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 December 31,
      2009





o
            
            Transition
      report under Section 13 or 15(d) of the Exchange Act of
      1934.





Commission
file number000-1326205





INDIA
GLOBALIZATION CAPITAL, INC.


(Exact
name of small business issuer in its charter)




Maryland
              (State
      or other jurisdiction of incorporation or organization)
            20-2760393
              (I.R.S. Employer Identification
      No.)





4336 Montgomery Ave.
Bethesda, Maryland 20814


(Address
of principal executive offices)





(301) 983-0998


(Issuer’s
telephone number)




Securities
registered under Section 12(b) of the Exchange Act:





Title of Each Class
            Name of exchange on which
      registeredUnits,
      each consisting of one share of Common Stock
            NYSE
      Amexand
      two WarrantsCommon
      Stock
            NYSE
      AmexCommon
      Stock Purchase Warrants
            NYSE
      Amex





Check
whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past
90 days.    þ
Yes     o No





Indicate
by check mark whether the registrant is a large accelerated filer, or a
non-accelerated filer. See definition of “accelerated filer and large
accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):





Large
Accelerated Filer o   
Accelerated Filer o   
Non-Accelerated Filer þ





Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).    o
Yes     þ No





Indicate
the number of shares outstanding for each of the issuer’s classes of common
equity as of the latest practicable date.





Class
            Shares Outstanding as of December 31,
      2009Common
      Stock, $.0001 Par Value
            12,898,291




1
 Table of Contents








India Globalization Capital


QUARTERLY
REPORT ON FORM 10-Q


FOR
THE QUARTERLY PERIOD ENDED DECEMBER 31, 2009





Table of
Contents








PagePART
      I – FINANCIAL INFORMATIONItem
      1.
            Financial
      Statements
            3Consolidated Balance Sheets as of
      December 31, 2009 (unaudited) and March 31,
2009
            3Consolidated Statements of
      Operations (unaudited) for the three and nine months ended December 31,
      2009 and 2008.
            4Consolidated Statements of
      Comprehensive income (loss) for the three and  nine months ended
      December 31, 2009 and 2008 (unaudited)
            5Consolidated Statements of
      Stockholders (Deficit) Equity for the three months ended December 31, 2009
      (unaudited)
            6Consolidated Statements of
      Cash Flows (unaudited) for the nine months ended December 31, 2009 and
      2008
            7Notes to Consolidated Financial
      Statements (unaudited)
            8Item
      2.
            Management’s Discussion and
      Analysis
            17Item
      3.
            Quantitative and Qualitative
      Disclosures About Market Risk
            25Item
      4.
            Controls and
      Procedures
            25PART
      II – OTHER INFORMATIONItem
      1.
            Legal
      Proceedings
            26Item
      2.
            Unregistered Sales of Equity
      Securities and Use of Proceeds
            26Item
      3.
            Defaults Upon Senior
      Securities
            26Item
      4.
            Submission of Matters to a Vote of
      Security Holders
            26Item
      5.
            Other
      Information
            26Item
      6.
            Exhibits
            26Signatures
            27








2
 Table of Contents





PART
I  - Financial Information





Item 1.  Financial Statements





India
Globalization Capital, Inc.


CONSOLIDATED BALANCE SHEETS





December 31,
              2009
              (unaudited)
            
            
            March
      31,
              2009
              (audited)ASSETSCurrent
      Assets:Cash
      and cash equivalents
            
            $
            2,079,706
            
            
            $
            2,129,365Accounts
      Receivable
            
            
            5,648,811
            
            
            
            9,307,088Unbilled
      Receivables
            
            
            0
            
            
            
            2,759,632Inventories
            
            
            2,124,836
            
            
            
            2,121,837Prepaid
      taxes
            
            
            88,683
            
            
            
            88,683Restricted
      cash
            
            
            215,517Prepaid
      expenses and other current assets
            
            
            2,113,766
            
            
            
            2,801,148Due
      from related parties
            
            
            3,675,599
            
            
            
            290,831Total
      Current Assets
            
            
            15,946,918
            
            
            
            19,498,584Property
      and equipment, net
            
            
            1,141,709
            
            
            
            6,601,394Accounts
      Receivable – Long Term
            
            
            0
            
            
            
            2,769,196Goodwill
            
            
            6,931,307
            
            
            
            17,483,501Investments
      in Affiliates
            
            
            8,172,475
            
            
            
            0Other
      Investments
            
            
            64,655
            
            
            
            70,743Deposits
      towards acquisitions
            
            
            334,236
            
            
            
            261,479Restricted
      cash, non-current
            
            
            1,627,656
            
            
            
            1,430,137Deferred
      tax assets, net of valuation allowance
            
            
            972,493
            
            
            
            898,792Other
      Assets
            
            
            773,984
            
            
            
            2,818,687Total
      Assets
            
            $
            35,965,433
            
            
            $
            51,832,513LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      Liabilities:Short-term
      borrowings and current portion of long-term debt
            
            $
            924,495
            
            
            $
            3,422,239Trade
      payables
            
            
            4,020,618
            
            
            
            462,354Advance
      from Customers
            
            
            0
            
            
            
            206,058Accrued
      expenses
            
            
            469,806
            
            
            
            555,741Taxes
      payable
            
            
            76,569
            
            
            
            76,569Notes
      Payable
            
            
            4,120,000
            
            
            
            1,517,328Due
      to related parties
            
            
            1,339,010
            
            
            
            1,214,685Other
      current liabilities
            
            
            114,134
            
            
            
            1,991,371Total
      current liabilities
            
            $
            11,064,632
            
            
            $
            9,446,345Long-term
      debt, net of current portion
            
            
            69,174
            
            
            
            1,497,458Deferred
      taxes on income
            
            
            0
            
            
            
            590,159Other
      liabilities
            
            
            1,332,359
            
            
            
            2,440,676Total
      Liabilities
            
            $
            12,466,165
            
            
            $
            13,974,638COMMITMENTS
      AND CONTINGENCYSTOCKHOLDERS’
      EQUITYCommon
      stock — $.0001 par value; 75,000,000 shares authorized; 12,898,291 issued
      and outstanding at December 31, 2009 and issued and 10,091,171
      outstanding at March 31, 2009.
            
            
            1,291
            
            
            
            1,009Additional
      paid-in capital
            
            
            36,534,929
            
            
            
            33,186,530Retained
      Earnings (Deficit)
            
            
            (11,954,396
            )
            
            
            (4,662,689
            )Accumulated
      other comprehensive (loss) income (AOCI)
            
            
            (2,721,057
            )
            
            
            (4,929,581
            )Total
      stockholders’ equity
            
            
            21,860,767
            
            
            
            23,595,269Non-controlling
      Interest
            
            
            1,638,501
            
            
            
            14,262,606Total
      liabilities and stockholders’ equity
            
            $
            35,965,433
            
            
            $
            51,832,513




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





3
 Table of Contents





IndiaGlobalization Capital,
Inc.


CONSOLIDATED STATEMENTS OF OPERATIONS


(unaudited)





Three
      Months Ended
              December
      31, 2009
            
            
            Three
      Months Ended
              December
      31, 2008
            
            
            Nine
      Months Ended
              December
      31, 2009
            
            
            Nine
      Months Ended
              December
      31, 2008Revenue:
            
            $
            5,909,024
            
            
            $
            3,836,428
            
            
            
            13,994,503
            
            
            $
            32,263,680Cost
      of revenue:
            
            
            (5,326,393
            )
            
            
            (2,902,431
            )
            
            
            (11,829,440
            )
            
            
            (23,948,382
            )Gross
      Profit
            
            
            582,631
            
            
            
            933,996
            
            
            
            2,165,063
            
            
            
            8,315,299Selling,
      General and Administrative
            
            
            (3,049,603
            )
            
            
            (2,135,267
            )
            
            
            (4,446,137
            )
            
            
            (4,224,524
            )Depreciation
            
            
            (101,991
            )
            
            
            (212,527
            )
            
            
            (519,812
            )
            
            
            (679,835
            )Total
      operating expenses
            
            
            (3,151,594
            )
            
            
            (2,347,794
            )
            
            
            (4,965,949
            )
            
            
            (4,904,359
            )Operating
      income (loss)
            
            
            (2,568,963
            )
            
            
            (1,413,798
            )
            
            
            (2,800,886
            )
            
            
            3,410,939Compensation
      Expense
            
            
            (123,139
            )
            
            
            
            
            
            
            (123,139
            )Other
      income (expense):Interest
      and other income
            
            
            40,884
            
            
            
            137,663
            
            
            
            146,477
            
            
            
            324,062Interest
      expense
            
            
            (252,619
            )
            
            
            (442,265
            )
            
            
            (1,019,687
            )
            
            
            (1,244,350
            )Amortization
      of debt discount
            
            
            (178,218
            )
            
            
            
            
            
            
            (178,218
            )Total
      other income (expense)
            
            
            (389,953
            )
            
            
            (304,602
            )
            
            
            (1,051,428
            )
            
            
            (920,288
            )Equity
      in (gain) loss of affiliates
            
            
            16,446
            
            
            
            
            
            
            
            16,446Income
      before extraordinary items and income taxes
            
            
            (3,065,609
            )
            
            
            (1,718,400
            )
            
            
            (3,959,007
            )
            
            
            2,490,651(Provision)
      benefit for income taxes
            
            
            103,281
            
            
            
            (565,885
            )
            
            
            (54,486
            )
            
            
            (1,928,490
            )Income
      before extraordinary items
            
            
            (2,962,328
            )
            
            
            (2,284,285
            )
            
            
            (4,013,493
            )
            
            
            562,161Extraordinary
      items:Loss
      on dilution of stake in Sricon
            
            
            (3,205,616
            )
            
            
            
            
            
            
            (3,205,616
            )Consolidated
      Net Income
            
            
            (6,167,944
            )
            
            
            (2,284,285
            )
            
            
            (7,291,709
            )
            
            
            562,161Net
      Income attributable to non-controlling interest
            
            
            (7,574
            )
            
            
            550,207
            
            
            
            (72,599
            )
            
            
            (936,996
            )Net
      income (loss) attributed to controlling interest
            
            $
            (6,175,518
            )
            
            $
            (1,734,078
            )
            
            $
            (7,291,708
            )
            
            $
            (374,835
            )Weighted
      average number of shares outstanding:Basic
            
            
            12,898,291
            
            
            
            8,780,107
            
            
            
            12,898,291
            
            
            
            8,780,107Diluted
            
            
            13,559,184
            
            
            
            8,780,107
            
            
            
            13,559,184
            
            
            
            8,780,107Net
      income per share:Basis
            
            $
            (0.48
            )
            
            $
            (0.20
            )
            
            $
            (0.56
            )
            
            $
            (0.04
            )Diluted
            
            $
            (0.45
            )
            
            $
            (0.20
            )
            
            $
            (0.54
            )
            
            $
            (0.04
            )




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




4
 Table of Contents








India
Globalization Capital, Inc.


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS)


(unaudited)





Three
            
            
            Three
            
            
            Nine
            
            
            NineMonths
      Ended
            Months
      Ended
            
            Months
      Ended
            Months
      Ended31-Dec-09
            31-Dec-08
            
            31-Dec-09
            30-Dec-08Net
      income / (loss)
            
            $
            (6,175,518
            )
            
            $
            (1,734,078
            )
            
            $
            (7,291,708
            )
            
            $
            (374,835
            )Foreign
      currency translation adjustments
            
            
            2,167,829
            
            
            
            (746,217
            )
            
            
            3,357,114
            
            
            
            (4,119,684
            )Deconsolidation
      of Sricon
            
            
            (1,148,591
            )
            
            
            
            
            
            
            (1,148,591
            )Comprehensive
      income (loss)
            
            $
            (5,156,280
            )
            
            $
            (2,480,295
            )
            
            $
            (5,083,185
            )
            
            $
            (4,494,519
            )







5
 Table of Contents





India
Globalization Capital, Inc.


CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY


(unaudited)









Common
      Stock
            
            Additional
              Paid-in
            
            Accumulated
      Retained
              Earnings
            
            Accumulated
              Other
              Comprehensive
      Income
            
            
            Non
              Controlling
            
            Total
              Stockholders'
            
            ComprehensiveShares
            
            
            Amount
            
            Capital
            
            (Deficit)
            
            /
      Loss
            
            
            Interest
            
            Equity
            
            IncomeBalance
      at March 31, 2009
            
            $
            10,091,171
            
            
            $
            1,009
            
            $
            33,186,530
            
            $
            (4,662,689
            )
            $
            (4,929,581
            )
            $
            14,262,606
            
            $
            37,857,875
            
            $Stock
      Option for 1413000 grants
            
            
            
            
            
            
            
            
            
            90,997
            
            
            
            
            
            
            
            
            
            
            
            90,997Issue
      of 78820 common stock
            
            
            78,820
            
            
            
            8
            
            
            39,402
            
            
            
            
            
            
            
            
            
            
            
            39,410Issue
      of Common Stock for Red Chip
              Companies
      @ .88 per share in Sep 09
            
            
            15,000
            
            
            
            2
            
            
            13,198
            
            
            
            
            
            
            
            
            
            
            
            13,200Issuance
      of 1599000 shares @ 1.25 per share
            
            
            1,599,000
            
            
            
            160
            
            
            1,638,690
            
            
            
            
            
            
            
            
            
            
            
            1,638,850Loss
      of translation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,189,286
            
            
            
            
            
            1,189,286
            
            
            1,189,286Net
      Income for non controlling interest
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            65,025
            
            
            65,025Net
      Income (Loss)
            
            
            
            
            
            
            
            
            
            
            
            
            (1,116,189
            )
            
            
            
            
            
            
            
            (1,116,189
            )
            
            (1,116,189
            )Balance
      at September 30, 2009
            
            
            11,783,991
            
            
            
            1,179
            
            
            34,968,817
            
            
            (5,778,878
            )
            
            (3,740,295
            )
            
            14,327,631
            
            
            39,778,454
            
            
            73,097Issue
      of 51000 common stock @ 1.60 per share
            
            
            51,000
            
            
            
            5
            
            
            81,595
            
            
            
            
            
            
            
            
            
            
            
            81,600Issue
      of 3300 common stock @ 1.58 per share
            
            
            3,300
            
            
            
            1
            
            
            5,054
            
            
            
            
            
            
            
            
            
            
            
            5,055Issue
      of 530,000 common stock to Bricoleur Capital
            
            
            530,000
            
            
            
            53
            
            
            811,528
            
            
            
            
            
            
            
            
            
            
            
            811,582Issue
      of 530,000 common stock to Oliviera
            
            
            530,000
            
            
            
            53
            
            
            667,936
            
            
            
            
            
            
            
            
            
            
            
            667,989Loss
      on translation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,167,829
            
            
            
            
            
            2,167,829
            
            
            2,167,829Impact
      of de-consolidation of Sricon
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,148,591
            )
            
            
            
            
            (1,148,591
            )
            
            (1,148,591
            )Elimination
      of non controlling interest pertaining to Sricon
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (12,696,704
            )
            
            (12,696,704
            )Net
      Income for non controlling interest
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            7,574
            
            
            7,574Net
      /Income (Loss)
            
            
            
            
            
            
            
            
            
            
            
            
            (6,175,518
            )
            
            
            
            
            
            
            
            (6,175,518
            )
            
            (6,175,518
            )Rounding
      Difference
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2
            )Balance
      at December 31, 2009
            
            $
            12,898,291
            
            
            $
            1,291
            
            $
            36,534,930
            
            $
            (11,954,396
            )
            $
            (2,721,057
            )
            $
            1,638,501
            
            $
            23,499,270
            
            $
            (5,083,185
            )





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





6
 Table of Contents




India
Globalization Capital, Inc.


CONSOLIDATED STATEMENT OF CASH FLOWS


(unaudited)




Nine
      months endedDecember
      31, 2009
            
            
            December
      31, 2008Cash
      flows from operating activities:Net
      income
            
            $
            (7,291,708
            )
            
            $
            (374,835
            )Adjustment
      to reconcile net income to net cash used in operating
      activities:Non-cash
      compensation & interest expense
            
            
            375,758
            
            
            
            450,850Deferred
      taxes
            
            
            (68,699
            )
            
            
            222,873Depreciation
            
            
            519,812
            
            
            
            679,835Loss/(Gain)
      on sale of property, plant and equipment
            
            
            0
            
            
            
            (50,905
            )Amortization
      of debt discount
            
            
            178,219
            
            
            
            2,652Deferred
      acquisition costs written-off
            
            
            1,854,750
            
            
            
            0Loss
      on dilution of stake
            
            
            3,205,616
            
            
            
            0Loss
      on extinguishment of loan
            
            
            586,785
            
            
            
            0Non
      controlling interest
            
            
            72,599
            
            
            
            0Equity
      in earnings of affiliates
            
            
            (16,446)
            
            
            
            0Changes
      in:Accounts
      and unbilled receivable
            
            
            (5,364,846
            )
            
            
            (5,693,844
            )Inventories
            
            
            (389,904
            )
            
            
            (436,945
            )Prepaid
      expenses and other assets
            
            
            (94,307
            )
            
            
            730,991Accrued
      expenses
            
            
            (85,935
            )
            
            
            (925,311
            )Taxes
      payable
            
            
            0
            
            
            
            87,497Trade
      Payable
            
            
            3,621,690
            
            
            
            243,425Advance
      from Customers
            
            
            0
            
            
            
            (1,347,958
            )Other  liabilities
            
            
            14,503
            
            
            
            (2,005,072
            )Due
      to / from related parties
            
            
            118,344
            
            
            
            2,124,212Net
      cash provided (used) in operating activities
            
            
            (2,763,768
            )
            
            
            (6,292,536
            )Cash
      flows from investing activities:Net
      proceeds from purchase and sale of property and equipment
            
            
            (123,450
            )
            
            
            (1,843,985
            )Purchase
      of investments
            
            
            0
            
            
            
            (85,116
            )Proceeds
      from sale of investments
            
            
            0
            
            
            
            1,424,897Restricted
      Cash
            
            
            (261,232
            )
            
            
            116,545Deposit
      towards acquisitions, net of cash acquired
            
            
            (600,024
            )
            
            
            0Redemption
      of convertible debenture
            
            
            
            
            
            
            3,000,000Net
      cash provided (used) in investing activities
            
            
            (984,706
            )
            
            
            2,612,341Cash
      flows from financing activities:Net
      proceeds / repayment of  cash credit and bank
      overdraft
            
            
            82,097
            
            
            
            (2,153,085
            )Proceeds
      from other short-term and long-term borrowings
            
            
            (75,879
            )
            
            
            1,192,408Repayment
      of  long-term borrowings
            
            
            0
            
            
            
            (569,372
            )Net
      proceeds from issue of equity shares
            
            
            1,777,939Repayment
      of notes payable
            
            
            
            
            
            
            (2,756,010
            )Proceeds
      from notes acquired
            
            
            2,000,000
            
            
            
            2,000,000Interest
      paid
            
            
            (72,710
            )
            
            
            0Net
      cash provided (used) by financing activities
            
            
            3,711,447
            
            
            
            (2,286,059
            )Effect
      of exchange rate changes on cash and cash equivalents
            
            
            (12,632
            )
            
            
            (691,910Net
      increase in cash and cash equivalent
            
            
            (49,659
            )
            
            
            (6,658,165
            )Cash
      and cash equivalent at the beginning of the period
            
            
            2,129,365
            
            
            
            8,397,440Cash
      and cash equivalent at the end of the period
            
            $
            2,079,706
            
            
            $
            1,739,275




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





7
 Table of Contents




Background
of India Globalization Capital, Inc. (IGC)





Notes to Consolidated Financial Statements
(unaudited)





NOTE
1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION





The
operations of IGC are based in India. IGC owns 100% of a subsidiary in Mauritius
called IGC-Mauritius (IGC-M).  This company in turn operates through
five subsidiaries in India.   We own twenty two (22.3%) of
percent of Sricon Infrastructure Private Limited (“Sricon”) and seventy seven
percent of Techni Bharathi, Limited (“TBL”).  We also beneficially own
one hundred percent of IGC India Mining and Trading, Private Limited, IGC
Logistic, Private Limited, and IGC Materials, Private Limited. Through our
subsidiaries we operate in the infrastructure industry.  Operating as
a fully integrated infrastructure company, IGC, through its subsidiaries, has
expertise in road building, mining and quarrying and engineering of high
temperature plants. The Company’s medium term plans are to expand each of these
core competencies while offering an integrated suite of service offerings to our
customers.





The
Company’s operations are subject to certain risks and uncertainties, including
among others, dependency on India’s economy and government policies, seasonal
business factors, competitively priced raw materials, dependence upon key
members of the management team and increased competition from existing and new
entrants.





India
Globalization Capital, Inc.





IGC, a
Maryland corporation, was organized on April 29, 2005 as a blank check
company formed for the purpose of acquiring one or more businesses with
operations primarily in India through a merger, capital stock exchange, asset
acquisition or other similar business combination or acquisition. On March 8,
2006, we completed an initial public offering.  On February 19, 2007,
we incorporated India Globalization Capital, Mauritius, Limited (IGC-M), a
wholly owned subsidiary, under the laws of Mauritius.  On March 7,
2008, we consummated the acquisition of 63% of the equity of Sricon
Infrastructure Private Limited (Sricon) and 77% of the equity of Techni Bharathi
Limited (TBL).   On February 19, 2009 IGC-M beneficially
purchased 100% of IGC Mining and Trading, Limited based in Chennai
India.





On July
4, 2009 IGC-M beneficially purchased 100% of IGC Materials, Private Limited, and
100% of IGC Logistics, Private Limited.  Both these companies are
based in Nagpur, India.





Effective
October 1, 2009 we decreased our ownership in Sricon Infrastructure from 63% to
22.3%.  By way of background: As explained in Note 13
(Deconsolidation) on or about March 7, 2008 we consummated the Sricon
Acquisition by purchasing 63% for about $29 million (based on an exchange rate
of 40 INR for $1 USD).  We subsequently borrowed around $17.9 million
(based on 40 INR for 1 USD) from Sricon.  Through 2008 and 2009 we
expanded our business offerings beyond construction to include a rapidly growing
materials business. We have successfully repositioned the company as a materials
and construction company; with construction activity in our TBL subsidiary and
materials activity in our other subsidiaries.  Rather than continue to
owe Sricon $17.9 million, and more importantly, continue to fund two
construction companies, we decreased our ownership in Sricon by an amount
proportionate to the loan.  The impact of this is that we no longer
owe Sricon $17.9 million and our corresponding ownership is a non-controlling
interest.  The deconsolidation of Sricon from the balance sheet of
IGC, results in shrinking the IGC balance sheet and a one-time charge on the
P&L.




Merger
and Accounting Treatment





Most of
the shares of Sricon and TBL acquired by IGC were purchased directly from the
companies.  IGC purchased a portion of the shares from the existing
owners of the companies.  The founders and management of Sricon own
77.7% of Sricon and the founders and management of TBL own 23% of
TBL.


Our
interest in Sricon and the ownership interest of the founders and management, of
TBL, is reflected in our financial statements as “Non-Controlling
Interest”.





Unless
the context requires otherwise, all references in this report to the “Company”,
“IGC”, “we”, “our”, and “us” refer to India Globalization Capital, Inc, together
with its wholly owned subsidiary IGC-M, and its direct and indirect subsidiaries
(Sricon, TBL IGC-IMT, IGC-LPL, and IGC-MPL).





IGC’s
organizational structure is as follows:









8
 Table of Contents





Securities





We have
three securities listed on NYSE Amex : (1) common stock, $.0001 par value
(ticker symbol: IGC), (2) redeemable warrants to purchase common stock (ticker
symbol: IGC.WS) and (3) units consisting of one share of common stock and two
redeemable warrants to purchase common stock (ticker symbol:
IGC.U).  Each Unit consists of one share of common stock and two
warrants.  The Units may be separated into common stock and
warrants.  Each warrant entitles the holder to purchase one share of
common stock at an exercise price of $5.00.  The warrants
expire on March 3, 2011, or earlier upon redemption.  The
registration statement for initial public offering was declared effective on
March 2, 2006.   The warrants may be exercised by contacting the
Company or the transfer agent Continental Stock Transfer & Trust
Company.  We have a right to call the warrants, provided the common
stock has traded at a closing price of at least $8.50 per share for any 20
trading days within a 30 trading day period ending on the third business day
prior to the date on which notice of redemption is given.  If we call the
warrants, the holder will either have to redeem the warrants by purchasing the
common stock from us for $5.00 or the warrants will expire.





On
January 9, 2009 we completed an exchange of 11,943,878 public and private
warrants for 1,311,064 new shares of common stock.  Following the
issuance of the shares relating to the warrant exercise, we had 10,091,971
shares of common stock and 11,855,122 warrants outstanding as of March
31, 2009.  On May 13, 2009, we issued 78,820 shares of common stock to
certain of our officers and directors pursuant to our 2008 Omnibus Incentive
Plan.  Subsequent to this issuance, as of June 30, 2009 we had
10,169,991 shares of common stock issued and outstanding.





On July
13, 2009, we issued 15,000 shares of common stock to RedChip Companies Inc. for
services rendered.










On
October 5, 2009, the Company issued 530,000 new shares of common stock as
partial consideration for the exchange of an outstanding promissory note for a
new interest free note of $2,120,000 with an extended due date of October 10,
2010.





On
October 13, 2009, the Company entered into an At The Market (“ATM”) Agency
Agreement with Enclave Capital LLC.  Under the ATM Agency Agreement,
we may offer and sell shares of our common stock having an aggregate offering
price of up to $4 million from time to time.  Sales of the shares, if
any, will be made by means of ordinary brokers’ transactions on the NYSE Amex at
market prices, or as otherwise agreed with Enclave.  We estimate that
the net proceeds from the sale of the shares of common stock we are offering
will be approximately $3.73 million.  We intend to use the net
proceeds from the sale of securities offered for working capital, repayment of
indebtedness and other general corporate purposes.





On
October 16, 2009, the Company issued 530,000 new shares of common stock in a
private placement in connection with the sale of an interest free, one year,
promissory note in the amount of $2,000,000 to an investor.





In
November 2009 we sold 3,300 shares of our common stock under the ATM Agency
Agreement.




Following
the issuance of the shares in the preceding transactions, we have 12,898,291
shares of common stock outstanding, warrants to purchase 11,855,122 shares of
common stock outstanding and new warrants to purchase 267,800 shares of common
stock outstanding.




Unaudited
Interim Financial Statements





The
unaudited consolidated balance sheet as of December 31, 2009, consolidated
statements of operations and cash flows for the three and nine months ended
December 31, 2009 and 2008 and consolidated statements of stockholders’ equity
(deficit) for the nine months ended December 31, 2009 include the accounts of
the Company and its subsidiaries. The unaudited interim consolidated financial
statements have been prepared in accordance with U.S. generally accepted
accounting principles for interim financial information and the rules and
regulations of the Securities and Exchange Commission for reporting on
Form 10-Q. Accordingly, they do not include certain information and
footnote disclosures required by generally accepted accounting principles for
annual financial reporting and should be read in conjunction with the
consolidated financial statements included in the Company’s Annual Report on
Form 10-K for the year ended March 31, 2009.The unaudited financial
statements include all adjustments (consisting of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair presentation of
such financial statements.  Operating results for the interim periods
presented are not necessarily indicative of the results to be expected for a
full fiscal year.





Prior
Pro Forma Results of Operations





We
previously disclosed Pro Forma results of Operations in our Quarterly Reports’
Management’s Discussion and Analysis sections. These Pro Forma statements were
reported as if the acquisition of Sricon and TBL occurred on April 1, 2007 and
April 1, 2008 respectively.  We felt that this was a more meaningful
presentation of our results of operations since we acquired both Sricon and TBL
on March 7, 2008.  Since the results from operations,  for
Sricon and TBL, are included for the three and nine month periods ending
December 31, 2009 and December 31, 2008, we no longer believe that Pro Forma
results of operations as reported in filings prior to the June 30, 2009
quarterly filings present a meaningful discussion of our results of
operations.  Therefore, the quarterly filing for the three and nine
month periods ended December 31, 2009 contains no pro forma
results.





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Principles
of Consolidation:





The
accompanying unaudited interim financial statements have been prepared on a
consolidated basis and reflect the unaudited interim financial statements of IGC
and all of its subsidiaries that are more than 50% owned and controlled. When
the Company does not have a controlling interest in an entity, but exerts a
significant influence on the entity, the Company applies the equity method of
accounting. All inter-company transactions and balances are eliminated in the
consolidated financial statements.





The
non-controlling interest disclosed in the accompanying unaudited interim
consolidated financial statements represents the non-controlling interest in
Techni Bharathi (TBL) and Sricon and the profits or losses associated with the
non-controlling interest in those operations.





The
adoption of Accounting Standards Codification (ASC) 810-10-65 “Consolidation —
Transition and Open Effective Date Information” (previously referred to as SFAS
No. 160, “Non-controlling Interests in Consolidated Financial Statements,
an amendment of ARB No. 51”), has resulted in the reclassification of
amounts previously attributable to minority interest (now referred to as
non-controlling interest) to a separate component of Shareholders’ Equity on the
accompanying consolidated balance sheets and consolidated statements of
shareholders’ equity and comprehensive income (loss). Additionally, net income
attributable to non-controlling interest is shown separately from net income in
the consolidated statements of income. This reclassification had no effect on
our previously reported financial position or results of
operations.





Prior
period amounts related to non-controlling interest (previously referred to as
minority interest) have been reclassified to conform to the current period
financial statement presentation.





Reclassifications





Certain
prior year balances have been reclassified to the presentation of the current
year.  Sales and services include adjustments made towards liquidated
damages, price variation and charges paid for discounting of receivables arising
from construction/project contracts on a non-recourse basis, wherever
applicable.


9
 Table of Contents
  Use
of estimates:
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those
estimates.


Revenue
Recognition





The
majority of the revenue recognized for the three and nine month periods ended
December 31, 2009 was derived from the Company’s subsidiaries and as
follows:





Revenue
is recognized when persuasive evidence of an arrangement exists, the sales price
is fixed or determinable and collectability is reasonably assured.





In
Government contracting we recognize revenue when a Government consultant
verifies and certifies an invoice for payment.





Revenue
from sale of goods is recognized when substantial risks and rewards of ownership
are transferred to the buyer under the terms of the
contract.





Revenue
from construction/project related activity and contracts for
supply/commissioning of complex plant and equipment is recognized as
follows:





a)
            
            Cost
      plus contracts: Contract revenue is determined by adding the aggregate
      cost plus proportionate margin as agreed with the customer and expected to
      be realized.b)
            
            Fixed
      price contracts: Contract revenue is recognized using the percentage
      completion method. Percentage of completion is determined as a proportion
      of cost incurred-to-date to the total estimated contract cost. Changes in
      estimates for revenues, costs to complete and profit margins are
      recognized in the period in which they are reasonably
      determinable.





Full
provision is made for any loss in the period in which it is
foreseen.





Revenue
from property development activity is recognized when all significant risks and
rewards of ownership in the land and/or building are transferred to the customer
and a reasonable expectation of collection of the sale consideration from the
customer exists.





Revenue
from service related activities and miscellaneous other contracts are recognized
when the service is rendered using the proportionate completion method or
completed service contract method.





Income
per common share:





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





Income
taxes:





Deferred
income taxes are provided for the differences between the bases of assets and
liabilities for financial reporting and income tax purposes. A valuation
allowance is established when necessary to reduce deferred tax assets to the
amount expected to be realized.  The IGC parent expects to
realize sufficient earnings and profits to utilize deferred tax assets as it
begins invoicing its subsidiaries for services and establishes iron sales
contracts with customers in China and other countries.





Cash
and Cash Equivalents:





For
financial statement purposes, the Company considers all highly liquid debt
instruments with maturity of three months or less when purchased to be cash
equivalents. The company maintains its cash in bank accounts in the United
States of America and Mauritius, which at times may exceed applicable insurance
limits. The Company has not experienced any losses in such accounts. The Company
believes it is not exposed to any significant credit risk on cash and cash
equivalent.  The company does not invest its cash in securities that
have an exposure to U.S. mortgages.





Restricted
cash:





Restricted
cash consists of deposits pledged to various government authorities and deposits
used as collateral with banks for guarantees and letters of credit, given by the
Company to its customers or vendors.





Accounts
receivable:





Accounts
receivables are recorded at the invoiced amount, taking into consideration any
adjustments made by Government consultants that verify and certify construction
and material invoices.  Account balances are written off when the
company believes that the receivables will not be recovered. The company did not
recognize any bad debt during the 9 month period ended December 31, 2009 and
December 31, 2008, respectively.


10
 Table of Contents


Inventories:





Inventories
primarily comprise of finished goods, raw materials, work in progress, stock at
customer site, stock in transit, components and accessories, stores and spares,
scrap and residue.  Inventories are stated at the lower of cost or
estimated net realizable value.





The Cost
of various categories of inventories is determined on the following
basis:





Raw
Material are valued at weighed average of landed cost (purchase price, freight
inward and transit insurance charges), work in progress is valued as confirmed,
valued and certified by the technicians and site engineers and finished goods at
material cost plus appropriate share of labor cost and production overheads.
Components and accessories, stores erection, materials, spares and loose tools
are valued on a first-in-first out basis.  Real Estate is valued at
the lower of purchase price or net realizable value.





Accounts
Receivable – Long Term:





This is
typically for Build-Operate-Transfer (BOT) contracts.  It is money due
to the company by the private or public sector to finance, design, construct,
and operate a facility stated in a concession contract over an extended period
of time.





Investments
in Subsidiaries and Other Investments:





The
Company's equity in the earnings/(losses) of affiliates is included in the
statement of income and the Company's share of net assets of affiliates is
included in the balance sheet.





Other
Investments are initially measured at cost, which is the fair value of the
consideration given for them, including transaction
costs.  Investments generally comprises of fixed deposits with
banks.





Property,
Plant and Equipment:





Property
and equipment are stated at cost less accumulated depreciation. Depreciation of
computers, construction, scrap processing and other equipments, buildings and
other assets are provided based on the straight-line method over useful life of
the assets.





The value
of plant and equipment that are capitalized include the acquisition price and
other direct attributable expenses.





The
estimated useful life of various assets and associated historical costs are as
follows:





Category
            
            Useful
      Life (years)
            
            
            As
      of December 31, 2009
            
            
            As
      of March 31, 2009Land
            
            N/A
            
            $
            12,370
            
            $
            34,234Building
      (Flat)
            
            25
            
            
            81,898
            
            
            230,428Plant
      and Machinery
            
            20
            
            
            3,702,253
            
            
            9,374,001Computer
      Equipment
            
            3
            
            
            233,317
            
            
            261,099Office
      Equipment
            
            5
            
            
            179,329
            
            
            160,728Furniture
      and Fixtures
            
            5
            
            
            97,376
            
            
            127,680Vehicles
            
            5
            
            
            786,531
            
            
            740,886Leasehold
      Improvements
            
            Over
      the period of lease or useful life (if less)
            
            
            0
            
            
            139,185Assets
      under construction
            
            N/A
            
            
            0
            
            
            13,063Total
            
            
            
            
            5,093,074
            
            
            11,081,304Less:
      Accumulated Depreciation
            
            
            
            
            (3,951,365
            )
            
            (4,479,910
            )Net
      Assets
            
            
            
            $
            1,141,709
            
            $
            6,601,394





Upon
disposition, cost and related accumulated depreciation of the Property and
equipment are removed from the accounts and the gain or loss is reflected in the
results of operation. Cost of additions and substantial improvements to property
and equipment are capitalized in the books of accounts. The cost of maintenance
and repairs of the property and equipment are charged to operating
expenses.


11
 Table of Contents


Policy
for Goodwill / Impairment





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





The
company adopted provisions of Accounting Standards Codification (“ASC”) 350,
“Intangibles – Goodwill and Others”, (previously referred to as SFAS No. 142,
"Goodwill and Other Intangible Assets", which sets forth the accounting for
goodwill and intangible assets subsequent to their acquisition. ASC 350 requires
that goodwill and indefinite-lived intangible assets be allocated to the
reporting unit level, which the Group defines as each circle.





ASC 350
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 ASC 350 is performed in two phases. The first
step of the impairment test, used to identify potential impairment, compares the
fair value of the reporting unit with its carrying amount, including goodwill.
If the carrying amount of the reporting unit exceeds its fair value, goodwill of
the reporting unit is considered impaired, and step two of the impairment test
must be performed. The second step of the impairment test quantifies the amount
of the impairment loss by comparing the carrying amount of goodwill to the
implied fair value. An impairment loss is recorded to the extent the carrying
amount of goodwill exceeds its implied fair value.





Impairment
of long – lived assets and intangible assets





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





Asset
retirement obligations:





Asset
retirement obligations associated with the Company’s leasehold land are subject
to the provisions of  ASC 410, “Asset Retirement and Environmental
Obligations”, (previously referred to as SFAS No. 143 “Accounting for Asset
Retirement Obligations” and related interpretation, FIN No. 47, “Accounting for
Conditional Asset Retirement Obligations, an interpretation of FASB Statement
No. 143”).The lease agreements entered into by the Company may contain clauses
requiring restoration of the leased site at the end of the lease term and
therefore create asset retirement obligations. The Company records the fair
value of a liability for an asset retirement obligation in the period in which
it is incurred and capitalizes the cost by increasing the carrying amount of the
related long-lived asset. Over time, the liability is accreted to its present
value of each period, and the capitalized cost is depreciated over the estimated
useful life of the related asset. Upon settlement of the liability, the Company
either settles the obligation for its recorded amount or incurs a gain or loss
upon settlement.





Foreign
currency transactions:





Our
functional currency is Indian Rupees (INR, or Rs).  Our financial
statements reporting currency is the United States Dollar. We refer to foreign
currency as currencies that are not US Dollars.  Monetary assets and
liabilities denominated in foreign currencies are converted from the foreign
currency at the rate of exchange in effect at the close of the balance
sheet.  A transaction in a foreign currency is recorded at the
exchange rate on the date of the transaction.  Adjustments resulting
from the translation of financial statements in the functional currency to
financial statements in to the reporting currency are accumulated and reported
as other comprehensive income/(loss), a separate component of shareholders’
equity.





Operating
leases:





Lease
payments made for operating leases are recognized as expenses using a
straight-line over the term of the lease.





Capital
leases:





Assets
acquired under capital leases are capitalized as assets by the Company at the
lower of the fair value of the leased property or the present value of the
related lease payments or where applicable, the estimated fair value of such
assets. Amortization of leased assets is computed on straight line basis over
the useful life of the assets. The amortization charge for capital leases is
included in depreciation expense.


12
 Table of Contents





Recently
adopted accounting pronouncements





In
December 2007, the FASB issued ASC 810-10-65 “Consolidation — Transition
and Open Effective Date Information” (previously referred to as SFAS
No. 160, “Non-controlling Interests in Consolidated Financial Statements,
an amendment of ARB No. 51”). ASC 810-10 establishes accounting and
reporting standards for a non-controlling interest in a subsidiary and for the
deconsolidation of a subsidiary. ASC 810-10-65 establishes accounting and
reporting standards that require (i) the ownership interest in subsidiaries
held by parties other than the parent to be clearly identified and presented in
the consolidated balance sheet within equity, but separate from the parent’s
equity, (ii) the amount of consolidated net income attributable to the
parent and the non-controlling interest to be clearly identified and presented
on the face of the consolidated statements of income, and (iii) changes in
a parent’s ownership interest while the parent retains its controlling financial
interest in its subsidiary to be accounted for consistently. Effective
April 1, 2009, the Company adopted ASC 810-10-65. See “Consolidated Balance
Sheets”, “Consolidated Statements of Income”, “Consolidated Statements of
Shareholders’ Equity and Comprehensive Income (Loss)”, and note 2 for
information and related disclosures regarding non-controlling
interest.




In
December 2007, the FASB issued ASC 805 “Business Combinations” (previously
referred to as SFAS No. 141 (revised 2007), “Business Combinations”, which
was a revision of SFAS No. 141, “Business Combinations”). This Statement
establishes principles and requirements for how an acquirer recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed and any non-controlling interest in an acquiree; recognizes
and measures the goodwill acquired in the business combination or a gain from a
bargain purchase; and determines what information to disclose to enable users of
the financial statements to evaluate the nature and financial effects of the
business combination. Effective April 1, 2009, the Company adopted ASC 805
and the adoption did not have a material impact on the Company’s consolidated
results of operations, cash flows or financial position.





In
February 2008, the FASB approved ASC 820-10 “Fair Value Measurements and
Disclosures” (previously referred to as FASB Staff Position FAS No.157-2,
“Effective Date of FASB statement No. 157” (FSP FAS 157-2), which grants a
one-year deferral of SFAS No. 157’s fair-value measurement requirements for
non-financial assets and liabilities, except for items that are measured or
disclosed at fair value in the financial statements on a recurring basis).
Effective April 1, 2009, the Company has adopted ASC 820-10 for
non-financial assets and liabilities. The adoption of ASC 820-10 for
non-financial assets and liabilities did not have a material impact on the
Company’s consolidated results of operations, cash flows or financial
position.





In
November 2008, the FASB’s Emerging Issues Task Force reached a consensus on
ASC 323-10 “Investments-Equity Method and Joint Ventures” (previously referred
to as EITF Issue No. 08-6, “Equity Method Investment Accounting
Considerations”). ASC 323-10 continues to account for the initial carrying value
of equity method investments on a cost accumulation model, which generally
excludes contingent consideration. ASC 323-10 also specifies that
other-than-temporary impairment testing by the investor should be performed at
the investment level and that a separate impairment assessment of the underlying
assets is not required. An impairment charge by the investee should result in an
adjustment of the investor’s basis of the impaired asset for the investor’s
pro-rata share of such impairment. In addition, ASC 323-10 reached a consensus
on how to account for an issuance of shares by an investee that reduces the
investor’s ownership share of the investee. An investor should account for such
transactions as if it had sold a proportionate share of its investment with any
gains or losses recorded through earnings. ASC 323-10 also addresses the
accounting for a change in an investment from the equity method to the cost
method after adoption of ASC 810-10 (previously referred to as SFAS
No. 160). ASC 323-10 affirms existing guidance which requires cessation of
the equity method of accounting and application of ASC 320-10 (previously
referred to as FASB Statement No. 115, “Accounting for Certain Investments
in Debt and Equity Securities”), or the cost method under ASC 323-10-35, as
appropriate. Effective April 1, 2009, the Company adopted ASC 323-10 and
the adoption did not have a material impact on the Company’s consolidated
results of operations, cash flows or financial position.





In
April 2009, the FASB issued ASC 805-20 “Business Combinations —
Identifiable Assets and Liabilities, and Any Non-controlling Interest”
(previously referred to as FASB Staff Position FAS No. 141R-1, “Accounting
for Assets Acquired and Liabilities Assumed in a Business Combination That Arise
from Contingencies” (FSP FAS No. 141R-1). ASC 805-20 eliminates the
distinction between contractual and non-contractual contingencies, including the
initial recognition and measurement criteria, in ASC 805 and instead carries
forward most of the provisions in FASB Statement No. 141, Business
Combinations, for acquired contingencies. ASC 805-20 is effective for contingent
assets or contingent liabilities acquired in business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. Effective April 1,
2009, the Company adopted ASC 805-20 and the adoption did not have a material
impact on the Company’s consolidated results of operations, cash flows or
financial position.





In
April 2009, the FASB issued the following three ASCs intended to provide
additional application guidance and enhance disclosures regarding fair value
measurements and impairments of securities:





ASC
820-10-65 “Fair Value Measurements and Disclosures — Transition and Open
Effective Date Information” (previously referred to as FASB Staff Positions FAS
157-4 “ Determining Fair Value When the Volume and Level of Activity for
the Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly”) provides additional guidance for estimating fair value in
accordance with ASC 820-10 “Fair Value Measurements and Disclosures” (previously
referred to as  SFAS No. 157) when the volume and level of activity
for the asset or liability have decreased significantly. ASC 820-10-65 also
provides guidance on identifying circumstances that indicate a transaction is
not orderly. The provisions of ASC 820-10-65 are effective for the Company’s
interim period ending on June 30, 2009. Effective April 1, 2009, the
Company adopted ASC 820-10-65 and the adoption did not have a material impact on
the Company’s consolidated results of operations, cash flows or financial
position.




ASC
825-10-65 “Financial Instruments - Transition and Open Effective Date
Information” (previously referred to as FASB Staff Positions FAS 107-1 and APB
28-1, “Interim Disclosures about Fair Value of Financial Instruments”), requires
disclosures about the fair value of financial instruments in interim reporting
periods of publicly traded companies that were previously only required to be
disclosed in annual financial statements. The provisions of ASC 825-10-65 are
effective for the Company’s interim period ending on June 30, 2009.
Effective April 1, 2009, the Company adopted ASC 825-10-65 and the adoption
did not have a material impact on the Company’s consolidated results of
operations, cash flows or financial position.





ASC
320-10-65 “Investments-Debt and Equity Securities - Transition and Open
Effective Date Information” (previously referred to as FASB Staff Positions FAS
115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary
Impairments”) amends current other-than-temporary impairment guidance in U.S.
GAAP for debt securities to make the guidance more operational and to improve
the presentation and disclosure of other-than-temporary impairments on debt and
equity securities in the financial statements. This ASC does not amend existing
recognition and measurement guidance related to other-than-temporary impairments
of equity securities. The provisions of ASC 320-10-65 are effective for the
Company’s interim period ending on June 30, 2009. Effective April 1,
2009, the Company adopted ASC 320-10-65 and the adoption did not have a material
impact on the Company’s consolidated results of operations, cash flows or
financial position.





In
May 2009, the FASB issued ASC 855-10 “Subsequent events” (previously
referred to as SFAS No. 165, “Subsequent Events” (“SFAS 165”)), which
provides guidance to establish general standards of accounting for and
disclosures of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. ASC 855-10 also
requires entities to disclose the date through which subsequent events were
evaluated as well as the rationale for why that date was selected. ASC 855-10 is
effective for interim and annual periods ending after June 15, 2009.
Effective April 1, 2009, the Company adopted ASC 855-10 which only requires
additional disclosures and the adoption did not have any impact on its
consolidated financial position, results of operations or cash flows. The
Company evaluated all events or transactions that occurred after
December 31, 2009 up through February 6, 2010. Based on this
evaluation, the Company is not aware of any events or transactions that would
require recognition or disclosure in the consolidated financial
statements.





In
June 2009, the FASB issued ASC 105-10 “Generally Accepted Accounting
Principles” (previously referred to as SFAS No. 168 “The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles—a replacement of FASB Statement No. 162”). The FASB Accounting
Standards Codification (“Codification”) will be the single source of
authoritative nongovernmental U.S. generally accepted accounting principles.
Rules and interpretive releases of the SEC under authority of federal
securities laws are also sources of authoritative GAAP for SEC registrants. ASC
105-10 is effective for interim and annual periods ending after
September 15, 2009. All existing accounting standards are superseded as
described in ASC 105-10. Effective October 1, 2009, the Company adopted ASC
105-10 and the adoption did not have any material impact on its consolidated
financial position, results of operations or cash flows.





Recently
issued accounting pronouncements





In
October 2009, the FASB issued ASU 2009-13 (EITF No. 08-1) which amends
ASC 605-25 “Revenue Recognition—Multiple-Element Arrangements”. ASU 2009-13
amends ASC 605-25 to eliminate the requirement that all undelivered elements
have Vendor Specific Objective Evidence (VSOE) or Third Party Evidence (TPE)
before an entity can recognize the portion of an overall arrangement fee that is
attributable to items that already have been delivered. In the absence of VSOE
or TPE of the standalone selling price for one or more delivered or undelivered
elements in a multiple-element arrangement, the overall arrangement fee will be
allocated to each element (both delivered and undelivered items) based on their
relative estimated selling prices. Application of the “residual method” of
allocating an overall arrangement fee between delivered and undelivered elements
will no longer be permitted upon adoption of ASU 2009-13. The provisions of ASU
2009-13 will be effective prospectively for revenue arrangements entered into or
materially modified in fiscal years beginning on or after June 15, 2010.
Early adoption will be permitted. The Company is currently evaluating the effect
of adoption of the provisions of the ASU 2009-13 on the Company’s consolidated
financial Statements.





In
August 2009, the FASB issued ASU 2009-05 which amends Subtopic 820-10 “Fair
Value Measurements and Disclosures” for the fair value measurement of
liabilities. ASU 2009-05 provides clarification that in circumstances in which a
quoted price in an active market for the identical liability is not available,
an entity is required to measure fair value utilizing one or more of the
following techniques (1) a valuation technique that uses the quoted market
price of an identical liability or similar liabilities when traded as assets; or
(2) another valuation technique that is consistent with the principles of
Topic 820, such as a present value technique or a market approach. The
provisions of ASU No. 2009-05 are effective for the first reporting period
(including the interim periods) beginning after issuance. The provisions of ASU
No. 2009-05 will be effective for interim and annual periods beginning
after August 27, 2009. The Company is currently evaluating the effect of
the provisions of the ASU 2009-05 on the Company’s consolidated financial
statements.





NOTE
3 – PREPAID EXPENSES AND OTHER ASSETS




Prepaid
expenses and other current assets consist of the following:





Description
            
            As
      of
              December
      31, 2009
            
            
            As
      of
              March
      31, 2009Advance
      to suppliers & services
            
            $
            828,777
            
            
            $
            1,831,998Security
      & other Deposits
            
            
            225,100
            
            
            
            596,793Discount
      on issues of Debt
            
            
            534,657
            
            
            
            0Prepaid
      / Preliminary Expenses
            
            
            525,232
            
            
            
            372,357Total
            
            $
            2,113,766
            
            
            $
            2,801,148




Other
Assets consist of the following:





Description
            
            As
      of
              December
      31, 2009
            
            
            As
      of
              March
      31, 2009Sr.
      Debtors Pending more than 1 year
            
            $
            488,655
            
            
            $
            771,076Advance
      pending more than 1 year
            
            
            285,329
            
            
            
            2,047,611Total
            
            $
            773,984
            
            
            $
            2,818,687




13
 Table of Contents




NOTE
4 – CURRENT AND LONG TERM LIABILITIES





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





As
      ofDecember 31,
      2009
            
            
            As
      ofMarch 31,2009Secured
            
            $
            869
            
            
            $
            2,502Unsecured
            
            
            56
            
            
            
            249Total
            
            
            925
            
            
            
            2,751Add:Current
      portion of long term debt
            
            
            0
            
            
            
            671Total
            
            $
            925
            
            
            $
            3,422





Amounts
in thousand US Dollars





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 India based directors & collaterally secured by mortgage
of company’s land & other immovable properties of directors and their
relatives.




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





As
      ofDecember 31,
      2009
            
            
            As
      ofMarch 31, 2009Secured
            
            $
            
            
            
            $
            -Term
      loans
            
            
            69Loan
      for assets purchased under capital lease
            
            
            0
            
            
            
            2,168Total
            
            
            69
            
            
            
            2,168Less:
      Current portion (Payable within 1 year)
            
            
            0
            
            
            
            671Total
            
            $
            69
            
            
            $
            1,497


Amounts
in thousand US Dollars




The
secured loans were collateralized by:





•
            The
      unencumbered Net Asset Block of the Company,•
            property
      owned by the India based promoter directors,•
            cash
      term deposits,•
            Hypothecation
      of receivables, assignment of toll rights, pledge of machineries, vehicles
      and  land,•
            First
      charge on the Debt-Service Reserve
Account




Other
current liabilities consist of the following:





Description
            
            
            As
      of
              December
      31,2009
            
            
            
            As
      of
              March
      31, 2009ITDS
      payable
            
            $
            5,483
            
            
            $
            0Payables
      more than 1 year
            
            
            0
            
            
            
            860,819Employees’
      dues
            
            
            74,666
            
            
            
            0Accrued
      vacation
            
            
            33,985
            
            
            
            1,130,552Total
            
            $
            114,134
            
            
            $
            1,991,371





Other
liabilities consist of the following:





Description
            
            
            As
      of
              December
      31,2009
            
            
            
            As
      on
              March
      31, 2009Sr.
      Creditors pending more than 1 year
            
            $
            1,299,690
            
            
            $
            1,188,480Provision
      for Expenses
            
            
            32,669
            
            
            
            1,252,196Total
            
            $
            1,332,359
            
            
            $
            2,440,676




NOTE
5 – OTHER DEBT AND NOTES PAYABLE




As
previously disclosed in Form 8-K dated October 5, 2009, the Company on October
5, 2009, consummated the exchange of an outstanding promissory note in the total
principal amount of $2,000,000 (the “Original Note”) initially issued to the
Steven M. Oliveira 1998 Charitable Remainder Unitrust (“Oliveira”) for a new
promissory note (the “New Note”) on substantially the same terms as the original
note except that the principal amount of the New Note is $2,120,000 reflected
the accrued but unpaid interest on the Original Note. There is no interest
payable on the New Note and the New Note is due and payable on October 4, 2010
(the “Maturity Date”). As is the case with the Original Note, IGC can pre-pay
the New Note at any time without penalty or premium, and the New Note is
unsecured. The New Note is not convertible into IGC Common Stock (the “Common
Stock”) or other securities of the Company. However, under the Note and Share
Purchase Agreement (the “Note and Share Purchase Agreement”), effective as of
October 4, 2009, by and among IGC and Oliveira, as additional consideration for
the exchange of the Original Note, IGC agreed to issue 530,000 shares of Common
Stock to Oliveira.




The
exchange or modification of the old loan was a substantial modification
determined in accordance with ASC 470-50, “Modifications and Extinguishments”,
(previously referred to as EITF 96-19, Debtors Accounting for Modification or
Exchange of Debt Instruments). Thus the Company recorded $586,785 as loss on
exchange or extinguishment of the old debt in the income statement during the
period ended December 31, 2009.




As
previously disclosed in Form 8-K dated October 16, 2009, the Company on October
16, 2009 consummated the sale of a promissory note in the principal amount of
$2,000,000 (the “Note”) to Bricolueur Partners, L.P. (“Bricoleur”) for
$2,000,000. There is no interest payable on the Note and the Note is due and
payable on October 16, 2010 (the “Maturity Date”). The Company can pre-pay the
Note at any time without penalty or premium and the Note is unsecured. The Note
is not convertible into the Company’s Common Stock or other securities of the
Company. However, under the Note and Share Purchase Agreement (the “Note and
Share Purchase Agreement”), effective as of October 16, 2009, by and among IGC
and Bricoleur, as additional consideration for the investment in the Note, IGC
issued 530,000 shares of Common Stock to Bricoleur.





The
Company in accordance with ASC 835-30, “Imputation of Interest”, (previously
referred to as APB 21, Interest on Receivables and Payables), and drawing
inference from ASC 815-40, “Contracts in Entity’s Own Equity”, (previously
referred to as EITF 00-19, Accounting for Derivative Financial Instruments
Indexed to, and Potentially Settled in, a Company's Own Stock), allocated the
proceeds based on the relative fair value of the various components of the
transaction and allocated such proceeds on a pro-rata basis, based on those
separately determined fair values.  Accordingly, the Company recorded
$712,872 as discount on issue of debt, which will be amortized over the period
of the loan. The Company amortized such discount amounting to $178,218 during
the the three month period ended December 31, 2009.




The
Company’s total interest expense was $1,019,687 for the nine months ended
December 31, 2009.  No interest was capitalized by the Company for the
nine months ended December 31, 2009.




NOTE
6 – FAIR VALUE OF FINANCIAL INSTRUMENTS




The fair
value of the Company’s current assets and current liabilities approximate their
carrying value because of their short term maturity. Such financial instruments
are classified as current and are expected to be liquidated within the next
twelve months.




NOTE
7 – GOODWILL





The
change in goodwill balance is as follows::




December
      31
              2009
            
            
            March
      31
              2009(Unaudited)
            
            
            (Audited)Balance
      at the beginning of the period
            
            $
            17,483,501
            
            
            $
            17,483,501Elimination
      on deconsolidation of Sricon
            
            
            (10,552,194
            )
            
            
            -Balance
      at the end of the period
            
            $
            6,931,307
            
            
            $
            17,483,501




NOTE
8 - RELATED PARTY TRANSACTIONS





For the
three month period ended December 31, 2009, $8,000 was paid to SJS Associates
for Mr. Selvaraj’s consulting services.





The
Company had agreed to pay Integrated Global Network, LLC (“IGN, LLC”), an
affiliate of our Chief Executive Officer, Mr. Mukunda, an administrative fee of
$4,000 per month for office space and general and administrative
services.  A total $8,000 was paid to IGN, LLC for the
period.  The Company and IGN, LLC have agreed to continue the
agreement on a month-to-month basis.





NOTE
9 -COMMITMENTS AND CONTINGENCY





No
significant commitments and contingencies were made during the 3 month and 9
month periods ended December 31, 2009.


14
 Table of Contents


NOTE
10 - INVESTMENT ACTIVITIES





No
significant investment activities occurred during the 3 month and 9 month
periods ended December 31, 2009.





NOTE
11 - COMMON STOCK





See
Securities Section.




NOTE
12 – STOCK-BASED COMPENSATION





On April
1, 2009 the Company adopted ASC 718, “Compensation-Stock Compensation”,
(previously referred to as SFAS No. 123 (revised 2004), Share Based
Payment).  ASC 718 requires all share-based payments to
employees, including grants of employee stock options, to be recognized in the
financial statements based on their fair values. No stock based compensation was
awarded during the 3 month period ended December 31, 2009.    On
May 13, 2009, the Company granted 78,820 shares of common stock and 1,413,000
stock options, to its directors and employees.   The options
vested immediately.  The exercise price of the options was $1.00 per
share, and the options will expire on May 13, 2014.  The fair value of
the stock was $39,410 on the date of grant and the fair value of the stock
options was $90,997.  Total share-based compensation expense, related
to all of the Company’s share-based awards, recognized for the 9 month period
ended December 31, 2009 is $130,407. Under the 2008 Omnibus Plan, 457,408
options remain issuable under the plan.





The fair
value of stock option awards is estimated on the date of grant using a
Black-Scholes Pricing Model with the following assumptions for options awarded
during the three and nine months ended December 31, 2009:





Three
      Months Ended
              December
      31,2009
            
            
            2008Expected
      life of options (years)
            
            
            None
            
            
            
            NoneVested
      Options
            
            None
            
            
            NoneRisk
      free interest rate
            
            None
            
            
            NoneExpected
      volatility of stock
            
            None
            
            
            NoneExpected
      dividend yield
            
            None
            
            
            None





Nine
      Months Ended
              December
      31,2009
            
            
            
            2008Expected
      life of options (years)
            
            
            5
            
            
            
            NoneVested
      Options
            
            
            100
            %
            
            
            NoneRisk
      free interest rate
            
            
            1.98
            %
            
            
            NoneExpected
      volatility of stock
            
            
            35.35
            %
            
            
            NoneExpected
      dividend yield
            
            None
            
            
            None





The
volatility estimate was derived using historical data for the IGC stock and
for public companies in the infrastructure industry.


15
 Table of Contents


NOTE
13 -  DECONSOLIDATION





As
previously disclosed in our Form 8-K dated September 21, 2007 and Form 10-QSB
for the quarterly period ended June 30, 2007, on September 21, 2007, the Company
entered into a Share Subscription cum Purchase Agreement  (the “Sricon
Subscription Agreement”) dated as of September 15, 2007 with Sricon
Infrastructure Private Limited  (“Sricon”) and certain individuals
(collectively, the “Sricon Promoters”), pursuant to which the Company or its
subsidiary in Mauritius (IGC-M)  acquired (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 ownedapproximately63% of the outstanding
equity shares of Sricon.  We paid full price for the stock of Sricon, and
we subsequently borrowed $17.9 million (computed at an exchange rate of
approximately 40 INR to $1 USD) from Sricon.    As
previously disclosed, failure to repay the note or negotiate a settlement could
result in IGC having to decrease its ownership in Sricon by tendering all or a
portion of the Sricon shares it owns to Sricon to repay the note.  The
Sricon Acquisition was consummated on March 7, 2008.




Pursuant
to board resolutions dated February 8, 2010, effective as of October 1, 2009 we
decreased our ownership in Sricon Infrastructure from 63% to 22.3%. Rather than
continue to owe Sricon $17.9 million, and more importantly, continue to fund two
construction companies, we decreased our ownership in Sricon by an amount
proportionate to the loan.  The impact is that we no longer owe Sricon
$17.9 million and our corresponding ownership is decreased.  The
deconsolidation of Sricon from the balance sheet of IGC results in shrinking the
IGC balance sheet and a one-time charge on the P&L taken in the quarter
ended December 31, 2009. The equity dilution of 40.715% resulted in a
consideration of $17,900,000 adjusted primarily for the inter-company loan
provided by Sricon to the parent.  Following the guidance under ASC 810-10, the parent
derecognized the assets, liabilities and equity components (including the
amounts previously recognized in other comprehensive income) related to
Sricon.  IGC recorded a loss of $1,107,124 million and further
reclassified an accumulated AOCI loss of $2,098,492 million in the income
statement as a result of the dilution.  Deferred acquisition costs
related to Sricon amounted to $1,854,750, which were subsequently recorded in
the income statement for the period ended December 31, 2009.





The
Company has accounted for its remaining 22.3% interest in Sricon by the equity
method.The
carrying value of the investment in Sricon as of December 31, 2009, was
$8,182,387. The Company’s equity in the income of Sricon for the three months
ended December 31, 2009 was $16,446.





NOTE
14 - INCOME TAXES





The
provision for income taxes decreased $1.9 million in the nine month period ended
December 31, 2009 compared to the same period in 2008.  The decrease
in income taxes was primarily due to the decrease in income before income taxes
of $6.4 million for the same nine month period. Our effective tax rate was 1.3%
in the nine month period ending December 31, 2009 and 77% for the same period in
2008. The majority of the tax expense was incurred by our overseas subsidiaries
with Sricon having the bulk of the tax expense allocation. The decrease in our
effective tax rate was due to the sharp decrease in income before income
taxes.




NOTE
15 - RECONCILIATION OF EPS





For
December 31, 2009, the basic shares include founders shares, shares sold in the
private placement, shares sold in the IPO, shares sold in the registered direct,
shares arising from the exercise of warrants issued in the placement of debt and
the registered direct, shares issued in connection with debt and shares issued
to employees, directors and vendors.   The fully diluted shares
include the basic shares plus warrants issued as part of the units sold in the
private placement and IPO, warrants sold as part of the units sold in the
registered direct and employee options.   The UPO issued to the
underwriters (1,500,000 shares) is not considered 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, through December 31, 2009, was applied using
the treasury method of calculating the fully diluted shares.  The
calculations for fully diluted shares include 660,893 shares and exclude
12,954,849 shares from the fully diluted EPS computations.





NOTE
16 - SUBSEQUENT EVENTS





As stated
in our 8-K dated January 6, 2010we commissioned a
quarry for commercial production in Maharashtra, India and announced plans for
use of a second quarry.




16
 Table of Contents


Item 2.  Management’s Discussion and Analysis





The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed financial
statements and related notes that appear elsewhere in this Quarterly Report on
Form 10-Q, and the Annual Report filed on From 10-K on July 14,
2009.  In addition to historical consolidated financial information,
the following discussion contains forward-looking statements that reflect our
plans, estimates and beliefs. Our actual results could differ materially from
those discussed in the forward-looking statements. Factors that could cause or
contribute to these differences include those discussed below and elsewhere in
this Quarterly Report on Form 10-Q, as well as in our Annual Report on Form 10-K
filed on July 14, 2009.





Overview





In
response to India’s rapidly expanding economy, our primary focus is to supply
construction materials and execute infrastructure projects through our
subsidiaries. We supply construction materials like iron ore, rock aggregate, we
construct interstate highways, rural roads, and we execute civil works in high
temperature cement and steel plants.  We own and operate rock
aggregate quarries with stone deposits and we have applied for licenses to mine
iron ore in India.  We have customers in India, China and we are
exploring other regional opportunities.





Company
Overview





We are a
materials and construction company offering a suit of services including : 1)
civil construction of roads and highways, 2) the construction and maintenance of
high temperature cement and steel plants, 3) operations and supply of rock
aggregate and 4) the export of iron ore to China.   Our present
and past clients include various Indian government organizations and steel mills
in China.   Including our subsidiaries, we have approximately 400
employees and contractors.    We are focused on winning
construction contracts, building out rock aggregate quarries and setting up
relations and export hubs for the export of iron ore to
China.





The
Indian government has articulated plans to modernize the Indian
Infrastructure.  It expects to spend around $22 billion in the next 12
months on roads and highways. We believe that these initiatives will continue to
be favorable to our business.  Our model is three fold: 1) we bid on
construction and engineering contracts which provide us with a backlog which
translates into greater revenues and earnings, 2) we are in the process of
building rock quarries and selling rock aggregate to the infrastructure industry
and 3) we export iron ore to China.  There is seasonality in our
business as outdoor construction activity slows down during the Indian
monsoons.  The rains typically last intermittently from June through
September.  Our expansion plans include 1) building out 10 rock
aggregate quarries to create a pure play one-stop shop for rock aggregate (a
business not prevalent in India), 2) obtaining licenses for the mining of iron
ore in India (to fill customer orders from China), and 3) win and execute
construction contracts.





Industry
Overview





The
Indian GDP surpassed $1 Trillion in fiscal 2007.  According to the
World Bank, only nine economies at the close of 2005 generated more than $1
Trillion in GDP.  According to the CIA World Fact Book, India’s growth
rates have been ranging from 6.2% to 9.6% since 2003; The GDP growth rate
for fiscal year ending March 31, 2008 was 9.0 %.  The Indian stock
markets experienced significant growth with the SENSEX peaking at 21,000
(January 8, 2008).   The current global financial crisis created
a liquidity crunch starting in October 2008, which are showing signs of
abating.





India’s GDP growth for fiscal
year ended March 31, 2009 was 6.7% compared to 9.0% a year
earlier.  The slowing of the GDP was caused by the global financial
crisis. However, it does indicate that India has withstood the global downturn
better than many nations.“GDP growth of 6.1% in
the first quarter of FY2009 signaled a modest improvement from 5.8% expansion in
the previous 2 quarters. The upturn reflected a recovery in industrial growth to
5.0% from less than 2% in the previous 6 months. Growth in the large services
sector slowed to 7.8%, mainly because of slower expansion in social and personal
services; the other business-oriented subsectors retained their momentum.”(Asian
Development Bank)The
factors contributing to maintaining the relatively high growth included growth
in the agriculture and service industries, favorable demographic dynamics (India
has a large youth population that exceeds 550 Million), the savings rate and
spending habits of the Indian middle class. Other factors are attributed to
changing investment patterns, increasing consumerism, healthy business
confidence, inflows of foreign investment (India ranks #2 behind China in the
A.T. Kearney “FDI Confidence Index” for 2007) and improvements in the Indian
banking system.





To
sustain India’s fast growing economy, the share of infrastructure investment in
India is expected to increase to 9 per cent of GDP by 2014, which is an
increase from 5 per cent in 2006-07.  This forecast is based on The
Indian Planning Commission’s annual publication that for the Eleventh Plan
period (2007-12), a large investment of approximately $494 Billion is
required for Infrastructure build out and modernization.  This
industry is one of the largest employers in the country – the construction
industry alone employs more than 30 million people.  According to the
Business Monitor International (BMI), by 2012, the construction industry’s
contribution to India’s GDP is forecasted to be 16.98%.


This
ambitious infrastructure development mandate by the Indian Government will
require funding.  The Government of India has already raised funds
from multi-lateral agencies such as the World Bank and the Asian Development
Bank.   The India Infrastructure Company was set up to support
projects by guaranteeing up to $2 Billion annually.  In addition,
the Indian Government has identified public-private partnerships (PPP) as the
cornerstone of its infrastructure development policy.  The government
is also proactively seeking additional FDI and approval is not required for up
to 100% of FDI in most infrastructure areas.
 17
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In
addition, the following represent some of the major infrastructure projects
planned for the next five years:





1.
            Constructing
      dedicated freight corridors between Mumbai-Delhi and
      Ludhiana-Kolkata.





2.
            Capacity
      addition of 485 million MT in Major Ports, 345 million MT in Minor
      Ports.





3.
            Modernization
      and redevelopment of 21 railway
stations.





4.
            Developing
      16 million hectares through major, medium and minor irrigation
      works.





5.
            Modernization
      and redevelopment of 4 metro and 35 non-metro
  airports.





6.
            Expansion
      to six-lanes 6,500 km (4,038 Miles) of Golden Quadrilateral and selected
      National Highways.





7.
            Constructing
      228,000 miles of new rural roads, while renewing and upgrading the
      existing 230,000 miles covering 78,304 rural
    habitations.





Our
operations are subject to certain risks and uncertainties, including among
others, dependency on the Indian and Asian economy and government policies,
competitively priced raw materials, dependence upon key members of the
management team and increased competition from existing and new
entrants.


18
 Table of Contents




Core
Business Competencies





We offer
an integrated approach in our customer service delivery based on core
competencies that we have demonstrated over the years.  This
integrated approach provides us with an advantage over our
competitors.





Our core
business competencies include the following:





Highway and heavy
construction:





The
Indian government has articulated a plan to build and modernize Indian
infrastructure.  The government’s plan, calls for spending over $475
billion over the next five years for the expansion and construction of rural
roads, major highways, airports, seaports, freight corridors, railroads and
townships. .





Mining
and Quarrying





As Indian
infrastructure modernizes, the demand for raw materials like stone aggregate,
coal, ore and similar resources is projected to increase. In 2006, according to
the Freedonia Group, India was the fourth largest stone aggregate market in the
world with demand of up to 1.1 billion metric tons.  We are in the
process of teaming with landowners to build out rock
quarries.   We have also applied for licenses to own and operate
iron ore mines.  Our mining and trading activity centers on selling
rock aggregate to the Indian infrastructure industry and supplying iron ore
to China.   India is the fourth largest producer of iron ore
and China is the largest importer of iron ore in the
world.





Construction
and maintenance of high temperature plants





We have
an expertise in the civil engineering, construction and maintenance of high
temperature plants.  This requires specialized skills to build and maintain
high temperature chimneys and kilns.





Customers





Our
customers include the National Highway Authority of India, several state high
way authorities, the Indian railways and several steel mills in
China..





Contract
bidding process





In order
to create transparency, the Indian government has centralized the contract
awarding process for building inter-state roads.  The
new process is as follows: At the “federal” level, as an example, NHAI publishes
a Statement of Work for an interstate highway construction
project.  The Statement of Work has a detailed description of the work
to be performed as well as the completion time frame. The bidder prepares two
proposals in response to the Statement of Work. The first proposal demonstrates
technical capabilities, prior work experience, specialized machinery, and
manpower required, and other criteria required to complete the project. The
second proposal includes a financial bid.  NHAI evaluates the
technical bids and short lists technically qualified companies. Next, the short
list of technically qualified companies are  invited to place a
detailed financial bid and show adequate financial strength in terms
of  revenue, net worth, credit lines,  and balance sheets.
Typically, the lowest bid wins the contract. Also, contract bidders must
demonstrate an adequate level of capital reserves such as the
following:  1) An earnest money deposit between 2% to 10%
of project costs, 2) performance guarantee of between 5% and 10%, 3)
adequate working capital and 4) additional capital for plant and
machinery.   Bidding qualifications for larger NHAI projects
are set by NHAI which are imposed on each contractor.  As the
contractor executes larger highway projects, the ceiling is increased by
NHAI.





19
 Table of Contents





Our
Growth Strategy and Business Model





Our
business model for the construction business is simple.  We bid on
construction, over burden removal at mining sites and or maintenance
contracts.   Successful bids increase our backlog of orders,
which favorably impacts our revenues and margins.   The
contracting process typically takes approximately six months. Over the
years, we have been successful in winning one out of every seven bids on
average.  We currently have one bid team.    In the
next year we will focus on the following: 1) build out between two and five rock
quarries, with the goal of building out a total of ten quarries, begin
production and obtain long term contracts for the sale of rock aggregate, 2)
create a brand in the ore market, obtain licenses for the mining of ore,
leverage our shipping hubs obtain long term contracts and expand our base
of customers for the delivery and sale of iron ore, 3) execute and expand
recurring contracts for infrastructure build out, 4) aggressively pursue the
collection of accounts receivables and delay claims.





Competition





We
operate in an industry that is fairly competitive.  However, there is
a large gap in the supply of well qualified and financed contractors and the
demand for contractors.  Large domestic and international firms compete for
jumbo contracts over $250 million in size, while locally based contractors vie
for contracts less than $5 million. The recent capital markets crisis has made
it more difficult for smaller companies to maturate into mid-sized companies, as
their access to capital has been restrained. Therefore, we would like to be
positioned in the $5 million to $50 million contract range, above locally based
contractors and below the large firms, creating a distinct technical and
financial advantage in this market niche.  Rock aggregate is supplied
to the industry through small crushing units, which supply low quality
material.  Frequently, high quality aggregate is unavailable, or is
transported over large distances.  We fill this gap by providing high
quality material in large quantities.  We compete on price, quantity
and quality.  Iron ore is produced in India where our core assets are
located, and exported to China.  While this is a fairly established
business, we compete by aggregating ore from smaller suppliers who do not have
access to customers outside India. Further, at our second shipping hub we expect
to install a crusher that can grind ore pebbles into dust, again providing a
value added service to the smaller mine owners.  Our strategy is to
create a brand, obtain customers, set up the logistics and finally obtain
licenses and supply ore from mines.





Seasonality





The
construction industry (road building) typically experiences recurring and
natural seasonal patterns throughout India.  The North East Monsoons,
historically, arrive on June 1, followed by the South West Monsoons, which
usually lasts intermittently until September.  Historically, the
monsoon months are slower than the other months because of the
rains.  Activity such as engineering, maintenance of high temperature
plants, and export of iron ore are less susceptible to the rains.  The
reduced paced in construction activity has historically been used to bid and win
contracts. The contract bidding activity is typically very high during the
monsoon season in preparation for work activity when the rains
abate.  During the monsoon season the rock quarries operate to build
up and distribute reserves to the various construction sites.





Employees
and Consultants





As of
December 31, 2009, we employed a work force of approximately 200 employees and
contract workers worldwide.  Employees are typically skilled workers
including executives, welders, drivers, and other specialized experts. Contract
workers require less specialized skills. We make diligent efforts to comply with
all employment and labor regulations, including immigration laws in the many
jurisdictions in which we operate.  In order to attract and retain
skilled employees, we have implemented a performance based incentive program,
offered career development programs, improved working conditions, and
provided United States work assignments, technology training, and other fringe
benefits. We are hoping that our efforts will make our companies more
attractive.  While we have not done so yet, we are exploring adopting
best practices for creating and providing vastly improved labor camps for our
labor force.  We are hoping that our efforts will make our companies
“employers of choice” and best of breed.  Our Executive
Chairman, and Chief Executive Officer is Ram Mukunda and our Non
Executive Chairman is Ranga Krishna.  Our  Country Head in India
is Mr. K. Parthasarathy.  Our Managing Director for Construction is
Ravindra Lal Srivastava, our Managing Director for Materials, Mining and Trading
is P. M. Shivaraman.   Our Treasurer and Principal Accounting
officer is John Selvaraj.  Our General Manager of Accounting based in
India is Santhosh Kumar.  We also utilize the services of several
consultants who provide USGAAP systems expertise among others.





Environmental
Regulations





India has
very strict environmental, occupational, health and safety
regulations.  In most instances, the contracting agency regulates and
enforces all regulatory requirements.   We internally monitor and
manage regulatory issues on a continuous basis, and we believe that we are in
compliance in all material respects with the regulatory requirements of the
jurisdictions in which we operate. Furthermore, we do not believe that
compliance will have a material adverse effect on our business
activities.




Information
and timely reporting





Our
operations are located in India where the accepted accounting standards is
Indian GAAP, which in many cases, is not congruent  to
USGAAP.  Indian accounting standards are evolving towards adopting
IFRS (International Financial Reporting Standards).    We
annually conduct PCAOB (USGAAP) audits for the company.  We
acknowledge that this process is at times cumbersome and places significant
restraints on our existing staff.  We believe we are still 4 to 6
months away from having processes and adequately trained personal in place to
meet the reporting timetables set out by the U.S. reporting
requirements.  Until then we expect to file for extensions to meet the
reporting timetables.  We will make available on our website, www.indiaglobalcap.com,
our annual reports, quarterly reports, proxy statements as well as up to- date
investor presentations.  Our SEC filings are also available at
www.sec.gov.


20
 Table of Contents


Foreign
Currency Translation





The
financial statements are reported in U.S. dollars. The Indian rupee is the
functional currency for our Indian operations. The export of iron ore is
conducted in U.S. dollars.  The translation of the functional
currencies into U.S. dollars is performed for assets and liabilities using the
exchange rates in effect at the balance sheet date and for revenues, costs and
expenses using average exchange rates prevailing during the reporting periods.
Adjustments resulting from the translation of functional currency financial
statements to reporting currency are accumulated and reported as other
comprehensive income/(loss), a separate component of shareholders’
equity.





Transactions
in foreign currency are recorded at the exchange rate prevailing on the date of
the transaction. Monetary assets and liabilities denominated in foreign
currencies are expressed in the functional currency at the exchange rates in
effect at the balance sheet date.  Revenues, costs and expenses are
recorded using exchange rates prevailing on the date of transaction. Gains or
losses resulting from foreign currency transactions are included in the
statement of income.





The
exchange rate between the Indian Rupee and the U.S. dollars are as
follows:





Period
            
            Average
      rate used for translating operations. INR to one
    U.S.D.
            
            
            Rate
      used for translating Balance Sheet. INR to one U.S.D.Nine
      months ended December  31, 2008
            
            
            44.59
            
            
            
            48.58Year
      ended March 31, 2009
            
            
            49.75
            
            
            
            50.87Nine
      months ended  December  31, 2009
            
            
            48.64
            
            
            
            46.40





Critical
Accounting Policies and Estimates





The
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires us to make
significant estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. These items are regularly monitored and analyzed by management
for changes in facts and circumstances, and material changes in these estimates
could occur in the future. These estimates include, among others, our revenue
recognition policies related to the proportional performance and percentage of
completion methodologies of revenue recognition of contracts and assessing our
goodwill for impairment annually. Changes in estimates are recorded in the
period in which they become known. We base our estimates on historical
experience and various other assumptions that we believe are reasonable under
the circumstances. Actual results will differ and may differ materially from the
estimates if past experience or other assumptions do not turn out to be
substantially accurate.





Our
significant accounting policies are presented within Note 2 to our consolidated
financial statements and the following summaries should be read in conjunction
with the unaudited consolidated financial statements and the related notes
included in this Report. While all accounting policies impact the financial
statements, certain policies may be viewed as critical. Critical accounting
policies are those that are both most important to the portrayal of financial
condition and results of operations and that require management’s most
subjective or complex judgments and estimates. Our management believes the
policies that fall within this category are the policies on revenue recognition,
accounting for stock-based compensation, goodwill and income taxes.




Revenue
Recognition





The
majority of the revenue recognized for three and nine month periods ended
December 31, 2009 was derived from the Company’s subsidiaries and as
accordingly:





Revenue
is recognized when persuasive evidence of an arrangement exists, the sales price
is fixed or determinable and collectability is reasonably assured.





In
Government contracting we recognize revenue when a Government consultant
verifies and certifies an invoice for payment.





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





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 Table of Contents


Full
provision is made for any loss in the period in which it is
foreseen.





Revenue
from property development activity is recognized when all significant risks and
rewards of ownership in the land and/or building are transferred to the customer
and a reasonable expectation of collection of the sale consideration from the
customer exists.





Revenue
from service related activities and miscellaneous other contracts are recognized
when the service is rendered using the proportionate completion method or
completed service contract method.





Employee
Stock Options or Share Based Payments





We grant
options to purchase our common stock and award restricted stock to our employees
and directors under our equity incentive plans. The benefits provided under
these plans are share-based payments subject to the provisions of SFAS No. 123R,
Share-Based Payment, and SEC Staff Accounting Bulletin 107, Share-Based
Payments. Effective April 1, 2009, we use the fair value method to apply the
provisions of FAS 123R with the modified prospective application, which provides
for certain changes to the method for valuing share-based compensation.
Share-based compensation expense recognized under FAS 123R for the 9 month
period ended December 31, 2009 was $130,407. At December 31, 2009, total
unrecognized estimated compensation expense related to non-vested awards granted
prior to that date was zero.  Stock options vest
immediately.





As a
result of FAS 123R, we estimate the value of share-based awards on the date of
grant using a Black-Scholes option-pricing model.  The determination
of the fair value of share-based payment awards on the date of grant using an
option-pricing model is affected by our stock price as well as assumptions
regarding a number of complex and subjective variables. These variables include
our expected stock price volatility over the term of the awards, actual and
projected employee stock option exercise behaviors, risk-free interest rate, and
expected dividends.





If
factors change and we employ different assumptions in the application of FAS
123R during future periods, the compensation expense that we record under FAS
123R may differ significantly from what we have recorded in the current period.
Therefore, we believe it is important for investors to be aware of the high
degree of subjectivity involved when using option-pricing models to estimate
share-based compensation under FAS 123R. Option-pricing models were developed
for use in estimating the value of traded options that have no vesting or
hedging restrictions, are fully transferable and do not cause dilution. Because
our share-based payments have characteristics significantly different from those
of freely traded options, and because changes in the subjective input
assumptions can materially affect our estimates of fair values, in our opinion,
existing valuation models, including the Black-Scholes Option Pricing model, may
not provide reliable measures of the fair values of our share-based
compensation. Consequently, there is a risk that our estimates of the fair
values of our share-based compensation awards on the grant dates may bear little
resemblance to the intrinsic values realized upon the exercise, expiration,
cancellation, or forfeiture of those share-based payments in the future. Certain
share-based payments, such as employee stock options, may expire worthless or
otherwise result in zero intrinsic value as compared to the fair values
originally estimated on the grant date and expensed in our financial statements.
Alternatively, value may be realized from these instruments that are
significantly in excess of the fair values originally estimated on the grant
date and expensed in our financial statements. There currently is neither a
market-based mechanism nor other practical application to verify the reliability
and accuracy of the estimates stemming from these valuation models, nor a way to
compare and adjust the estimates to actual values. Although the fair value of
employee share-based awards is determined in accordance with FAS 123R and SAB
107 using a qualified option-pricing model, that value may not be indicative of
the fair value observed in a willing buyer/willing seller market transaction.
Estimates of share-based compensation expenses are significant to our financial
statements, but these expenses are based on the aforementioned option valuation
model and will never result in the payment of cash by us.





Theoretical
valuation models and market-based methods are evolving and may result in lower
or higher fair value estimates for share-based compensation. The timing,
readiness, adoption, general acceptance, reliability, and testing of these
methods is uncertain. Sophisticated mathematical models may require voluminous
historical information, modeling expertise, financial analyses, correlation
analyses, integrated software and databases, consulting fees, customization, and
testing for adequacy of internal controls.





For
purposes of estimating the fair value of stock options granted during the nine
months ended December 31, 2009 using the Black-Scholes model, we used the
historical volatility of our stock for the expected volatility assumption input
to the Black-Scholes model, consistent with the guidance in FAS 123R and SAB
107. The risk-free interest rate is based on the risk-free zero-coupon rate for
a period consistent with the expected option term at the time of grant. We do
not currently pay nor do we anticipate paying dividends, but we are required to
assume a dividend yield as an input to the Black-Scholes model. As such, we use
a zero dividend rate. The expected option term is estimated using both
historical term measures and projected termination estimates.


22
 Table of Contents


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 the fourth quarter  of each calendar year.
An interim goodwill impairment test would be performed if an event occurs or
circumstances change between annual tests that would more likely than not reduce
the fair value of a reporting unit below its carrying amount. For purposes of
performing the goodwill impairment test, we concluded there is one reporting
unit. During the fourth quarter of year ending March 31, 2009, we completed the
required annual test, which indicated there was no impairment.





Accounting
for Income Taxes





In
connection with preparing our financial statements, we are required to estimate
our income taxes in each of the jurisdictions in which we operate. This process
involves the assessment of our net operating loss carry forwards and credits, as
well as estimating the actual current tax liability together with assessing
temporary differences resulting from differing treatment of items, such as
reserves and accrued  liabilities, for tax and accounting purposes. We
then assess the likelihood that deferred tax assets will be recovered from
future taxable income, and to the extent we believe that recovery is not likely,
we must establish a valuation allowance.. We expect to realize our differed tax
assets as we expect to generate revenue and profit at the parent level through
service fees charged to the subsidiaries and ore contracts obtained at the
parent level.  We have therefore not provided an allowance against the
deferred tax asset.




Results
of Operations




Three
Months Ended December 31, 2009 Compared to Three Months Ended December 31,
2008





Revenue -Total revenue
was $5.9 million for the three months ended December 31, 2009, as compared $3.8
million for the three months ended December 31, 2008.  The revenue
reported in December 2009 does not include Sricon revenue, due to the
deconsolidation of Sricon.  The revenue reported in December 2008
however, includes revenue from Sricon.  Despite deconsolidation, the
Company grew its top line, year over year, by 55%.  The revenue
reported in the quarter ended September 30, 2009 was $5.36
million.  This revenue also included Sricon. The quarter over quarter
growth is 10% despite the deconsolidation of Sricon.  This revenue
growth is from the materials business as well as the construction
business.





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.  It also includes the cost
associated with buying raw materials.  Cost of revenue for the quarter
ended December 31, 2009 was $5.3 million compared to $2.9 million for the
quarter ended December 31, 2008.  As a percentage of revenue, the cost
of revenue increased, primarily because the Company has contracts for rock
aggregate and iron ore that it is filling before its quarries become
operational.  This practice will continue till our quarries and ore
mines are functional.  At that point, we will fill orders for
infrastructure materials from a much-improved cost basis.  We expect
two rock quarries to come on line in the quarter ending March 31, 2010 and the
ore mines to come on line towards the end of this calendar
year.   In the mean time our strategy is to gain market
share, establish our brand, and expand the customer base.





Selling, General and Administrative- Selling, general and administrative expenses were $3.0 million for the
quarter ended December 31, 2009 compared to $2.1 million for the quarter ended
December 31, 2008.   The December 2009 SG&A has a total of
$2.44 million of one time charges, about $1.85 million relating to the
deconsolidation of Sricon, and $587 thousand relating to the extinguishment of
the debt.   Adjusting for the one-time charges the SG&A for
the quarter ended December 31, 2009 would be around $ 600 thousand, or around
10% of revenue, compared to $2.1 million, or around 55% of revenue, incurred in
the quarter ended December 31, 2008.  The SG&A for the quarter
ended December 31, 2009 also had increased legal fees from the capital raise as
well as the deconsolidation.




Operating Income (loss) -In
the quarter ended December 31, 2009, operating loss was $ $2.6 million compared
to an operating loss of $1.4 million for the quarter ended December 31,
2008.  The operating loss in the quarter ended December 2009, stem
partly from a large one-time charge of $2.44 M in SG&A  reflecting
the de consolidation of Sricon and the extinguishment of debt.  With
an adjustment for one-time charges the operating loss for the quarter is around
$127 thousand.  We expect operating income to increase as our revenue
ramps up and our quarries become operational.





Early extinguishment of debt,
interest expense, and amortization of debt discount –the early
extinguishment of debt resulted in a one-time charge of about $586,785 thousand,
that is included in the SG&A.  The interest expense and
amortization of debt discount for the quarter ended December 31, 2009 was
$430,837 compared to $442,265 for the quarter ended December 31,
2008.  The interest expense and amortization of debt discount are for
$5.11 million of short and long term debt.  The annual effective rate
of interest is 34%, albeit much of it non-cash.  If the Company raises
equity and pays of some of the loans, it can potentially save around $400,000
per quarter, or $1.6 million a year, which would increase our bottom line
substantially.





AOCI & Loss on dilution of
Sricon –AOCI stands for Accumulated Other Comprehensive
Income.  As a result of the deconsolidation of Sricon, we have taken a
one-time charge for about $ 2.1 million, which represents a portion of the Other
Comprehensive Income of Sricon that accumulated from the time that IGC acquired
63% of Sricon. We recorded a one-time loss of $1.1 million, as a result of
decreasing our ownership from 63% to 22.3% in Sricon and extinguishing the loan
of $17.9 million due to Sricon.




Inter Company Loans-IGC
borrowed $17.9 million from Sricon.  As a result of the decrease in
ownership, this loan is eliminated.





Consolidated Net Income (loss) –Consolidated Net loss for the quarter ended December 31, 2009 was ($6.2)
million compared to a consolidated net loss of  ($2.3) million
for the quarter ended December 31, 2008.  The net loss in the 2009
December quarter includes one-time and non-cash charges of $6.0
million.





Cash, cash equivalents, restricted
cash and working capital –As on December 31, 2009 the company had $3.9
million of cash, cash equivalents and restricted cash.  Restricted
cash is cash in a fixed deposit used to secure a bank guarantee.  For
the quarter ended December 31, 2009 the Company had about $4.9 million in
working capital.




Stock holders equity and Total
Assets:Compared to March 31, 2009 our stock holders equity decreased
from $23.6 million to $21.9 million and our total assets decreased from $51.8
million to $35.9 million, mostly based on the de consolidation of
Sricon.  The decrease in the balance sheet ($15.9) million is
primarily due to elimination of debt ($17.9) million that was owed to Sricon,
along with accounting adjustments.


Nine
Months Ended December 31, 2009 Compared to Nine Months Ended December 31,
2008





Revenue -Total revenue
was $13.99 million for the nine months ended December 31, 2009, as compared to
$32.3 million for the nine months ended December 31, 2008.  The lower
revenue for the nine months ended December 31, 2009 is from decreasing our
contracts and backlog of work as a result of the financial turmoil.


23
 Table of Contents


Cost of Revenue- Cost of
revenue consists primarily of compensation and related fringe benefits for
project-related personnel, department management and all other dedicated project
related costs and indirect costs. Cost of Revenue decreased by $12.1
million, compared to the nine-month period ended December 31,
2008.  The decrease was caused by declining revenue and associated
costs.





Selling, General and Administrative- Consists primarily of employee-related expenses, professional fees,
other corporate expenses and allocated overhead. Selling, general and
administrative expenses were $4.4 million for the nine-month period ended
December 31, 2009 compared to $4.2 million for the nine-month period ended
December 31, 2008, or 13.1% of revenue.  The nine-month period ended
December 31, 2009 included $2.44 million of one time charges related to the
deconsolidation of Sricon.  Net of deconsolidation charges the
SG&A was about $ 2.0 million or about 14.3% of the revenue for the nine
month period ended December 31, 2009.


Operating Income (loss) -In
the nine-month period ended December 31, 2009, operating loss was ($2.8)
million, compared to operating income of $3.4 million for the nine-month period
ending December 31, 2008.


Net Interest Income (Expense)
– Net interest expense decreased by $47 thousand compared to the nine-month
period ending December 31, 2008.





Consolidated
Net Income (loss) –Net loss for the nine months ended December 31, 2009
was ($7.2) million compared to consolidated net income of $562 thousand for the
nine months ended December 31, 2008.  As explained in the quarterly
comparisons, one-time charges were taken in the quarter ended December 31, 2009
for the deconsolidation of Sricon as well as for the extinguishment of
debt.




Off-Balance
Sheet Arrangements





We do not
have any off-balance sheet arrangements as defined in Regulation S-K promulgated
under the Securities Exchange Act of 1934.





Liquidity and Capital
Resources





This
liquidity and capital resources discussion compares the consolidated company
results for nine months period ended December 31, 2009 and
2008.





Cash used
for operating activities from continuing operations is our net loss adjusted for
certain non-cash items and changes in operating assets and liabilities. During
the first nine months of 2009, cash used for operating activities was ($2.8)
million compared to cash used for operating activities of ($6.3) million during
the first nine months of 2008. The uses of cash in the first nine months of 2009
relate primarily to the payment of general operating expenses of our subsidiary
companies.  The large change is due to less business
volume.





During
the first nine months of 2009, investing activities from continuing operations
used ($985) thousand of cash as compared to $2.6 million provided during the
comparable period in 2008.





Financing
cash flows from continuing operations consist primarily of transactions related
to our debt and equity structure. In the first nine months of 2009 there was
financing cash provided of approximately $3.7 million, compared to cash used of
approximately ($2.3) million for the first nine months of 2008.  The
increase of cash from financing was due to the issuance of 1,599,000 shares of
stock.





Our
future liquidity needs will depend on, among other factors, stability of
construction costs, interest rates, and a continued increase in infrastructure
contracts in India. We believe that our current cash balances and anticipated
operating cash flow will be sufficient to fund our normal operating requirements
for at least the next 12 months. However, we may seek to secure additional
capital to fund further growth of our business, or the repayment of debt, in the
near term.





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Forward-Looking
Statements





This
report contains forward-looking statements, including, among others,
(a) our expectations about possible business combinations, (b) our
growth strategies, (c) our future financing plans, and (d) our
anticipated needs for working capital. Forward-looking statements, which involve
assumptions and describe our future plans, strategies, and expectations, are
generally identifiable by use of the words “may,” “should,” “expect,”
“anticipate,” “approximate,” “estimate,” “believe,” “intend,” “plan,” or
“project,” or the negative of these words or other variations on these words or
comparable terminology. This information may involve known and unknown risks,
uncertainties, and other factors that may cause our actual results, performance,
or achievements to be materially different from the future results, performance,
or achievements expressed or implied by any forward-looking statements. These
statements may be found in this report. Actual events or results may differ
materially from those discussed in forward-looking statements as a result of
various factors, including, without limitation, the risks outlined under our
“Description of Business” and matters described in this report generally. In
light of these risks and uncertainties, the events anticipated in the
forward-looking statements may or may not occur. These statements are based on
current expectations and speak only as of the date of such statements. We
undertake no obligation to publicly update or revise any forward-looking
statement, whether as a result of future events, new information or
otherwise.





The
information contained in this report identifies important factors that could
adversely affect actual results and performance. All forward-looking statements
attributable to us are expressly qualified in their entirety by the foregoing
cautionary statements.





Item 3.  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.




Item 4.  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
December 31, 2009.  Based upon that evaluation, management, including
our principal executive officer and principal financial officer, concluded that
the Company’s disclosure controls and procedures were effective in alerting it
in a timely manner to information relating to the Company required to be
disclosed in this report other than with respect to our procedures for including
the required auditor consents.





We
believe our control procedures are sufficiently effective to ensure that
information requiring inclusion or disclosure in our reports filed pursuant to
the Securities Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules,
regulations and related forms, and that such information is accumulated and
communicated to our principal executive officer and principal financial officer,
as appropriate, to allow timely decisions regarding required
disclosure.





No change
in the Company's internal control over financial reporting occurred during the
quarter ended  December 31, 2009, that materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.





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PART
II – OTHER INFORMATION





Item 1.  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





Refer to
the 8K filed on October 8, 2009 and 8K filed on October 16, 2009.





Item3.  Defaults Upon Senior
Securities





None.





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





None.





Item 5.  Other Information





None.





Item6.  Exhibits





31.1
            Certificate Pursuant to 17
      CFR 240.13a-14(a).31.2
            Certificate Pursuant to 17
      CFR 240.13a-14(a).32.1
            Certificate Pursuant to 18
      U.S.C. § 1350.32.2
            Certificate Pursuant to 18
      U.S.C. § 1350.





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SIGNATURES







In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.





INDIA GLOBALIZATION CAPITAL,
      INC.Date:
      February 10, 2009
            By:
            /s/ Ram
      MukundaRam
      MukundaChief
      Executive Officer and President (Principal Executive
    Officer)





Date:
      February 10, 2009
            By:
            /s/ John B.
      SelvarajJohn
      B. SelvarajTreasurer,
      Principal Financial and Accounting Officer










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