus on the following: 1) build out between two and five rock
quarries, begin production and obtain long term contracts for the sale of rock
aggregate, 2) leverage our shipping hub, develop a second shipping hub, obtain
long term contracts for the delivery and sale of iron ore, 3) execute and expand
recurring contracts for infrastructure build out, 4) aggressively pursue the
collection of accounts receivables and delay claims.
 
 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 $5 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 would like to be
positioned in the $5 million to $50 million contract range, above locally based
contractors and below the large firms, creating a distinct technical and
financial advantage in this market niche.  Rock aggregate is supplied
to the industry through small crushing units, which supply low quality
material.  Frequently, high quality aggregate is unavailable, or is
transported over large distances.  We fill this gap by providing high
quality material in large quantities.  We compete on price, quantity
and quality.  Iron ore is produced in India where our core assets are
located, and exported to China.  While this is a fairly established
business, we compete by aggregating ore from smaller suppliers who do not have
access to customers outside India. Further, at our second shipping hub we expect
to install a crusher that can grind ore pebbles into dust, again providing a
value added service to the smaller mine owners.
 
 Seasonality
 
 The
construction industry (road building) 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
monsoon months are slower than the other months because of the
rains.  Activity such as engineering, maintenance of high temperature
plants, and export of iron ore are less susceptible to the rains.  The
reduced paced in construction activity has 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.  During the monsoon season the rock quarries operate to build
up and distribute reserves to the various construction sites.
 
 Employees
and Consultants
 
 As of
September 30, 2009, we employed a work force of approximately 400 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.  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. We are hoping that our efforts will make our companies more
attractive.  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.  As of March 31, 2009 our
Executive Chairman,  Chief Executive Officer is Ram Mukunda and our
Non Executive Chairman is Ranga Krishna.  Our over all Country Head in
India is Mr. K. Parthasarathy.  Our Managing Director for Construction
is Ravindra Lal Srivastava, our Managing Director for Materials, Mining and
Trading is P. M. Shivaraman.   Our Treasurer and Principal
Accounting officer is John Selvaraj.  Our General Manager of
Accounting based in India is Santhosh Kumar.  We also utilize the
services of several consultants who provide USGAAP systems 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.
 
 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).    We
annually conduct PCAOB (USGAAP) audits for the company.  We
acknowledge that this process is at times cumbersome and places significant
restraints on our existing staff.  We believe we are still 6 to 12
months away from having processes and adequately trained personal in place to
meet the reporting timetables set out by the U.S. reporting
requirements.  Until then we expect to file for extensions to meet the
reporting timetables.  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.
  20
 Table of Contents
 
 Foreign
Currency Translation
 
 The
financial statements are reported in U.S. dollars. The Indian rupee is the
functional currency for the Sricon and TBL. 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
the 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.
 
 The
exchange rate between the Indian Rupee and the U.S. dollars are as
follows:
 
 Period
              
              Average
      rate used for translating operations. INR to one
    U.S.D.
              
              
              Rate
      used for translating Balance Sheet. INR to one U.S.D.Six
      months ended September  30, 2008
              
              
              48.72
              
              
              
              47.74Year
      ended March 31, 2009
              
              
              49.75
              
              
              
              50.87Six
      months ended  September  30, 2009
              
              
              48.42
              
              
              
              48.04
 
 Critical
Accounting Policies and Estimates
 
 The
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires us to make
significant estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. These items are regularly monitored and analyzed by management
for changes in facts and circumstances, and material changes in these estimates
could occur in the future. These estimates include, among others, our revenue
recognition policies related to the proportional performance and percentage of
completion methodologies of revenue recognition of contracts and assessing our
goodwill for impairment annually. Changes in estimates are recorded in the
period in which they become known. We base our estimates on historical
experience and various other assumptions that we believe are reasonable under
the circumstances. Actual results will differ and may differ materially from the
estimates if past experience or other assumptions do not turn out to be
substantially accurate.
 
 Our
significant accounting policies are presented within Note 2 to our consolidated
financial statements and the following summaries should be read in conjunction
with the unaudited consolidated financial statements and the related notes
included in this Report. While all accounting policies impact the financial
statements, certain policies may be viewed as critical. Critical accounting
policies are those that are both most important to the portrayal of financial
condition and results of operations and that require management’s most
subjective or complex judgments and estimates. Our management believes the
policies that fall within this category are the policies on revenue recognition,
accounting for stock-based compensation, goodwill and income taxes.
 
 Revenue
Recognition
 
 The
majority of the revenue recognized for three and six month periods ended
September 30, 2009 was derived from the Company’s subsidiaries and as
accordingly:
 
 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
 
 21
 Table of Contents
 
 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.
 
 Employee
Stock Options or Share Based Payments
 
 We grant
options to purchase our common stock and award restricted stock to our employees
and directors under our equity incentive plans. The benefits provided under
these plans are share-based payments subject to the provisions of SFAS No. 123R,
Share-Based Payment, and SEC Staff Accounting Bulletin 107, Share-Based
Payments. Effective April 1, 2009, we use the fair value method to apply the
provisions of FAS 123R with the modified prospective application, which provides
for certain changes to the method for valuing share-based compensation.
Share-based compensation expense recognized under FAS 123R for the 6 month
period ended September 30, 2009 was $130,407. At September 30, 2009, total
unrecognized estimated compensation expense related to non-vested awards granted
prior to that date was zero.  Stock options vest
immediately.
 
 As a
result of FAS 123R, we estimate the value of share-based awards on the date of
grant using a Black-Scholes option-pricing model.  The determination
of the fair value of share-based payment awards on the date of grant using an
option-pricing model is affected by our stock price as well as assumptions
regarding a number of complex and subjective variables. These variables include
our expected stock price volatility over the term of the awards, actual and
projected employee stock option exercise behaviors, risk-free interest rate, and
expected dividends.
 
 If
factors change and we employ different assumptions in the application of FAS
123R during future periods, the compensation expense that we record under FAS
123R may differ significantly from what we have recorded in the current period.
Therefore, we believe it is important for investors to be aware of the high
degree of subjectivity involved when using option-pricing models to estimate
share-based compensation under FAS 123R. Option-pricing models were developed
for use in estimating the value of traded options that have no vesting or
hedging restrictions, are fully transferable and do not cause dilution. Because
our share-based payments have characteristics significantly different from those
of freely traded options, and because changes in the subjective input
assumptions can materially affect our estimates of fair values, in our opinion,
existing valuation models, including the Black-Scholes Option Pricing model, may
not provide reliable measures of the fair values of our share-based
compensation. Consequently, there is a risk that our estimates of the fair
values of our share-based compensation awards on the grant dates may bear little
resemblance to the intrinsic values realized upon the exercise, expiration,
cancellation, or forfeiture of those share-based payments in the future. Certain
share-based payments, such as employee stock options, may expire worthless or
otherwise result in zero intrinsic value as compared to the fair values
originally estimated on the grant date and expensed in our financial statements.
Alternatively, value may be realized from these instruments that are
significantly in excess of the fair values originally estimated on the grant
date and expensed in our financial statements. There currently is neither a
market-based mechanism nor other practical application to verify the reliability
and accuracy of the estimates stemming from these valuation models, nor a way to
compare and adjust the estimates to actual values. Although the fair value of
employee share-based awards is determined in accordance with FAS 123R and SAB
107 using a qualified option-pricing model, that value may not be indicative of
the fair value observed in a willing buyer/willing seller market transaction.
Estimates of share-based compensation expenses are significant to our financial
statements, but these expenses are based on the aforementioned option valuation
model and will never result in the payment of cash by us.
 
 The
guidance in FAS 123R and SAB 107 is still relatively new, and best practices are
not well established. The application of these principles may be subject to
further interpretation and refinement over time. There are significant
differences among valuation models, and there is a possibility that we will
adopt different valuation models in the future. This may result in a lack of
consistency in future periods and materially affect the fair value estimate of
share-based payments. It may also result in a lack of comparability with other
companies that use different models, methods, and assumptions.
 
 Theoretical
valuation models and market-based methods are evolving and may result in lower
or higher fair value estimates for share-based compensation. The timing,
readiness, adoption, general acceptance, reliability, and testing of these
methods is uncertain. Sophisticated mathematical models may require voluminous
historical information, modeling expertise, financial analyses, correlation
analyses, integrated software and databases, consulting fees, customization, and
testing for adequacy of internal controls.
 
 For
purposes of estimating the fair value of stock options granted during the six
months ended September 30, 2009 using the Black-Scholes model, we used the
historical volatility of our stock for the expected volatility assumption input
to the Black-Scholes model, consistent with the guidance in FAS 123R and SAB
107. The risk-free interest rate is based on the risk-free zero-coupon rate for
a period consistent with the expected option term at the time of grant. We do
not currently pay nor do we anticipate paying dividends, but we are required to
assume a dividend yield as an input to the Black-Scholes model. As such, we use
a zero dividend rate. The expected option term is estimated using both
historical term measures and projected termination estimates.
 
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  Goodwill
 
 We
account for goodwill in accordance with SFAS No. 142, “Goodwill and Other Intangible
Assets”(“SFAS No. 142”). SFAS No. 142 requires the use of a
non-amortization approach to account for purchased goodwill and certain
intangibles. Under the non-amortization approach, goodwill and certain
intangibles are not amortized into results of operations, but instead are
reviewed for impairment at least annually and written down and charged to
operations only in the periods in which the recorded value of goodwill and
certain intangibles exceeds its fair value. We have elected to perform our
annual impairment test in November of each calendar year. An interim goodwill
impairment test would be performed if an event occurs or circumstances change
between annual tests that would more likely than not reduce the fair value of a
reporting unit below its carrying amount. For purposes of performing the
goodwill impairment test, we concluded there is one reporting unit. During the
fourth quarter of year ending March 31, 2009, we completed the required annual
test, which indicated there was no impairment.
 
 Accounting
for Income Taxes
 
 In
connection with preparing our financial statements, we are required to estimate
our income taxes in each of the jurisdictions in which we operate. This process
involves the assessment of our net operating loss carry forwards and credits, as
well as estimating the actual current tax liability together with assessing
temporary differences resulting from differing treatment of items, such as
reserves and accrued  liabilities, for tax and accounting purposes. We
then assess the likelihood that deferred tax assets will be recovered from
future taxable income, and to the extent we believe that recovery is not likely,
we must establish a valuation allowance. Based on historical results, we believe
that it is more likely than not that we will not realize the value of our
deferred tax assets and therefore have provided a full valuation allowance
against our net deferred tax assets.
 
 Results
of Operations
 
 Three
Months Ended September 30, 2009 Compared to Three Months Ended September 30,
2008
 
 Revenue -Total revenue
was $5.4 million for the three months ended September 30, 2009, as compared
$10.5 million for the three months ended September 30, 2008.  Due to
increased liquidity requirements in maintaining a high level of growth,
we curtailed the number of contracts we directly performed  by
sub-contracting some and cancelling others.
 
 Operating Income (loss) -In
the three month period ending September 30, 2009, operating loss was $ 224
thousand compared to operating income of $1.2 million for the three month period
ending September 30, 2008.
 
 Total Cost of Revenue and Operating
Expenses - Our total cost of revenue and operating expenses principally
consist of construction materials, employee compensation and benefits,
depreciation and amortization, startup costs, and general and administrative
expense. In the three month period ending September 30, 2009, total cost of
revenue and operating expenses decreased by $3.7 million, compared to the three
month period ending September 30, 2008.  This was caused by decreasing
business volume and associated costs.
 
 Cost of Revenue- Cost of
revenue consists primarily of compensation and related fringe benefits for
project-related personnel, department management and all other dedicated project
related costs and indirect costs. Cost of Revenue decreased by $3.2
million, compared to the three month period ending September 30,
2008.  The decrease was caused by declining business volume and
associated costs.
 
 Selling, General and Administrative- Consists primarily of employee-related expenses, professional fees,
other corporate expenses and allocated overhead. We expect that in the future,
selling, general and administrative expenses will increase as we add personnel
and incur additional professional fees and insurance costs related to being a
publicly held company. Selling, general and administrative expenses were $666
thousand for the three month period ending September 30, 2009 compared to $1.1
million for the three month period ending September 30, 2008.
 
 Net Income (loss) –Net loss
for the three months ended September 30, 2009 was $580 thousand compared to net
income of $72 thousand for the three months ended September 30,
2008.
 
 Six
Months Ended September 30, 2009 Compared to Six Months Ended September 30,
2008
 
 Revenue -Total revenue
was $8.1 million for the six months ended September 30, 2009, as compared to
$28.4 million for the six months ended September 30, 2008.  Due to
increased liquidity requirements in maintaining a high level of growth,
we curtailed the number of contracts we directly performed  by
sub-contracting some and cancelling others.
 
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 Operating Income (loss) -In
the six month period ending September 30, 2009, operating loss was $232
thousand, compared to operating income of $4.8 million for the six month period
ending September 30, 2008.
 
 Total Cost of Revenue and Operating
Expenses - Our total cost of revenue and operating expenses principally
consist of construction materials, employee compensation and benefits,
depreciation and amortization, startup costs, and general and administrative
expense. In the six month period ending September 30, 2009, total cost of
revenue and operating expenses decreased by $15.3 million, compared to the six
month period ending September 30, 2008.  This was caused by decreasing
business volume and associated costs.
 
 Cost of Revenue- Cost of
revenue consists primarily of compensation and related fringe benefits for
project-related personnel, department management and all other dedicated project
related costs and indirect costs. Cost of Revenue decreased by $14.5
million, compared to the six month period ending September 30,
2008.  The decrease was caused by declining business volume and
associated costs.
 
 Selling, General and Administrative- Consists primarily of employee-related expenses, professional fees,
other corporate expenses and allocated overhead. We expect that in the future,
selling, general and administrative expenses will increase as we add personnel
and incur additional professional fees and insurance costs related to being a
publicly held company. Selling, general and administrative expenses were $1.4
million for the six month period ending September 30, 2009 compared to $2.1
million for the six month period ending September 30, 2008. Additional
expenses for the six month period ending September 30, 2009 are $130,407 in
non-cash compensation expenses resulting from SFAS 123(R) and loan discount
amortization expense of a long-tem loan in the amount of $241,338.
 
 Net Interest Income (Expense)
– Net interest expense decreased by $45.8 thousand compared to the six month
period ending September 30, 2008.  As discussed in the prior section,
we booked a non-cash charge of $241,338 for loan amortization
expense.
 
 Net Income (loss) –Net loss
for the six months ended September 30, 2009 was $1.1 million compared to net
income of $1.4 million for the six months ended September 30, 2008.
  Off-Balance
Sheet Arrangements
 
 We do not
have any off-balance sheet arrangements as defined in Regulation S-K promulgated
under the Securities Exchange Act of 1934.
 
 Liquidity
and Capital Resources
 
 This
liquidity and capital resources discussion compares the consolidated company
results for six months period ended September 30, 2009 and
2008.
 
 Cash used
for operating activities from continuing operations is our net loss adjusted for
certain non-cash items and changes in operating assets and liabilities. During
the first six months of 2009, cash used for operating activities was $121
thousand compared to cash used for operating activities of $7.8 million during
the first six months of 2008. The uses of cash in the first six months of 2009
relate primarily to the payment of general operating expenses of our subsidiary
companies.  The large change is due to less business
volume.
  During
the first six months of 2009, investing activities from continuing operations
used $517 thousand of cash as compared to $657 thousand used during the
comparable period in 2008.
 Financing
cash flows from continuing operations consist primarily of transactions related
to our debt and equity structure. In the first six months of 2009 there was
financing cash provided of approximately $855 thousand, compared to cash
provided of approximately $2.9 million for the first six months of 2008. 
The increase of cash from financing was due to the issuance of 1,599,000 shares
of stock.
 Our
future liquidity needs will depend on, among other factors, stability of
construction costs, interest rates, and a continued increase in infrastructure
contracts in India. We believe that our current cash balances and anticipated
operating cash flow, will be sufficient to fund our normal operating
requirements for at least the next 12 months. However, we may seek to secure
additional capital to fund further growth of our business, or the repayment of
debt, in the near term.
 
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 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.
  Item3.  Quantitative and Qualitative Disclosures About
Market Risk
 
 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.
 
 Item4.  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 as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of
September 30, 2009.  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 other than with respect to our procedures for including
the required auditor consents.
 
 We
believe our control procedures are sufficiently effective to ensure that
information requiring inclusion or 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.
 
 No  change  in  the
Company's internal control over financial reporting occurred during the quarter
ended September 30, 2009, that materially affected, or is
reasonably  likely  to  materially  affect,  the  Company's  internal
control over financial reporting.
 
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 PART
II – OTHER INFORMATION
  Item1.  Legal
Proceedings
 
 The
Company is not a party to any pending legal proceeding other than routine
litigation that is incidental to our business.
  Item2.  Unregistered
Sales of Equity Securities and Use of Proceeds
 
 On July
13, 2009, we issued 15,000 shares of our common stock to RedChip Companies Inc
..for services rendered.  The stock price on the date of the
transaction was $0.88 per share.  The issuance was made in reliance on
the exemption from registration afforded by Section 4(2) of the Securities Act
of 1933, as amended (the “Securities Act”) for transactions not involving a
public offering.  Neither the Company nor anyone acting on its behalf
offered or sold these securities by any form of general solicitation or general
advertising and no commission was paid in connection with the issuance of the
shares.  As the shares were issued for services we received no cash
proceeds for the issuance of the shares.
 
 Item3 Defaults
Upon Senior Securities
  None.
 Item4.  Submission
of Matters to a Vote of Security Holders
 
 None.
 
 Item5.  Other
Information
 
 None.
 
 Item6 Exhibits
 
 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.
 
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 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:
      November 12, 2009
              By:
              /s/ Ram
      MukundaRam
      MukundaChief
      Executive Officer and President (Principal Executive
    Officer)
 
 Date:
      November 12, 2009
              By:
              /s/ John B.
      SelvarajJohn
      B. SelvarajTreasurer,
      Principal Financial and Accounting Officer
 
 
 
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