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,
2008




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
      Euronextand
      two WarrantsCommon
      Stock
            NYSE
      EuronextCommon
      Stock Purchase Warrants
            NYSE
      Euronext




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
September 30,2008


Common
Stock, $.0001 Par
Value                                             8,780,107







Table of Contents




INDEX


India
Globalization Capital


QUARTERLY
REPORT ON FORM 10-Q


FOR
THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008





Table of
Contents







PagePART
      I – FINANCIAL INFORMATIONItem
      1.
            Financial
      Statements
            3Consolidated Balance Sheets as of
      September 30, 2008 (unaudited) and March 31,
    2008
            3Consolidated Statements of
      Operations (unaudited) for the three months ended September 30, 2008 and
      2007, and Predecessor Companies for September 30,
      2007
            4Consolidated Statements of
      Operations (unaudited) for the six months ended September 30, 2008 and
      2007, and Predecessor Companies for September 30,
      2007
            5Consolidated Statements of
      Stockholders (Deficit) Equity for the three months ended September 30,
      2008 (unaudited)
            6Consolidated Statements of Cash
      Flows (unaudited) for the three months ended September 30, 2008 and
      2007
            7Notes to Consolidated Financial
      Statements (unaudited)
            8Item
      2.
            Management’s Discussion and
      Analysis
            19Item
      3.
            Quantitative and Qualitative
      Disclosures About Market Risk
            19Item
      4.
            Controls and
      Procedures
            27PART
      II – OTHER INFORMATIONItem
      1.
            Legal
      Proceedings
            20Item
      2.
            Unregistered Sales of Equity
      Securities and Use of Proceeds
            20Item
      3.
            Defaults Upon Senior
      Securities
            20Item
      4.
            Submission of Matters to a Vote of
      Security Holders
            20Item
      5.
            Other
      Information
            20Item
      6.
            Exhibits
            2020Signatures21








Table of Contents









PARTI  - Financial Information





Item 1.  Financial
Statements





India
Globalization Capital, Inc.


CONSOLIDATED
BALANCE SHEETS





September
      30, 2008
              (unaudited)
            
            
            March
      31, 2008
              (audited)ASSETSCurrent
      Assets:Cash
      and cash equivalents
            
            $
            2,478,131
            
            
            $
            8,397,441Accounts
      Receivable
            
            
            13,057,496
            
            
            
            8,708,861Unbilled
      Receivables
            
            
            4,310,703
            
            
            
            5,208,722Inventories
            
            
            1,782,012
            
            
            
            1,550,080Interest
      Receivable - Convertible Debenture
            
            
            
            
            
            
            277,479Convertible
      debenture in MBL
            
            
            
            
            
            
            3,000,000Prepaid
      taxes
            
            
            88,683
            
            
            
            49,289Restricted
      cash
            
            
            98,144
            
            
            
            6,257Short
      term investments
            
            
            757,882
            
            
            
            671Prepaid
      expenses and other current assets
            
            
            2,123,173
            
            
            
            4,324,201Due
      from related parties
            
            
            341,680
            
            
            
            1,373,447Total
      Current Assets
            
            $
            25,037,904
            
            
            $
            32,896,447Property
      and equipment, net
            
            
            7,710,522
            
            
            
            7,337,361Build,
      Operate and Transfer (BOT under Progress)
            
            
            3,032,702
            
            
            
            3,519,965Goodwill
            
            
            17,483,501
            
            
            
            17,483,501Investment
            
            
            2,276,302
            
            
            
            1,688,303Deposits
      towards acquisitions
            
            
            187,500
            
            
            
            187,500Restricted
      cash, non-current
            
            
            1,744,831
            
            
            
            2,124,160Deferred
      tax assets - Federal and State, net of valuation
      allowance
            
            
            942,955
            
            
            
            1,013,611Other
      Assets
            
            
            2,327,422
            
            
            
            1,376,126Total
      Assets
            
            $
            60,743,639
            
            
            $
            67,626,973LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      Liabilities:Short-term
      borrowings and current portion of long-term debt
            
            $
            5,859,196
            
            
            $
            5,635,408Trade
      payables
            
            
            3,464,741
            
            
            
            1,771,151Advance
      from Customers
            
            
            262,067
            
            
            
            931,092Accrued
      expenses
            
            
            414,841
            
            
            
            1,368,219Taxes
      payable
            
            
            76,569
            
            
            
            58,590Notes
      Payable to Oliveira Capital, LLC
            
            
            
            
            
            
            3,000,000Notes
      Payable to Oliveira Trust
            
            
            1,034,652Due
      to related parties
            
            
            2,493,684
            
            
            
            1,330,291Other
      current liabilities
            
            
            2,041,824
            
            
            
            3,289,307Total
      current liabilities
            
            $
            15,647,574
            
            
            $
            17,384,058Long-term
      debt, net of current portion
            
            
            1,533,067
            
            
            
            1,212,841Advance
      from Customers
            
            -
            
            
            
            832,717Deferred
      taxes on income
            
            
            651,441
            
            
            
            608,535Other
      liabilities
            
            
            1,148,016
            
            
            
            6,717,109Total
      Liabilities
            
            $
            18,980,098
            
            
            $
            26,755,261Minority
      Interest
            
            
            15,032,860
            
            
            
            13,545,656STOCKHOLDERS’
      EQUITYCommon
      stock — $.0001 par value; 75,000,000 shares authorized; 8,780,107 issued
      and outstanding at September 30, 2008 and 8,570,107 issued and outstanding
      at March 31, 2008
            
            
            878
            
            
            
            857Additional
      paid-in capital
            
            
            32,888,962
            
            
            
            31,470,134Retained
      Earnings (Deficit)
            
            
            (2,781,870
            )
            
            
            (4,141,113
            )Accumulated
      other comprehensive (loss) income
            
            
            (3,377,289
            )
            
            
            (3,822
            )Total
      stockholders’ equity
            
            
            26,730,681
            
            
            
            27,326,056Total
      liabilities and stockholders’ equity
            
            $
            60,743,639
            
            
            $
            67,626,973





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
      Months
            
            
            Combined
      Predecessor Three MonthsEnded
            
            
            Ended
            
            
            EndedSeptember
      30, 2008
            
            
            September
      30, 2007
            
            
            September
      30, 2007Revenues:
            
            $
            10,498,870
            
            
            $
            
            
            $
            6,795,112Cost
      of revenue:
            
            
            (7,890,252
            )
            
            
            
            
            
            (4,394,592
            )Gross
      Profit
            
            
            2,608,618
            
            
            
            
            
            
            2,400,520Selling,
      General and Administrative
            
            
            (1,141,751
            )
            
            
            
            
            
            (450,965
            )Depreciation
            
            
            (235,725
            )
            
            
            
            
            
            (65,049
            )One
      Time Legal and start up costs
            
            
            
            
            
            
            (204,684
            )Total
      operating expenses
            
            
            (1,377,476
            )
            
            
            (204,684
            )
            
            
            (516,014
            )Operating
      income (loss)
            
            
            1,231,142
            
            
            
            (204,684
            )
            
            
            1,884,506Other
      income (expense):Interest
      and other income
            
            
            57,520
            
            
            
            603,145
            
            
            
            2,642,349Interest
      expense
            
            
            (327,775
            )
            
            
            (381,722
            )
            
            
            (432,168)Total
      other income (expense)
            
            
            (270,255
            )
            
            
            221,423
            
            
            
            2,210,181Income
      (loss) before provision for income taxes
            
            
            960,887
            
            
            
            16,739
            
            
            
            4,094,687(Provision)
      benefit for income taxes
            
            
            (273,515
            )
            
            
            (5,691
            )
            
            
            (193,717
            )Income
      (loss) after provision for income tax
            
            
            687,372
            
            
            
            11,048
            
            
            
            3,900,970Provision
      for Dividend on Preference Stock and its Tax
            
            
            
            
            
            
            
            
            
            
            (52,436)Minority
      interest
            
            
            (614,948
            )Net
      income (loss)
            
            $
            72,425
            
            
            $
            11,048
            
            
            $
            3,848,534Weighted
      average number of shares outstanding:Basic
            
            
            8,780,107
            
            
            
            13,974,500Diluted
            
            
            8,780,107
            
            
            
            13,974,500Net
      income per share:Basis
            
            $
            0.01
            
            
            $
            0.00Diluted
            
            $
            0.01
            
            
            $
            0.00





The
accompanying notes should be read in connection with the financial
statements











4
 Table of Contents








IndiaGlobalization
Capital, Inc.


CONSOLIDATED
STATEMENTS OF OPERATIONS


(unaudited)








Six
      Months
            
            
            Six
      Months
            
            
            Combined
      Predecessor Six MonthsEnded
            
            
            Ended
            
            
            EndedSeptember
      30, 2008
            
            
            September
      30, 2007
            
            
            September
      30, 2007Revenues:
            
            $
            28,427,252
            
            
            $
            
            
            $
            10,106,421Cost
      of revenue:
            
            
            (21,045,950
            )
            
            
            
            
            
            (7,141,827
            )Gross
      Profit
            
            
            7,381,302
            
            
            
            
            
            
            2,964,594Selling,
      General and Administrative
            
            
            (2,089,257
            )
            
            
            
            
            
            (880,566
            )Depreciation
            
            
            (467,308
            )
            
            
            
            
            
            (258,614
            )One
      Time Legal and start up costs
            
            
            
            
            
            
            (384,528
            )Total
      operating expenses
            
            
            (2,556,565
            )
            
            
            (384,528
            )
            
            
            (1,139,180
            )Operating
      income (loss)
            
            
            4,824,737
            
            
            
            (384,528
            )
            
            
            1,825,414Other
      income (expense):Interest
      and other income
            
            
            186,399
            
            
            
            1,298,063
            
            
            
            2,729,910Interest
      expense
            
            
            (802,085
            )
            
            
            (841,600
            )
            
            
            (683,929
            )Total
      other income (expense)
            
            
            (615,686
            )
            
            
            456,463
            
            
            
            2,045,981Income
      (loss) before provision for income taxes
            
            
            4,209,051
            
            
            
            71,935
            
            
            
            3,871,395(Provision)
      benefit for income taxes
            
            
            (1,362,605
            )
            
            
            (24,604
            )
            
            
            (410,438
            )Income
      (loss) after provision for income tax
            
            
            2,846,446
            
            
            
            47,331
            
            
            
            3,460,957Provision
      for Dividend on Preference Stock and its Tax
            
            
            
            
            
            
            
            
            
            
            (78,340
            )Minority
      interest
            
            
            (1,487,203
            )Net
      income (loss)
            
            $
            1,359,243
            
            
            $
            47,331
            
            
            $
            3,382,617Weighted
      average number of shares outstanding:Basic
            
            
            8,780,107
            
            
            
            13,974,500Diluted
            
            
            8,780,107
            
            
            
            13,974,500Net
      income per share:Basis
            
            $
            0.15
            
            
            $
            0.00Diluted
            
            $
            0.15
            
            
            $
            0.00











5
 Table of Contents








IndiaGlobalization Capital, Inc.


CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY


(unaudited)







Common
      Stock
            
            Additional
              Paid-in
            
            Accumulated
              Earnings
            
            
            Accumulated
              Other
              Comprehensive
      Income
            
            Total
              Stockholders'Shares
            
            Amount
            
            Capital
            
            (Deficit)
            
            
            /
      Loss
            
            EquityBalance
      at March 31, 2008
            
            
            8,570,107
            
            
            $
            857
            
            
            $
            31,470,134
            
            
            $
            (4,141,113
            )
            
            $
            (3,822
            )
            
            $
            27,326,056Issuance
      of 425,000 warrants to Oliveira Capital, LLC
            
            
            
            
            
            
            
            
            
            
            403,750
            
            
            
            
            
            
            
            
            
            
            
            403,750Issuance
      of common stock to Red Chip Companies
            
            
            10,000
            
            
            
            1
            
            
            
            47,098
            
            
            
            
            
            
            
            
            
            
            
            47,099Issuance
      of Common Stock to Oliveira Trust
            
            
            200,000
            
            
            
            20
            
            
            
            967,980
            
            
            
            
            
            
            
            
            
            
            
            968,000Net
      Income (Loss)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,359,243
            
            
            
            (3,373,467
            )
            
            
            (2,014,224
            )Balance
      at September 30, 2008
            
            
            8,780,107
            
            
            $
            878
            
            
            $
            32,888,962
            
            
            $
            (2,781,870
            )
            
            $
            (3,377,289
            )
            
            $
            26,730,681





The
accompanying notes should be read in connection with the financial
statements.








6
 Table of Contents







IndiaGlobalization Capital, Inc.


CONSOLIDATED
STATEMENT OF CASH FLOWS


(unaudited)





Six
      months ended
              
              
              Combined
                Predecessor
                Six
      months endedSeptember
      30, 2008
              
              
              September
      30, 2007
              
              
              September
      30, 2007Cash
      flows from operating activities:Net
      income
              
              $
              1,359,243
              
              
              $
              47,331
              
              
              $
              3,383,077Adjustment
      to reconcile net income to net cash used in operating
      activities:Interest
      earned on Treasury Bills
              
              
              
              
              
              
              (1,342,086
              )Non-cash
      compensation expense
              
              
              450,850Deferred
      taxes
              
              
              196,232
              
              
              
              (482,988
              )
              
              
              46,872Depreciation
              
              
              467,308
              
              
              
              
              
              
              
              258,944Loss/(Gain)
      on sale of property, plant and equipment
              
              
              (53,257
              )
              
              
              
              
              
              
              62,978Amortization
      of debt discount on Oliveira debt
              
              
              2,652
              
              
              
              697,759Changes
      in:Accounts
      receivable
              
              
              (6,053,309
              )
              
              
              
              
              
              
              (3,555,944
              )Unbilled
      Receivable
              
              
              192,888
              
              
              
              
              
              
              
              650,623Inventories
              
              
              (486,631
              )
              
              
              
              
              
              
              (567,804
              )Prepaid
      expenses and other current assets
              
              
              2,104,019
              
              
              
              52,431
              
              
              
              651,907Interest
      receivable - convertible debenture
              
              
              277,479
              
              
              
              (120,000
              )Deferred
      interest liability
              
              
              
              
              
              
              (177,112
              )Accrued
      expenses
              
              
              (976,024
              )
              
              
              245,812Taxes
      payable
              
              
              34,497
              
              
              
              152,592Trade
      Payable
              
              
              2,112,994
              
              
              
              
              
              
              
              1,743,124Other
      Current Liabilities
              
              
              (1,215,283
              )
              
              
              
              
              
              
              39,614Advance
      from Customers
              
              
              (1,370,592
              )
              
              
              
              
              
              
              (993,000
              )Non
      current assets
              
              
              (1,244,397
              )
              
              
              
              
              
              
              (346,274
              )Other
      non-current liabilities
              
              
              (5,056,129
              )
              
              
              
              
              
              
              (1,208,210
              )BOT
      under Progress
              
              
              
              
              
              
              
              
              
              
              3,260,051Minority
      Interest
              
              
              1,487,203Net
      cash (used) in operating activities
              
              
              (7,770,256
              )
              
              
              (572,037
              )
              
              
              3,425,958Cash
      flows from investing activities:Purchase
      of treasury bills
              
              
              
              
              
              
              (199,725,789
              )Maturity
      of treasury bills
              
              
              
              
              
              
              200,079,157Decrease
      (increase) in cash held in trust
              
              
              
              
              
              
              1,304Purchase
      of property and equipment
              
              
              (2,045,178
              )
              
              
              
              
              
              
              (18,087
              )Proceeds
      from sale of property and equipment
              
              
              117,433
              
              
              
              
              
              
              
              121,771Purchase
      of short term investments
              
              
              (825,238
              )Non
      Current Investments
              
              
              (895,550
              )
              
              
              
              
              
              
              387,424Investment
      in joint ventures
              
              
              
              
              
              
              
              
              
              
              (116,398
              )Restricted
      Cash
              
              
              (8,261
              )
              
              
              
              
              
              
              (78,379
              )Redemption
      of Convertible Debenture
              
              
              3,000,000Deposit
      to CWEL
              
              
              
              
              
              
              (250,000
              )Payment
      of deferred acquisition costs
              
              
              
              
              
              
              (118,429
              )Net
      cash provided (used) in investing activities
              
              
              (656,794
              )
              
              
              (13,757
              )
              
              
              296,331Cash
      flows from financing activities:Issuance
      of Preference Stock
              
              
              
              
              
              
              
              
              
              
              1,182,000Net
      movement in cash credit and bank overdraft
              
              
              993,974
              
              
              
              
              
              
              
              (5,145,988
              )Proceeds
      from other short-term borrowings
              
              
              1,607,247
              
              
              
              
              
              
              
              11,030Proceeds
      from long-term borrowings
              
              
              
              
              
              
              
              
              
              
              328,170Repayment
      of  long-term borrowings
              
              
              (975,137
              )
              
              
              
              
              
              
              (687,460
              )Due
      to related parties
              
              
              2,301,874
              
              
              
              
              
              
              
              (623,169
              )Proceeds
      from notes payable to stockholders
              
              
              
              
              
              
              275,000Repayment
      of note payable to Oliveira Capital, LLC
              
              
              (3,000,000
              )Proceeds
      from note payable to Oliveira Trust
              
              
              2,000,000Proceeds
      from private placementRepayment
      of notes payable to stockholder
              
              
              
              
              
              
              (600,000
              )Net
      cash (used in) provided by financing activities
              
              
              2,927,958
              
              
              
              (325,000
              )
              
              
              (4,935,417
              )Effect
      of exchange rate changes on cash and cash
equivalents
              
              
              (420,217
              )
              
              
              
              
              
              
              62,000Net
      increase in cash and cash equivalent
              
              
              (5,919,309
              )
              
              
              (910,794
              )
              
              
              (1,151,128
              )Cash
      and cash equivalent at the beginning of the period
              
              
              8,397,440
              
              
              
              1,169,422
              
              
              
              1,297,000Cash
      and cash equivalent at the end of the period
              
              $
              2,478,131
              
              
              $
              258,628
              
              
              $
              145,872Supplemental
      schedule of non cash financing activitiesFair
      value of issuance of warrants and common stock
              
              $
              1,418,849Accrual
      of deferred acquisition costs
              
              
              
              
              
              $
              40,000




The
accompanying notes should be read in connection with the financial
statements.






7
 Table of Contents




IndiaGlobalization Capital, Inc. (IGC)


Notes
to Consolidated Financial Statements (unaudited)




Note
1 - Nature of Operations and Basis of Presentation




IGC
operates through two infrastructure companies in India, Sricon Infrastructure
Private Limited (“Sricon”) and Techni Bharathi, Limited (“TBL”).  IGC
owns sixty-three percent of Sricon and seventy-seven percent of
TBL.  IGC through its subsidiaries has three core businesses: 1)
highway and other heavy construction, 2) mining & quarrying and 3) civil
construction and engineering of high temperature plants.




The
Company’s operations are subject to certain risks and uncertainties, including
among others, liquidity, 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, the company completed an initial public offering.  On February
19, 2007, the Company incorporated India Globalization Capital, Mauritius,
Limited (IGC-M), a wholly owned subsidiary, under the laws of
Mauritius.





Merger
and Accounting Treatment





On March
7, 2008, the Company consummated the acquisition of 63% of the equity of Sricon
Infrastructure Private Limited (Sricon) and 77% of the equity of Techni Bharathi
Limited (TBL). The shares of the two Indian companies, Sricon and TBL, are held
by IGC-M.  Most of the shares of Sricon and TBL acquired by IGC were
purchased directly from the companies. IGC purchased a portion of the shares
from the existing owners of the companies.  The founders and
management of Sricon own 37% of Sricon and the founders and management of TBL
own 23% of TBL. Prior to the acquisitions of Sricon and TBL, IGC had no
operations and was considered a developmental stage enterprise.





The
acquisitions were accounted for under the purchase method of
accounting.  Under this method of accounting, for accounting and
financial purposes, IGC-M, Limited was treated as the acquiring entity and
Sricon and TBL as the acquired entities.  The consolidated financial
statements provided here and going forward are the consolidated statements of
IGC, which include IGC-M following the date of formation of IGC-M and Sricon and
TBL following the date of the Company’s acquisition of the interests in Sricon
and TBL.  The consolidated financial statements do not reflect the
operating results of Sricon and TBL prior to the acquisition. However, for
comparative purposes, the combined statement of operations for the two acquired
companies are presented as the “Combined Predecessors” for the three and six
month period ended September 30, 2007.





Unless
the context requires otherwise, all references in this report to the “Company”,
“IGC”, “we”, “our”, and “us” refer to India Globalization Capital, Inc, together
with its wholly owned subsidiary IGC-M, and its direct and indirect subsidiaries
(Sricon and TBL).  Ownership in these two companies is reflected in
the financial statements as “Minority Interest”. The following represents our
corporate structure after the acquisitions:







Securities





We have
three securities listed on the NYSE Euronext: (1) common stock, $.0001 par value
(ticker symbol: IGC), (2) redeemable warrants to purchase common stock (ticker
symbol: IGC.WS) and (3) units consisting of one share of common stock and two
redeemable warrants to purchase common stock (ticker symbol:
IGC.U).  On March 8, 2006, we sold 11,304,500 units in our initial
public offering.  These 11,304,500 units include 9,830,000 units sold to
the public and the over-allotment option of 1,474,500 units exercised by the
underwriters of the public offering. The units were separated into common stock
and warrants on April 13, 2006.  Each warrant entitles the holder to
purchase one share of common stock at an exercise price of $5.00.  The
warrants expire on March 3, 2011, or earlier upon
redemption.  The registration statement for initial public offering
was declared effective on March 2, 2006.  The warrants are currently
not exercisable pending the effectiveness of a registration statement relating
to the warrants.  When the warrants become exercisable, they may be
exercised by contacting the Company or the transfer agent Continental Stock
Transfer & Trust Company.  We have a right to call the warrants,
provided the common stock has traded at a closing price of at least $8.50 per
share for any 20 trading days within a 30 trading day period ending on the third
business day prior to the date on which notice of redemption is given.  If
we call the warrants, the holder will either have to redeem the warrants by
purchasing the common stock from us for $5.00 or the warrants will
expire.





On March
7, 2008, we bought and redeemed a total of 6,159,346 shares.  As a
result, of the redemption and the subsequent issuance of an aggregate of 210,000
shares of common stock in private placements, including the issuance to Red Chip
Companies described below, on September 30, 2008, we had 8,780,107 shares
outstanding (including shares sold to our founders in a private placement prior
to the public offering) and 24,874,000 shares of common stock were reserved for
issuance upon exercise of redeemable warrants and underwriters’ purchase
option.





Unaudited
Interim Financial Statements





The
unaudited consolidated financial statements of IGC as of September 30, 2008 and
for the three and six months ended September 30, 2008 and 2007 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.




Pro
Forma Results of Operations





The
accompanying unaudited consolidated statements of operations only reflect the
operating results of companies acquired following the date of acquisition and do
not reflect the operating results prior to the acquisitions.  The
following are pro forma unaudited results of operations for the Company for the
three and six months ended September 30, 2008 and 2007 with the results for the
Company alone for the three and six months ended September 30, 2007 included for
comparative purposes.  The results in the column labeled “Pro Forma
Three Months Ended September 30, 2007” and “Pro Forma Six Months Ended September
30, 2007” assume the Sricon and TBL acquisitions occurred on April 1,
2007.  The unaudited pro forma results of operations are not
necessarily indicative of results of operations that may have actually occurred
had the acquisitions taken place on the dates noted, or the future financial
position or operating results of the Company. The pro forma adjustments are
based upon available information and assumptions that the Company believes are
reasonable. The pro forma adjustments include adjustments for interest expense,
start up costs, increased depreciation and amortization expense as a result of
the application of the purchase method of accounting based on the fair values of
the tangible and intangible assets.








8
 Table of Contents





PRO
FORMA CONSOLIDATED STATEMENTS OF OPERATIONS


(unaudited)





Three
      Months
            
            
            Three
      Months
            
            
            Pro
      forma Three MonthsEnded
            
            
            Ended
            
            
            EndedSeptember
      30, 2008
            
            
            September
      30, 2007
            
            
            September
      30, 2007Revenues:
            
            $
            10,498,870
            
            
            $
            
            
            $
            6,795,112Cost
      of revenue:
            
            
            (7,890,252
            )
            
            
            
            
            
            (4,394,592
            )Gross
      Profit
            
            
            2,608,618
            
            
            
            
            
            
            2,400,520Selling,
      general and administrative
            
            
            (1,141,751
            )
            
            
            
            
            
            (450,965
            )Depreciation
            
            
            (235,725
            )
            
            
            
            
            
            (65,049
            )One
      Time Legal and other start up costs
            
            
            
            
            
            
            (204,684
            )
            
            
            (204,684
            )Total
      operating expenses
            
            
            (1,377,476
            )
            
            
            (204,684
            )
            
            
            (720,698
            )Operating
      income (loss)
            
            
            1,231,142
            
            
            
            (204,684
            )
            
            
            1,679,822Other
      income (expense):Interest
      income
            
            
            57,520
            
            
            
            603,145
            
            
            
            2,642,349Interest
      expense
            
            
            (327,775
            )
            
            
            (381,722
            )
            
            
            (813,890
            )Other
      income (expense)
            
            
            (270,255
            )
            
            
            221,423
            
            
            
            1,828,459Income
      (loss) before provision for income taxes
            
            
            960,887
            
            
            
            16,739
            
            
            
            3,508,281(Provision)
      benefit for income taxes
            
            
            (273,515
            )
            
            
            (5,691
            )
            
            
            6,455Income
      (loss) after provision for income tax
            
            
            687,372
            
            
            
            11,048
            
            
            
            3,514,736Provision
      for Dividend on Preference Stock and its Tax
            
            
            
            
            
            
            
            
            
            
            (52,436)Minority
      interest
            
            
            (614,948
            )
            
            
            
            
            
            
            (947,994)Net
      income (loss)
            
            $
            72,425
            
            
            $
            11,048
            
            
            $
            2,514,306Weighted
      average number of shares outstanding:Basic
            
            
            8,780,107
            
            
            
            13,974,500Diluted
            
            
            8,780,107
            
            
            
            13,974,500Net
      income per share:Basis
            
            $
            0.01
            
            
            $
            0.00Diluted
            
            $
            0.01
            
            
            $
            0.00












9
 Table of Contents





Six
      Months
            
            
            Six
      Months
            
            
            Pro
      forma Six MonthsEnded
            
            
            Ended
            
            
            EndedSeptember
      30, 2008
            
            
            September
      30, 2007
            
            
            September
      30, 2007Revenues:
            
            $
            28,427,252
            
            
            $
            
            
            $
            10,106,421Cost
      of revenue:
            
            
            (21,045,950
            )
            
            
            
            
            
            (7,141,827
            )Gross
      Profit
            
            
            7,381,302
            
            
            
            
            
            
            2,964,594Selling,
      general and administrative
            
            
            (2,089,257
            )
            
            
            
            
            
            (880,566
            )Depreciation
            
            
            (467,308
            )
            
            
            
            
            
            (258,614
            )One
      Time Legal and other start up costs
            
            
            
            
            
            
            (384,528
            )
            
            
            (384,528
            )Total
      operating expenses
            
            
            (2,556,565
            )
            
            
            (384,528
            )
            
            
            1,523,708Operating
      income (loss)
            
            
            4,824,737
            
            
            
            (384,528
            )
            
            
            1,440,886Other
      income (expense):Interest
      income
            
            
            186,399
            
            
            
            1,298,063
            
            
            
            2,729,910Interest
      expense
            
            
            (802,085
            )
            
            
            (841,600
            )
            
            
            (1,525,529
            )Total
      Other income (expense)
            
            
            (615,686
            )
            
            
            456,463
            
            
            
            1,204,381Income
      (loss) before provision for income taxes
            
            
            4,209,051
            
            
            
            71,935
            
            
            
            2,645,267(Provision)
      benefit for income taxes
            
            
            (1,362,605
            )
            
            
            (24,604
            )
            
            
            8,936Income
      (loss) after provision for income tax
            
            
            2,846,446
            
            
            
            47,331
            
            
            
            2,654,203Provision
      for Dividend on Preference Stock and its Tax
            
            
            
            
            
            
            
            
            
            
            (78,340
            )Minority
      interest
            
            
            (1,487,203
            )
            
            
            
            
            
            
            (883,903
            )Net
      income (loss)
            
            $
            1,359,243
            
            
            $
            47,331
            
            
            $
            1,691,960Weighted
      average number of shares outstanding:Basic
            
            
            8,780,107
            
            
            
            13,974,500Diluted
            
            
            8,780,107
            
            
            
            13,974,500Net
      income per share:Basis
            
            $
            0.15
            
            
            $
            0.00Diluted
            
            $
            0.15
            
            
            $
            0.00




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.





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.






10
 Table of Contents





Revenue
Recognition




The
majority of the revenue recognized for the three and six month period ended
September 30, 2008 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.




Policy
for Goodwill / Impairment





Goodwill
represents the excess cost of an acquisition over the fair value of the Group's
share of net identifiable assets of the acquired subsidiary at the date of
acquisition.  Goodwill on acquisition of subsidiaries is disclosed
separately.  Goodwill is stated at cost less accumulated amortization
and impairment losses, if any.




The
company adopted provisions of FAS No. 142, "Goodwill and Other Intangible
Assets" ('FAS 142') which sets forth the accounting for goodwill and intangible
assets subsequent to their acquisition. FAS 142 requires that goodwill and
indefinite-lived intangible assets be allocated to the reporting unit level,
which the Group defines as each circle.





FAS 142
also prohibits the amortization of goodwill and indefinite-lived intangible
assets upon adoption, but requires that they be tested for impairment at least
annually, or more frequently as warranted, at the reporting unit
level.




The
goodwill impairment test under FAS 142 is performed in two phases. The first
step of the impairment test, used to identify potential impairment, compares the
fair value of the reporting unit with its carrying amount, including goodwill.
If the carrying amount of the reporting unit exceeds its fair value, goodwill of
the reporting unit is considered impaired, and step two of the impairment test
must be performed. The second step of the impairment test quantifies the amount
of the impairment loss by comparing the carrying amount of goodwill to the
implied fair value. An impairment loss is recorded to the extent the carrying
amount of goodwill exceeds its implied fair value.




Impairment
of long – lived assets and intangible assets




The
company reviews its long-lived assets, including identifiable intangible
assets with finite lives, for impairment whenever events or changes in business
circumstances indicate that the carrying amount of assets may not be fully
recoverable. Such circumstances include, though are not limited to, significant
or sustained declines in revenues or earnings and material adverse changes in
the economic climate.  For assets that the company intends to hold for
use, if the total of the expected future undiscounted cash flows produced by the
assets or subsidiary company is less than the carrying amount of the assets, a
loss is recognized for the difference between the fair value and carrying value
of the assets.  For assets the company intends to dispose of by
sale, a loss is recognized for the amount by which the estimated fair value less
cost to sell is less than the carrying value of the assets.  Fair
value is determined based on quoted market prices, if available, or other
valuation techniques including discounted future net cash flows.





Income
per common share:





Basic
earnings per share is computed by dividing net income (loss) applicable to
common stockholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per share reflect the additional dilution for
all potentially dilutive securities such as stock warrants and options. We
considered the potential dilutive effect of 23,799,000 warrants in the weighted
average shares computation.




For
September 30, 2008, the basis shares include shares sold in the IPO, founder’s
shares, shares sold in the private placement, shares awarded to the investors in
certain bridge loans made to the company, shares issued to our investor
relations firm and shares redeemed by the company.  The fully diluted
shares include basic shares plus the following: shares arising from the exercise
of warrants sold as part of the units in the offering plus shares arising from
the exercise of warrants issued to Oliveira Capital.   The UPO issued to
the underwriters (1,500,000 shares) is not considered in this calculation as the
strike price for the UPO is “out of the money” at $6.50 per share. The
historical weighted average per share, for our shares, for the three month
period ended September 30, 2008, was applied using the treasury method of
calculating the fully diluted shares.   The calculation for fully diluted
shares includes no shares and excludes 23,799,000 shares from the final EPS
computation.




11
 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.





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, India and Mauritius, which at times may exceed applicable
insurance limits. The Company has not experienced any losses in such accounts.
The Company believes it is not exposed to any significant credit risk on cash
and cash equivalent.  The company does not invest its cash in
securities that have an exposure to U.S. mortgages.




Recent
Pronouncements:





The
Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes,” an interpretation of FASB Statement No. 109 (“FIN 48”) on
April 1, 2007.  FIN 48 clarifies the criteria for the recognition,
measurement, presentation and disclosure of uncertain tax positions. A tax
benefit from an uncertain position may be recognized only if it is “more likely
than not” that the position is sustainable based on its technical merits. FIN 48
also provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure, and
transition.  In May 2007, the FASB issued Staff Position, FIN 48-1,
“Definition of Settlement in
FASB Interpretation No. 48” (FSP FIN 48-1) which provides guidance on how
an enterprise should determine whether a tax position is effectively settled for
the purpose of recognizing previously unrecognized tax
benefits.   FSP FIN 48-1 was effective with the initial adoption
of FIN 48.  The adoption of FIN 48 or FSP FIN 48-1 did not have a material
effect on the Company’s financial condition or results of
operations.





In
December 2007, the Financial Accounting Standards Board released SFAS 160
“Non-controlling Interests in Consolidated Financial Statements” that is
effective for annual periods beginning December 15, 2008. The pronouncement
resulted from a joint project between the FASB and the International Accounting
Standards Board and continues the movement toward the greater use of fair values
in financial reporting. Upon adoption of SFAS 160, the Company will re-classify
any non-controlling interests as a component of equity.





Management
does not believe that any other recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.




Note
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, 2008
            
            
            March
      31, 2008Secured
            
            $
            4,832
            
            
            $
            4,556Unsecured
            
            
            292
            
            
            
            3,306Total
            
            
            5,124
            
            
            
            7,862Add:Current
      portion of long term debt
            
            
            735
            
            
            
            773Total
            
            $
            5,859
            
            
            $
            8,635





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.





Note
4 - LONG TERM DEBT COMPRIMISES:


(Amounts
in Thousand US Dollars)





Long term
debt for the consolidated companies consists of the following:


As
      of
            
            
            As
      ofSeptember
      30, 2008
            
            
            March
      31, 2008Secured
            
            $
            -
            
            
            $
            -Term
      loans
            
            
            -
            
            
            
            632Loan
      for assets purchased under capital lease
            
            
            2,268
            
            
            
            1,354Total
            
            
            2,268
            
            
            
            1,982Less:
      Current portion (Payable within 1 year)
            
            
            735
            
            
            
            773Total
            
            $
            1,533
            
            
            $
            1,213






12
 Table of Contents




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
5 - RELATED PARTY TRANSACTIONS




For the
three month period ended September 30, 2008, $15,000 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
totaling $12,000 for the three month period.   The Company and IGN,
LLC have agreed to continue the agreement on a month-to-month
basis.





In April
2008 R.L. Srivastava, Chairman of Sricon, made an unsecured loan of $1,953,157
to Sricon which is due in 6 months from the date of the loan, which due date is
extendable after the 6 month period by mutual consent.  The loan’s
interest rate is 2% annually.




NOTE
6 -COMMITMENTS AND CONTINGENCY





The
Founders will be entitled to registration rights with respect to their shares of
common stock acquired prior to the Public Offering and the shares of common
stock they purchased in the Private Placement pursuant to an agreement executed
on March 3, 2006. The holders of the majority of these shares are entitled
to make up to two demands that the Company register these shares at any time
after the date on which the lock-up period expires.  In addition, the
Founders have certain “piggy-back” registration rights on registration
statements filed subsequent to the anniversary of the effective date of the
Public Offering. In addition, the holders of certain shares of common stock
of the Company and warrants to purchase Common Stock of the Company purchased
from the Company in private placements are entitled to demand and “piggy back”
registration rights.




In
connection with our proposed acquisition of a wind energy farm from
Chiranjjeevi Wind Energy Limited ("CWEL"), we have agreed to pay a finder’s fee
of 0.25% of the purchase price to Master Aerospace Consultants (Pvt) Ltd, a
consulting firm located in India. The fee is contingent on the consummation
of the transaction.




NOTE
7 - INVESTMENT ACTIVITIES





Contract
Agreement between IGC, CWEL, AMTL and MAIL





As
previously disclosed in our Form 8-K dated May 2, 2007 and Form 10-QSB for the
quarterly period ended September 30, 2007, on April 29, 2007, the Company
entered into a Contract Agreement Dated April 29, 2007 (“CWEL Purchase
Agreement”) with CWEL, Arul Mariamman Textiles Limited (AMTL), and
Marudhavel Industries Limited (MAIL), collectively CWEL. Pursuant to the CWEL
Purchase Agreement, the Company or its subsidiary in Mauritius will acquire 100%
of a 24-mega watt wind energy farm, consisting of 96 250-kilowatt wind turbines,
located in Karnataka, India to be manufactured by CWEL.





CWEL is a
manufacturer and supplier of wind operated electricity generators, towers and
turnkey implementers of wind energy farms.  On May 22, 2007, the
Company made a down payment of approximately $250,000 to
CWEL.  Pursuant to the First Amendment dated August 20, 2007 (as
previously disclosed in the Company’s Form 8-K dated August 22, 2007), if the
Company does not consummate the transaction with CWEL, approximately $187,500
will be returned to the Company.





The
Company is contemplating pursuing this opportunity, or a similar one if it is
able to obtain adequate funding from the exercise of warrants, debt or other
means.





NOTE
8 - COMMON STOCK





On August
24, 2005, the Company’s Board of Directors authorized a reverse stock split of
one share of common stock for each two outstanding shares of common stock and
approved an amendment to the Company’s Certificate of Incorporation to decrease
the number of authorized shares of common stock to 75,000,000. All references in
the accompanying financial statements to the number of shares of stock have been
retroactively restated to reflect these transactions.  On March 7,
2008 we redeemed and bought a total of 6,159,346 shares at $5.94 per
share.  At September 30, 2008 and 2007 we had 8,780,107 and 13,974,500
shares of common stock issued and outstanding respectively.   At
September 30, 2008 and 2007, 25,299,000 and 24,874,000 shares of common stock
respectively, were reserved for issuance upon exercise of redeemable warrants,
underwriters’ purchase option and warrants issued to Oliveira Capital,
LLC.








13
 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 September 30, 2007, on September 21, 2007, the
Company entered into a Share Subscription cum Purchase Agreement  (the
“Sricon Subscription Agreement”) dated as of September 15, 2007 with Sricon
Infrastructure Private Limited  (“Sricon”) and certain individuals
(collectively, the “Sricon Promoters”), pursuant to which the Company or its
subsidiary in Mauritius (IGC-M) will acquire (the “Sricon Acquisition”)4,041,676 newly-issued
equity shares  (the “New Sricon Shares”) directly from Sricon for
approximately $26 million and 351,840 equity shares from Mr. R. L. Srivastava
for approximately $3 million (both based on an exchange rate of INR 40 per USD)
so that at the conclusion of the transactions contemplated by the Sricon
Subscription Agreement the Company would ownapproximately63% of the outstanding
equity shares of Sricon.  The purchase price of $26 million was funded
with approximately $8.1 million in cash and a note for $17.9
million (computed at an exchange rate of approximately 40 INR to $1 USD).
 The expectation is that IGC will repay the note starting in October 2008.
 Failure to repay the note 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.





As
previously disclosed in our Form 8-K dated September 21, 2007 and Form 10-QSB
for the quarterly period ended September 30, 2007, on September 21, 2007, the
Company entered into a Share Subscription Agreement  (the “TBL
Subscription Agreement”) dated as of September 16, 2007 with Techni Bharathi
Limited (“TBL”) and certain individuals (collectively, the “TBL Promoters”),
pursuant to which the Company through its subsidiary in Mauritius (IGC-M)
acquired (the “TBL Acquisition”)7,150,000 newly-issued
company stock for approximately $6.9 million, 1,250,000 newly-issued convertible
preference shares for approximately $3.13 million  (both at an
exchange rate of INR 40 per USD; collectively, the “New Shares”) directly from
TBL and 5,000,000 convertible preference shares from Odeon, a Singapore based
holder of TBL securities, for approximately $2 million.  With the
conclusion of this transaction, on March 7, 2008 the Company ownedapproximately 77%, of
the outstanding equity shares of TBL.





No
acquisitions or mergers transactions occurred during the three month periods
ending June 30 and September 30, 2008.  Details of the Sricon and TBL
acquisitions can be found in the Company’s 10-KSB filed for year end March 31,
2008.




NOTE
10 – PRIVATE PLACEMENT





On July
18, 2008 we issued 10,000 shares of common stock to Red Chip Companies, our
investor relations firm as compensation for services.  This has been
expensed at $47,100.





In
February 2007 we borrowed $3 million from Oliveira Capital and made an
investment in MBL.  On August 6, 2008 MBL returned the investment and
we subsequently repaid the loan to Oliveira Capital.  As per the terms
of the loan agreement entered into between IGC and Oliveira Capital, we issued
425,000 warrants to Oliveira Capital.  The company calculated the
Black-Scholes value of these warrants at $403,750 based on a volatility of
32.40% and a strike price of $5.





As
previously disclosed, on September 30, 2008 we commenced a private placement
offering of unsecured promissory notes for an aggregate principal amount of up
to $5,000,000.  On September 30, 2008 we consummated an initial
closing of the offering in the total amount of $2,000,000 with Steven M.
Oliveira 1998 Charitable Remainder Unitrust (“Oliveira Trust”).  The
Note bears interest equal to 6% per annum and is payable in full twelve (12)
months from the date of issuance of the Note.  As additional
consideration for the investment in the Notes, IGC agreed to issue the Oliveira
Trust 200,000 shares of common stock.  If the Note is not repaid by
the Maturity Date, Oliveira Trust will be entitled to receive an additional
200,000 shares of common stock.  The value of the stock is accounted
at $968,000.




NOTE
11 - SUBSEQUENT EVENTS




None





Item2.  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-KSB filed on July 16, 2008.





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.





The 2008
share of infrastructure investment in India is expected to increase to 9
per cent of GDP, which is an increase from 5 per cent in
2006-07.  This forecast is based on The Indian Planning Commission’s
annual publication which surmised that for the Eleventh Plan period (2007-12), a
large investment of approximately $494 Billion would be required for
Infrastructure build and modernization.  The infrastructure
development industry is the largest employer in India – the construction
industry alone employs more than 30 million people.  According to the
Business Monitor International (BMI), by 2012, the construction industry’s
contribution to India’s GDP is forecasted to be 16.98%.  The current
global financial problems have begun to impact India and China. While China
recently responded by injecting a large amount of capital into the economy,
India has responded by cutting interest rates.  However, as of now,
banks are slow to increase lending.  The government of India is
acutely aware of the issues, and is actively involved in responding to the
overall lack of liquidity.





Our
operations are subject to certain risks and uncertainties, including among
others, liquidity, dependency on India’s 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 has a pan-India focus and is accredited with ISO
9001:2000 certification and its present and past clients include various Indian
government organizations.  Sricon employs approximately 250 skilled
employees and over 800 unskilled labor contractors.  It currently has
the capacity and prior experience to bid on contracts that are priced at a
maximum of about $116 million.






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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.




Core
Business Areas





Our core
business areas include highway and heavy construction, mining and quarrying and
construction and maintenance of high temperature plants.




Customers





Over the
past 10 years, Sricon has qualified in all states in India and has worked in
several, including Maharashtra, Gujarat, Orissa and Madhya
Pradesh.  The National Highway Authority of India (NHAI) awards
interstate highway contracts on a national level, while intra-state contracts
are awarded by state agencies. The National Thermal Power Corporation (NTPC)
awards contacts for  civil work associated with power plants. The
National Coal Limited (NCL) awards large mining contracts. Our customers
include, or have included, NHAI, NTPC, and various state public works
departments.





Foreign
Currency Translation





The
financial statements are reported in U.S. dollars. The Indian rupee is the
functional currency for 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:





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, 2007
            
            
            40.72
            
            
            
            39,75Year
      ended March 31, 2008
            
            
            40.12
            
            
            
            40.02Six
      months ended September 30, 2008
            
            
            42.62
            
            
            
            46.45




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.






15
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Revenue
Recognition




The
majority of the revenue recognized for three month period ended September 30,
2008 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




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.





Accounting
for Stock-Based Compensation




As of September 30, 2008, we had not granted any stock options under our
Employee Stock Plan.




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
November 2007, 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, 2008 Compared to Three Months Ended September 30,
2007




The
following results of operations discussion compares our consolidated company
results for the three months ended September 30, 2008 to the Combined
Predecessor Results of Operations for the three months ended September 30,
2007.  We believe this is a better measure of performance than
comparing the consolidated company results to pre-acquisition results because
there were no significant operating results before acquiring Sricon and TBL
companies.





Revenue -Total revenue
increased 55% to $10.5 million for the three months ended September 30,
2008, as compared to $6.8 million for the three months ended September 30, 2007.
Our revenue increased due to the increase in the number of new and active
contracts in our contract backlog.






16
 Table of Contents


Operating Income (loss) -In
the three month period ending September 30, 2008, operating margin is 1.2
million, compared to $1.9 million for the combined predecessor companies for the
three month period ending September 30, 2007.  Our operating margin
decreased due to the increased cost of raw materials.





Total Cost of Revenueand 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, 2008, total cost of revenue and operating expenses
increased by $3.4 million or 89%, compared to the three month period ending
September 30, 2007.





Costs of Revenue- Costs 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 increased by $3.5 million
or 80%, compared to the three month period ending September 30,
2007.  The increase was due to higher contract revenue during the
year.





Selling, General and Administrative- Consist 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 increased
by $0.7 million or 153%, compared to the three month period ending
September 30, 2007, due to higher scale of operations resulting from
acquisitions.





Net Interest Income (Expense)
– Net interest expense increased by $2.5 million or 89% compared to the
three month period ending September 30, 2007.  The increase was due to
one-time settlement income recorded in the period ended September 30,
2007.





Net Income (loss) –Net
income was $72.4 thousand for the three months ended September 30, 2008, as
compared to net income of $3.8 million for the three months ended September 30,
2007.  The September 30, 2008 net income includes non-cash expenses
related to the issuance of stocks and warrants as well as minority
interest.  The September 30, 2007 net income does not include minority
interest, but does include a one-time settlement.





Six
Months Ended September 30, 2008 Compared to Six Months Ended September 30,
2007




The
following results of operations discussion compares our consolidated company
results for the six months ended September 30, 2008 to the Combined Predecessor
Results of Operations for the six months ended September 30, 2007.  We
believe this is a better measure of performance than comparing the consolidated
company results to pre-acquisition results because there were no significant
operating results before acquiring Sricon and TBL companies.





Revenue -Total revenue
increased 181% to $28.4 million for the six months ended September 30,
2008, as compared to $10.1 million for the six months ended September 30, 2007.
Our revenue increased due to the increase in the number of new and active
contracts in our contract backlog.





Operating Income (loss) -In
the six month period ending September 30, 2008, operating margin is $4.8
million, compared to a loss of $1.8 million for the combined predecessor
companies for the six month period ending September 30, 2007.  Our
operating margin increased due to the increase in the number of new and
active contracts in our contract backlog.





Total Cost of Revenueand 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
ended September 30, 2008, total cost of revenue and operating expenses increased
by $15.3 million or 185%, compared to the six month period ended September 30,
2007.





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 increased by $13.9
million or 195%, compared to the six month period ending September 30,
2007.  The increase was due to higher contract revenue during the
year.





Selling, General and Administrative- Consist 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 increased
by $1.2 million or 137%, compared to the six month period ending September
30, 2007, due to higher scale of operations resulting from
acquisitions.





Net Interest Income (Expense)
– Net interest (expense) and other income decreased by $2.6 million or 130%
compared to the six month period ending September 30, 2007.  The
decrease was due to one-time settlement income recorded in the six month period
ended September 30, 2007.





Net Income (loss) –Net
income was $1.4 million for the six months ended September 30, 2008, as compared
to a net income of $3.4 million for the six months ended September 30, 2007. The
September 30, 2008 net income includes non-cash expenses related to the issuance
of stocks and warrants as well as minority interest.  The September
30, 2007 net income does not include minority interest, but does include
one-time settlements.





17
 Table of Contents





Liquidity
and Capital Resources




This
liquidity and capital resources discussion compares the consolidated company
results for the six months period ended September 30, 2008 and
2007.  The Predecessor cash flow statements for the six month ended
period September 30, 2007 are not available.




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 six month period ending September of 2008, cash used for operating
activities was $7.7 million compared to cash used for operating activities of
$0.6 million during the six month period ending September of 2007. The uses of
cash in the six month period ending September of 2008 relates primarily to the
payment of general operating expenses of our subsidiary companies.




During
the same six month period ending September 2008, investing activities from
continuing operations used $ 657 thousand of cash as compared to approximately
$14 thousand used during the comparable period in 2007. In the second quarter of
2008, we paid $2 million for property and equipment purchases, 1 million for
restricted cash and approximately $825 thousand for short term
investments.




Financing
cash flows from continuing operations consist primarily of transactions related
to our debt and equity structure. During the six month period ending September
of 2008, there was financing cash provided of approximately $2.9 million,
compared to cash used of approximately $325 thousand for the same six month
period of 2007.  The cash provided in 2008 was primarily due to use of bank
credit lines.  The cash used in 2007 was primarily due to repayment of
long-term notes to stockholders.




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, are inadequate to sustain the rapid growth
envisioned for the Company.  As such we are taking measures to
severely constrain growth until we have visibility into increased
liquidity.  As of now our bank lines in India are frozen at the
amounts borrowed and outstanding.  We continue to explore funding
sources including bank lines, equity, convert, debt, etc. However, there can be
no assurance that we will be able to access additional credit
facilities.  We expect to curtail our growth plans to match the
currently available liquidity.





Off-Balance
Sheet Arrangements





We do not
have any off-balance sheet arrangements as defined in Item 303(a) (4) (ii) of
Regulation S-K promulgated under the Securities Exchange Act of
1934.




Commitments




1)
Capital commitments




The
estimated amount of contracts remaining to be executed on capital account not
provided for as on September 30, 2008 are USD zero.




2)
Guarantees




The
Company had outstanding financial / performance bank guarantees of approximately
USD 4 million as of September 30, 2008.




a)
            
            Sricon  was
      awarded a contract from National Highway Authority of India (‘NHAI’) in
      2004-05, for restoring the Jaipur – Gurgaon National Highway 8. The total
      contract value was USD 5.10 million to be completed in 6 months. The
      entire stretch of the site was handed over on piecemeal basis without any
      defined schedule in contravention with contractual provisions and approved
      construction program and methodology. This has resulted in additional
      costs due to additional deployment of resources for prolonged period.
      Thus, Sricon invoked the escalation clause of the contract and filed a
      claim of USD 8.16 million. The dispute has been referred to arbitration.
      The Company has not recognized the claimed amounts on its
      books.b)
            
            Sricon
      was awarded a contract from National Highway Authority of India (‘NHAI’)
      in 2001-02 for construction of a four lane highway on the Namkkal bypass
      on National Highway 7, in the state of Tamilnadu. The total contract value
      was $4 million and the construction was to have been completed by November
      30, 2002. The escalation and variation claim of  $5.27 million
      is pending with NHAI. An arbitration process was initiated on July 3,
      2007. The company has not recognized the claim amounts on its
      books.c)
            
            TBL
      is contingently liable to pay four-thousand dollars towards interest
      and penalty towards Provident Dues as per the orders of the competent
      authorities.








18
 Table of Contents




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.





The
Global credit crisis has created significant risk in our ability to rapidly
scale our business.   In India, the bank lines have been frozen
at the amounts that are already borrowed and outstanding.  These
amounts are significantly lower than the sanctioned limits.  In the
U.S. we have had limited success in securing capital.  We have no
visibility as to when the credit and capital markets will recover. We are taking
steps to constrain our growth until there is visibility into bank credit, or
other financing.   Further, as we acquired Sricon for cash and a
note, inadequate liquidity could possibly result in a reduction in our ownership
in Sricon by tendering a portion of our shares in Sricon to repay the
note.





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, 2008.  Based upon that evaluation, management, including
our principal executive officer and principal financial officer, concluded that
the Company’s disclosure controls and procedures were effective in alerting it
in a timely manner to information relating to the Company required to be
disclosed in this report other than with respect to our procedures for including
the required auditor consents.




In
connection with the preparation of our Form 10-KSB for our fiscal year ended
March 31, 2008, we failed to request one of the consents from our auditors in a
timely manner.  This deficiency in our controls caused us to file our Form
10-KSB for fiscal year ended March 31, 2008 one day late.  We determined
that this control deficiency did not result, however, in a material misstatement
or lack of disclosure within the Form 10-KSB.




Based on
the changes and improvements made since July 16, 2008 (the date we filed our
Form 10-KSB), our management, including our principal executive officer and
principal financial officer, believes that we have designed and implemented a
new controls environment to address the weakness described above.  Such
remediation activities involved assigning the principal financial officer with
the responsibility of requesting consents from our auditors, allocating
additional personnel to the disclosure process, adopting written disclosure
controls and procedures, forming a disclosure controls committee that will
consider the materiality of information and determine disclosure obligations on
a timely basis and engaging outside counsel to review to future SEC
filings.




With
these programs in place, we believe our control procedures 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 year
ended September 30, 2008, that materially affected, or is reasonably
likely  to  materially  affect,  the  Company's  internal
control over financial reporting.





19
 Table of Contents




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.




Item
2.     Unregistered Sales of Equity Securities and Use of
Proceeds.




No
unregistered sales of securities were made during the quarter that were not
previously reported on a Current Report on Form 8-K.




Item
      3.
            Defaults
      Upon Senior Securities




None




Item 4.
            Submission
      of Matters to a Vote of Security
Holders





None





Item 5. Other Information





None.





Item
6.    Exhibits





The
following exhibits are filed as part of, or are incorporated by reference into,
this report:




(a)
Financial Statements





Our
financial statements as set forth in the Index to Financial Statements attached
hereto commencing on page F-1 are hereby incorporated by reference.





(b)
Exhibits.




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 14, 2008
            By:
            /s/ Ram
      MukundaRam
      MukundaChief
      Executive Officer and President (Principal Executive
    Officer)




Date:
      November 14, 2008
            By:
            /s/ John B.
      SelvarajJohn
      B. SelvarajTreasurer,
      Principal Financial and Accounting Officer









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