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,
2008




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




Commission
file number000-1326205




INDIA
GLOBALIZATION CAPITAL, INC.


(Exact
name of small business issuer in its charter)




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




4336 Montgomery Ave.
Bethesda, Maryland 20814


(Address
of principal executive offices)




(301) 983-0998


(Issuer’s
telephone number)




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




Title of Each Class
              Name of exchange on which
      registeredUnits,
      each consisting of one share of Common Stock
              NYSE
      Alternextand
      two WarrantsCommon
      Stock
              NYSE
      AlternextCommon
      Stock Purchase Warrants
              NYSE
      Alternext




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 January 12, 2009Common Stock,
      $.0001 Par Value
            10,091,171






Table of Contents







INDEX


India
Globalization Capital


QUARTERLY
REPORT ON FORM 10-Q


FOR
THE QUARTERLY PERIOD ENDED DECEMBER 31, 2008





Table of
Contents







PagePART
      I – FINANCIAL INFORMATIONItem
      1.
              Financial
      Statements
              3Consolidated
      Balance Sheets as of December 31, 2008 (unaudited) and March 31,
      2008
              3Consolidated
      Statements of Operations (unaudited) for the three months ended December
      31, 2008 and 2007, and Predecessor Companies for December 31,
      2007
              4Consolidated
      Statements of Operations (unaudited) for the nine months ended December
      31, 2008 and 2007, and Predecessor Companies for December 31,
      2007
              5Consolidated
      Statements of Stockholders (Deficit) Equity for the nine months ended
      December 31, 2008 (unaudited)
              6Consolidated
      Statements of Cash Flows (unaudited) for the nine months ended December
      31, 2008 and 2007
              7Notes to
      Consolidated Financial Statements (unaudited)
              9Item
      2.
              Management’s
      Discussion and Analysis
              18Item
      3.
              Quantitative and
      Qualitative Disclosures About Market Risk
              23Item
      4.
              Controls and
      Procedures
              24PART
      II – OTHER INFORMATIONItem
      1.
              Legal
      Proceedings
              25Item
      2.
              Unregistered Sales
      of Equity Securities and Use of Proceeds
              25Item
      3.
              Defaults Upon
      Senior Securities
              25Item
      4.
              Submission of
      Matters to a Vote of Security Holders
              25Item
      5.
              Other
      Information
              25Item
      6.
              Exhibits
              2525Signatures26






Table of Contents




PARTI - Financial Information





Item 1.  Financial
Statements





India
Globalization Capital, Inc.


CONSOLIDATED
BALANCE SHEETS





December
      31, 2008
                        (unaudited)
                      
                      
                      March
      31, 2008
                        (audited)ASSETSCurrent
      Assets:Cash
      and cash equivalents
                      
                      $
                      1,739,275
                      
                      
                      $
                      8,397,441Accounts
      Receivable
                      
                      
                      12,750,244
                      
                      
                      
                      8,708,861Unbilled
      Receivables
                      
                      
                      3,941,197
                      
                      
                      
                      5,208,722Inventories
                      
                      
                      1,678,007
                      
                      
                      
                      1,550,080Interest
      Receivable - Convertible Debenture
                      
                      
                      
                      
                      
                      
                      277,479Convertible
      debenture in MBL
                      
                      
                      
                      
                      
                      
                      3,000,000Prepaid
      taxes
                      
                      
                      88,683
                      
                      
                      
                      49,289Restricted
      cash
                      
                      
                      
                      
                      
                      
                      6,257Short
      term investments
                      
                      
                      78,783
                      
                      
                      
                      671Prepaid
      expenses and other current assets
                      
                      
                      2,521,086
                      
                      
                      
                      4,324,201Due
      from related parties
                      
                      
                      424,863
                      
                      
                      
                      1,373,446Total
      Current Assets
                      
                      $
                      23,222,138
                      
                      
                      $
                      32,896,447Property
      and equipment, net
                      
                      
                      7,159,723
                      
                      
                      
                      7,337,361Build,
      Operate and Transfer (BOT under Progress)
                      
                      
                      2,899,733
                      
                      
                      
                      3,519,965Goodwill
                      
                      
                      17,483,501
                      
                      
                      
                      17,483,501Investment
                      
                      
                      82,950
                      
                      
                      
                      1,688,303Deposits
      towards acquisitions
                      
                      
                      187,500
                      
                      
                      
                      187,500Restricted
      cash, non-current
                      
                      
                      1,647,951
                      
                      
                      
                      2,124,160Deferred
      tax assets - Federal and State, net of valuation allowance
                      
                      
                      919,122
                      
                      
                      
                      1,013,611Other
      Assets
                      
                      
                      2,040,746
                      
                      
                      
                      1,376,126Total
      Assets
                      
                      $
                      55,643,364
                      
                      
                      $
                      67,626,973LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      Liabilities:Short-term
      borrowings and current portion of long-term debt
                      
                      $
                      2,754,023
                      
                      
                      $
                      5,635,408Trade
      payables
                      
                      
                      1,682,498
                      
                      
                      
                      1,771,151Advance
      from Customers
                      
                      
                      215,772
                      
                      
                      
                      931,092Accrued
      expenses
                      
                      
                      469,377
                      
                      
                      
                      1,368,219Taxes
      payable
                      
                      
                      76,569
                      
                      
                      
                      58,590Notes
      Payable to Oliveira Capital, LLC
                      
                      
                      
                      
                      
                      
                      3,000,000Notes
      Payable to Oliveira Trust
                      
                      
                      1,278,642Due
      to related parties
                      
                      
                      
                      
                      
                      
                      1,330,291Other
      current liabilities
                      
                      
                      2,476,142
                      
                      
                      
                      3,289,3073,495,775Total
      current liabilities
                      
                      $
                      12,448,798
                      
                      
                      $
                      17,384,059Long-term
      debt, net of current portion
                      
                      
                      1,483,154
                      
                      
                      
                      1,212,841Advance
      from Customers
                      
                      
                      
                      
                      
                      
                      832,717Deferred
      taxes on income
                      
                      
                      633,743
                      
                      
                      
                      608,535Other
      liabilities
                      
                      
                      2,344,205
                      
                      
                      
                      6,717,109Total
      Liabilities
                      
                      $
                      16,909,900
                      
                      
                      $
                      26,755,261Minority
      Interest
                      
                      
                      14,482,653
                      
                      
                      
                      13,545,656STOCKHOLDERS’
      EQUITYCommon
      stock — $.0001 par value; 75,000,000 shares authorized; 8,780,107 issued
      and outstanding at December 31, 2008 and 8,570,107 issued and outstanding
      at March 31, 2008
                      
                      
                      878
                      
                      
                      
                      857Additional
      paid-in capital
                      
                      
                      32,888,962
                      
                      
                      
                      31,470,134Retained
      Earnings (Deficit)
                      
                      
                      (4,515,523
                      )
                      
                      
                      (4,141,113
                      )Accumulated
      other comprehensive (loss) income
                      
                      
                      (4,123,506
                      )
                      
                      
                      (3,822
                      )Total
      stockholders’ equity
                      
                      
                      2,4250,811
                      
                      
                      
                      27,326,056Total
      liabilities and stockholders’ equity
                      
                      $
                      55,643,364
                      
                      
                      $
                      67,626,973





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




3
 Table of Contents







IndiaGlobalization Capital,
Inc.


CONSOLIDATED
STATEMENTS OF OPERATIONS


(unaudited)






Three
      Months Ended
                                                                  December
      31, 2008
                                                                
                                                                Three
      Months Ended
                                                                  December
      31, 2007
                                                                
                                                                Combined
      Predecessor
                                                                  Three
      Months Ended
                                                                  December
      31, 2007Revenues:
                                                                
                                                                $
                                                                3,836,428
                                                                
                                                                $
                                                                
                                                                $
                                                                11,800,380Cost
      of revenue:
                                                                
                                                                
                                                                (2,902,431
                                                                )
                                                                
                                                                
                                                                
                                                                (7,454,842
                                                                )Gross
      Profit
                                                                
                                                                
                                                                933,996
                                                                
                                                                
                                                                
                                                                
                                                                4,345,538Selling,
      General and Administrative
                                                                
                                                                
                                                                (2,135,267
                                                                )
                                                                
                                                                
                                                                
                                                                (1,425,269
                                                                )Depreciation
                                                                
                                                                
                                                                (212,527
                                                                )
                                                                
                                                                
                                                                
                                                                (433,211
                                                                )One
      Time Legal and start up costs
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                (286,006
                                                                )Total
      operating expenses
                                                                
                                                                
                                                                (2,347,794
                                                                )
                                                                
                                                                (286,006
                                                                )
                                                                
                                                                (1,858,480
                                                                )Operating
      income (loss)
                                                                
                                                                
                                                                (1,413,798
                                                                )
                                                                
                                                                
                                                                
                                                                
                                                                2,487,058Other
      income (expense):Interest
      and other income
                                                                
                                                                
                                                                137,663
                                                                
                                                                
                                                                538,894
                                                                
                                                                
                                                                124,306Interest
      expense
                                                                
                                                                
                                                                (442,265
                                                                )
                                                                
                                                                (443,100
                                                                )
                                                                
                                                                (542,570
                                                                )Total
      other income (expense)
                                                                
                                                                
                                                                (304,602
                                                                )
                                                                
                                                                95,794
                                                                
                                                                
                                                                (418,264
                                                                )Income
      (loss) before provision for income taxes
                                                                
                                                                
                                                                (1,718,400
                                                                )
                                                                
                                                                (190,212
                                                                )
                                                                
                                                                2,068,795(Provision)
      benefit for income taxes
                                                                
                                                                
                                                                (565,885
                                                                )
                                                                
                                                                (64,630
                                                                )
                                                                
                                                                (351,857
                                                                )Income
      (loss) after provision for income tax
                                                                
                                                                
                                                                (2,284,285
                                                                )
                                                                
                                                                (125,582
                                                                )
                                                                
                                                                1,716,938Provision
      for Dividend on Preference Stock and its Tax
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                (53,688
                                                                )Minority
      interest
                                                                
                                                                
                                                                550,207Net
      income (loss)
                                                                
                                                                $
                                                                (1,734,078
                                                                )
                                                                $
                                                                (125,582
                                                                )
                                                                $
                                                                1,663,250Weighted
      average number of shares outstanding:Basic
                                                                
                                                                
                                                                8,780,107
                                                                
                                                                
                                                                8,780,107Diluted
                                                                
                                                                
                                                                8,780,107
                                                                
                                                                
                                                                8,780,107Net
      income per share:Basis
                                                                
                                                                $
                                                                (0.20
                                                                )
                                                                $
                                                                (0.01
                                                                )Diluted
                                                                
                                                                $
                                                                (0.20
                                                                )
                                                                $
                                                                (0.01
                                                                )












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







4
 Table of Contents




IndiaGlobalization Capital,
Inc.


CONSOLIDATED
STATEMENTS OF OPERATIONS


(unaudited)





Combined
      PredecessorNine
      MonthsEnded
                        
                        
                        Nine
      MonthsEnded
                        
                        
                        Nine
      Months EndedDecember
      31, 2008
                        
                        
                        December
      31, 2007
                        
                        
                        December
      31, 2007Revenues:
                        
                        $
                        32,263,680
                        
                        
                        $
                        
                        
                        $
                        21,906,801Cost
      of revenue:
                        
                        
                        (23,948,382
                        )
                        
                        
                        
                        
                        
                        (14,596,669
                        )Gross
      Profit
                        
                        
                        8,315,299
                        
                        
                        
                        
                        
                        
                        7,310,132Selling,
      General and Administrative
                        
                        
                        (4,224,524
                        )
                        
                        
                        
                        
                        
                        (2,305,835
                        )Depreciation
                        
                        
                        (679,835
                        )
                        
                        
                        
                        
                        
                        (691,825
                        )One
      Time Legal and start up costs
                        
                        
                        
                        
                        
                        
                        (670,534
                        )Total
      operating expenses
                        
                        
                        (4,904,359
                        )
                        
                        
                        (670,534
                        )
                        
                        
                        (2,997,660
                        )Operating
      income (loss)
                        
                        
                        3,410,939
                        
                        
                        
                        (670,534
                        )
                        
                        
                        4,312,472Other
      income (expense):Interest
      and other income
                        
                        
                        324,062
                        
                        
                        
                        1,836,957
                        
                        
                        
                        2,854,216Interest
      expense
                        
                        
                        (1,244,350
                        )
                        
                        
                        (1,284,700
                        )
                        
                        
                        (1,226,499
                        )Total
      other income (expense)
                        
                        
                        (920,288
                        )
                        
                        
                        (552,257
                        )
                        
                        
                        1,627,717Income
      (loss) before provision for income taxes
                        
                        
                        2,490,651
                        
                        
                        
                        (118,279
                        )
                        
                        
                        5,940,189(Provision)
      benefit for income taxes
                        
                        
                        (1,928,490
                        )
                        
                        
                        40,026
                        
                        
                        
                        (762,295
                        )Income
      (loss) after provision for income tax
                        
                        
                        562,161
                        
                        
                        
                        (78,251
                        )
                        
                        
                        5,177,894Provision
      for Dividend on Preference Stock and its Tax
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (132,028
                        )Minority
      interest
                        
                        
                        (936,996
                        )Net
      income (loss)
                        
                        $
                        (374,835
                        )
                        
                        $
                        (78,251
                        )
                        
                        $
                        5,045,866Weighted
      average number of shares outstanding:Basic
                        
                        
                        8,780,107
                        
                        
                        
                        13,974,500Diluted
                        
                        
                        8,780,107
                        
                        
                        
                        13,974,500Net
      income per share:Basis
                        
                        $
                        (0.04
                        )
                        
                        $
                        (0.01
                        )Diluted
                        
                        $
                        (0.04
                        )
                        
                        $
                        (0.01
                        )





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




5
 Table of Contents







IndiaGlobalization Capital, Inc.


CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY


(unaudited)







Common
      Stock
                        
                        Additional
                          Paid-in
                        
                        Accumulated
                          Earnings
                        
                        
                        Accumulated
                          Other
                          Comprehensive
      Income
                        
                        Total
                          Stockholders'Shares
                        
                        Amount
                        
                        Capital
                        
                        (Deficit)
                        
                        
                        /
      Loss
                        
                        EquityBalance
      at March 31, 2008
                        
                        
                        8,570,107
                        
                        
                        $
                        857
                        
                        
                        $
                        31,470,134
                        
                        
                        $
                        (4,141,113
                        )
                        
                        $
                        (3,822
                        )
                        
                        $
                        27,326,056Issuance
      of 425,000 warrants to Oliveira Capital, LLC
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        403,750
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        403,750Issuance
      of common stock to Red Chip Companies
                        
                        
                        10,000
                        
                        
                        
                        1
                        
                        
                        
                        47,098
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        47,099Issuance
      of Common Stock to Oliveira Trust
                        
                        
                        200,000
                        
                        
                        
                        20
                        
                        
                        
                        967,980
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        968,000Net
      Income (Loss)
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (374,410
                        )
                        
                        
                        (4,119,684
                        )
                        
                        
                        (4,494,094
                        )Balance
      at December 31, 2008
                        
                        
                        8,780,107
                        
                        
                        $
                        878
                        
                        
                        $
                        32,888,962
                        
                        
                        $
                        (4,515,523
                        )
                        
                        $
                        (4,123,506
                        )
                        
                        $
                        24,250,812





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








6
 Table of Contents




IndiaGlobalization Capital, Inc.


CONSOLIDATED
STATEMENT OF CASH FLOWS


(unaudited)





Nine
      months ended
                                            
                                            
                                            Combined
                                              Predecessor
                                              Nine
      months endedDecember
      31, 2008
                                            
                                            
                                            December
      31, 2007
                                            
                                            
                                            December
      31, 2007Cash
      flows from operating activities:Net
      income
                                            
                                            $
                                            (374,835)
                                            
                                            
                                            $
                                            (78,251
                                            )
                                            
                                            $
                                            5,045,868Adjustment
      to reconcile net income to net cash used in operating
      activities:
                                            
                                            
                                            
                                            
                                            
                                            
                                            (1,888,597
                                            )Interest
      earned on Treasury BillsNon-cash
      compensation expense
                                            
                                            
                                            450,850Deferred
      taxes
                                            
                                            
                                            222,873
                                            
                                            
                                            
                                            (748,895
                                            )
                                            
                                            
                                            125,139Depreciation
                                            
                                            
                                            679,835
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            691,825Loss/(Gain)
      on sale of property, plant and equipment
                                            
                                            
                                            (50,905
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            63,682Amortization
      of debt discount on Oliveira debt
                                            
                                            
                                            2,652
                                            
                                            
                                            
                                            1,052,988Amortization
      of loan acquisition costs
                                            
                                            
                                            
                                            
                                            
                                            
                                            12,295Changes
      in:Accounts
      receivable
                                            
                                            
                                            (6,074,864
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            (7,733,365
                                            )Unbilled
      Receivable
                                            
                                            
                                            381,020
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            1,212,592Inventories
                                            
                                            
                                            (436,945
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            (135,299
                                            )Prepaid
      expenses and other current assets
                                            
                                            
                                            1,441,780
                                            
                                            
                                            
                                            66,572
                                            
                                            
                                            
                                            1,998,176Interest
      receivable - convertible debenture
                                            
                                            
                                            277,479
                                            
                                            
                                            
                                            (180,000
                                            )Deferred
      interest liability
                                            
                                            
                                            
                                            
                                            
                                            
                                            249,216Accrued
      expenses
                                            
                                            
                                            (925,311
                                            )
                                            
                                            
                                            338,296Taxes
      payable
                                            
                                            
                                            87,497
                                            
                                            
                                            
                                            (346,131
                                            )Trade
      Payable
                                            
                                            
                                            243,425
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (458,454
                                            )Other
      Current Liabilities
                                            
                                            
                                            (532,614
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            1,416,487Advance
      from Customers
                                            
                                            
                                            (1,347,958
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            (1,614,651
                                            )Non
      current assets
                                            
                                            
                                            (988,268
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            (1,503,080
                                            )Other
      non-current liabilities
                                            
                                            
                                            (3,474,682
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            419,457BOT
      under Progress
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            3,296,481Minority
      Interest
                                            
                                            
                                            936,996Net
      cash (used) in operating activities
                                            
                                            
                                            (8,416,748
                                            )
                                            
                                            
                                            (1,522,507
                                            )
                                            
                                            
                                            2,824,857
       7
 Table of Contents
  India
Globalization Capital, Inc.
 CONSOLIDATED
STATEMENT OF CASH FLOWS
 (unaudited)
 (continued)
   Nine
      months ended
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        Combined
                                                                                                                                          Predecessor
                                                                                                                                          Nine
      months endedDecember
      31, 2008
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        December
      31, 2007
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        December
      31, 2007
 Cash
      flows from investing activities:Purchase
      of treasury bills
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (401,237,567
                                                    )Maturity
      of treasury bills
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    402,336,508Decrease
      (increase) in cash held in trust
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (44,277
                                                    )Purchase
      of property and equipment
                                                    
                                                    
                                                    (1,956,230
                                                    )
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (42,873
                                                    )Proceeds
      from sale of property and equipment
                                                    
                                                    
                                                    112,245
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    123,131Purchase
      of short term investments
                                                    
                                                    
                                                    (85,116
                                                    )Non
      Current Investments
                                                    
                                                    
                                                    1,424,897
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    324,256Investment
      in joint venturesRestricted
      Cash
                                                    
                                                    
                                                    116,545
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    14,902Redemption
      of Convertible Debenture
                                                    
                                                    
                                                    3,000,000Deposit
      towards acquisitions
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (3,670,000
                                                    )Payment
      of deferred acquisition costs
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (48,419
                                                    )Net
      cash provided (used) in investing activities
                                                    
                                                    
                                                    2,612,340
                                                    
                                                    
                                                    
                                                    2,663,755
                                                    )
                                                    
                                                    
                                                    419,416Cash
      flows from financing activities:Issuance
      of Preference Stock
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    1,241,619Net
      movement in cash credit and bank overdraft
                                                    
                                                    
                                                    (2,153,085
                                                    )
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (2,431,752
                                                    )Proceeds
      from other short-term borrowings
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    141,258Proceeds
      from long-term borrowings
                                                    
                                                    
                                                    1,192,408
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    212,620Repayment
      of  long-term borrowings
                                                    
                                                    
                                                    (569,372
                                                    )
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (3,740,442
                                                    )Due
      to related parties
                                                    
                                                    
                                                    2,124,212
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (2,237,692
                                                    )Proceeds
      from notes payable to stockholders
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    4,825,000Proceeds
      from notes payable to stockholders
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (600,000
                                                    )Repayment
      of note payable to Oliveira Capital, LLC
                                                    
                                                    
                                                    (2,756,010
                                                    )
                                                    
                                                    
                                                    1,000,000Proceeds
      from note payable to Oliveira Trust
                                                    
                                                    
                                                    2,000,000Proceeds
      from private placementRepayment
      of notes payable to stockholderMoney
      received pending allotment
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    3,170,102Net
      cash (used in) provided by financing activities
                                                    
                                                    
                                                    (161,847
                                                    )
                                                    
                                                    
                                                    (5,225,000
                                                    )
                                                    
                                                    
                                                    (3,644,287
                                                    )Effect
      of exchange rate changes on cash and cash equivalents
                                                    
                                                    
                                                    (691,910
                                                    )
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    126,332Net
      increase (decrease) in cash and cash equivalent
                                                    
                                                    
                                                    (6,658,165
                                                    )
                                                    
                                                    
                                                    1,038,738
                                                    
                                                    
                                                    
                                                    (273,682
                                                    )Cash
      and cash equivalent at the beginning of the period
                                                    
                                                    
                                                    8,397,440
                                                    
                                                    
                                                    
                                                    1,169,422
                                                    
                                                    
                                                    
                                                    1,297,000Cash
      and cash equivalent at the end of the period
                                                    
                                                    $
                                                    1,739,275
                                                    
                                                    
                                                    $
                                                    2,208,160
                                                    
                                                    
                                                    $
                                                    1,023,318Supplemental
      schedule of non cash financing activitiesAccrual
      of deferred acquisition costs
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    $
                                                    26,031Accrual
      of loan acquisition costs
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    250,000




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


8
 Table of Contents




IndiaGlobalization Capital, Inc. (IGC)


Notes
to Consolidated Financial Statements (unaudited)




Note
1 - Nature of Operations and Basis of Presentation




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




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





India
Globalization Capital, Inc.





IGC, a
Maryland corporation, was organized on April 29, 2005 as a blank check
company formed for the purpose of acquiring one or more businesses with
operations primarily in India through a merger, capital stock exchange, asset
acquisition or other similar business combination or acquisition. On March 8,
2006, the company completed an initial public offering.  On February
19, 2007, the Company incorporated India Globalization Capital, Mauritius,
Limited (IGC-M), a wholly owned subsidiary, under the laws of
Mauritius.





Merger
and Accounting Treatment





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





The
acquisitions were accounted for under the purchase method of
accounting.  Under this method of accounting, for accounting and
financial purposes, IGC-M, Limited was treated as the acquiring entity and
Sricon and TBL as the acquired entities.  The consolidated financial
statements provided here and going forward are the consolidated statements of
IGC, which include IGC-M following the date of formation of IGC-M and Sricon and
TBL following the date of the Company’s acquisition of the interests in Sricon
and TBL.  The consolidated financial statements do not reflect the
operating results of Sricon and TBL prior to the acquisition. However, for
comparative purposes, the combined statement of operations for the two acquired
companies are presented as the “Combined Predecessors” for the three and nine
month period ended December 31, 2007.





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




Securities





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





On March
7, 2008, we bought and redeemed a total of 6,159,346 shares.  As a
result, of the redemption and the subsequent issuance of an aggregate of 210,000
shares of common stock in private placements, including the issuance to Red Chip
Companies described below, on December 31, 2008, we had 8,780,107 shares
outstanding (including shares sold to our founders in a private placement prior
to the public offering) and 24,874,000 shares of common stock were reserved for
issuance upon exercise of redeemable warrants and underwriters’ purchase
option.





9
 Table of Contents




In an
effort to raise additional capital and reduce the number of warrants
outstanding, on November 24, 2008, we announced to the holders of all 22,609,000
outstanding, publicly traded warrants and of 1,190,000 warrants issued by the
Company in private placements  the opportunity to acquire shares of
common stock. We modified the terms of the Warrants to (1) permit, instead of
paying the purchase price of $5.00 in cash, the exchange of 5 Warrants and $0.55
for one share of Common Stock and (2) permit the exercise of a Warrant such that
the Holder will receive one share of Common Stock in exchange for every 12
Warrants surrendered. The Warrant holders could use one or both methods in
exercising the warrants for Common Stock. The offer was initially planned to
commence on Monday, November 24, 2008 and expire on December 23, 2008 as further
described in our initial Tender Offer Statement dated November 24, 2008 and
filed with the SEC on that date.


On
January 6, 2009, we extended the expiration date of the tender offer to January
9, 2009.  See the section below titled Subsequent Events for the
results of the tender offer.




Unaudited
Interim Financial Statements





The
unaudited consolidated financial statements of IGC as of December 31, 2008 and
for the three and nine months ended December 31, 2008 and 2007 include the
accounts of the Company and its subsidiaries. The unaudited financial statements
include all adjustments (consisting of normal recurring adjustments) which are,
in the opinion of management, necessary for a fair presentation of such
financial statements.  Operating results for the interim periods
presented are not necessarily indicative of the results to be expected for a
full fiscal year.




Pro
Forma Results of Operations





The
accompanying unaudited consolidated statements of operations only reflect the
operating results of companies acquired following the date of acquisition and do
not reflect the operating results prior to the acquisitions.  The
following are pro forma unaudited results of operations for the Company for the
three and nine months ended December 31, 2008 and 2007 with the results for the
Company alone for the three and nine months ended December 31, 2007 included for
comparative purposes.  The results in the column labeled “Pro Forma
Three Months Ended December 31, 2007” and “Pro Forma Nine Months Ended December
31, 2007” assume the Sricon and TBL acquisitions occurred on April 1,
2007.  The unaudited pro forma results of operations are not
necessarily indicative of results of operations that may have actually occurred
had the acquisitions taken place on the dates noted, or the future financial
position or operating results of the Company. The pro forma adjustments are
based upon available information and assumptions that the Company believes are
reasonable. The pro forma adjustments include adjustments for interest expense,
start up costs, increased depreciation and amortization expense as a result of
the application of the purchase method of accounting based on the fair values of
the tangible and intangible assets.










10
 Table of Contents




PRO
FORMA CONSOLIDATED STATEMENTS OF OPERATIONS


(unaudited)




Three
      Months Ended
                                    December
      31, 2008
                                  
                                  
                                  Three
      Months Ended
                                    December
      31, 2007
                                  
                                  
                                  Pro
      forma
                                    Three
      Months Ended
                                    December
      31, 2007Revenues:
                                  
                                  $
                                  3,836,428
                                  
                                  
                                  $
                                  
                                  
                                  $
                                  11,800,380Cost
      of revenue:
                                  
                                  
                                  (2,902,431
                                  )
                                  
                                  
                                  
                                  
                                  
                                  (7,454,842
                                  )Gross
      Profit
                                  
                                  
                                  933,996
                                  
                                  
                                  
                                  
                                  
                                  
                                  4,345,538Selling,
      general and administrative
                                  
                                  
                                  (2,135,267
                                  )
                                  
                                  
                                  
                                  
                                  
                                  (1,425,269
                                  )Depreciation
                                  
                                  
                                  (212,527
                                  )
                                  
                                  
                                  
                                  
                                  
                                  (433,211
                                  )One
      Time Legal and other start up costs
                                  
                                  
                                  
                                  
                                  
                                  
                                  (286,006
                                  )
                                  
                                  
                                  (286,008
                                  )Total
      operating expenses
                                  
                                  
                                  (2,347,794
                                  )
                                  
                                  
                                  (286,006
                                  )
                                  
                                  
                                  (2,144,488
                                  )Operating
      income (loss)
                                  
                                  
                                  (1,413,798
                                  )
                                  
                                  
                                  
                                  
                                  
                                  
                                  2,201,050Other
      income (expense):Interest
      income and other income
                                  
                                  
                                  137,663
                                  
                                  
                                  
                                  538,894
                                  
                                  
                                  
                                  124,306Interest
      expense
                                  
                                  
                                  (442,265
                                  )
                                  
                                  
                                  (443,100
                                  )
                                  
                                  
                                  (985,670
                                  )Other
      income (expense)
                                  
                                  
                                  (304,602
                                  )
                                  
                                  
                                  95,794
                                  
                                  
                                  
                                  (861,364
                                  )Income
      (loss) before provision for income taxes
                                  
                                  
                                  (1,718,400
                                  )
                                  
                                  
                                  (190,212
                                  )
                                  
                                  
                                  1,339,686(Provision)
      benefit for income taxes
                                  
                                  
                                  (565,885
                                  )
                                  
                                  
                                  (64,630
                                  )
                                  
                                  
                                  (109,573
                                  )Income
      (loss) after provision for income tax
                                  
                                  
                                  (2,284,285
                                  )
                                  
                                  
                                  (125,582
                                  )
                                  
                                  
                                  1,230,113Provision
      for Dividend on Preference Stock and its Tax
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  (53,688
                                  )Minority
      interest
                                  
                                  
                                  550,207
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  (587,710
                                  )Net
      income (loss)
                                  
                                  $
                                  (1,734,078
                                  )
                                  
                                  $
                                  (125,582
                                  )
                                  
                                  $
                                  588,715Weighted
      average number of shares outstanding:Basic
                                  
                                  
                                  8,780,107
                                  
                                  
                                  
                                  8,780,107Diluted
                                  
                                  
                                  8,780,107
                                  
                                  
                                  
                                  8,780,107Net
      income per share:Basis
                                  
                                  $
                                  (0.20
                                  )
                                  
                                  $
                                  (0.01
                                  )Diluted
                                  
                                  $
                                  (0.20
                                  )
                                  
                                  $
                                  (0.01
                                  )










11
 Table of Contents






Nine
      Months
                                  
                                  
                                  Nine
      Months
                                  
                                  
                                  Pro
      forma Nine MonthsEnded
                                  
                                  
                                  Ended
                                  
                                  
                                  EndedDecember
      31, 2008
                                  
                                  
                                  December
      31, 2007
                                  
                                  
                                  December
      31, 2007Revenues:
                                  
                                  $
                                  32,263,680
                                  
                                  
                                  $
                                  
                                  
                                  $
                                  21,906,801Cost
      of revenue:
                                  
                                  
                                  (23,948,382
                                  )
                                  
                                  
                                  
                                  
                                  
                                  (14,596,669
                                  )Gross
      Profit
                                  
                                  
                                  8,315,299
                                  
                                  
                                  
                                  
                                  
                                  
                                  7,310,132Selling,
      general and administrative
                                  
                                  
                                  (4,224,524
                                  )
                                  
                                  
                                  
                                  
                                  
                                  (2,305,835
                                  )Depreciation
                                  
                                  
                                  (679,835
                                  )
                                  
                                  
                                  
                                  
                                  
                                  (691,825
                                  )One
      Time Legal and other start up costs
                                  
                                  
                                  
                                  
                                  
                                  
                                  (670,534
                                  )
                                  
                                  
                                  (670,536
                                  )Total
      operating expenses
                                  
                                  
                                  (4,904,359
                                  )
                                  
                                  
                                  (670,534
                                  )
                                  
                                  
                                  (3,668,196
                                  )Operating
      income (loss)
                                  
                                  
                                  3,410,939
                                  
                                  
                                  
                                  (670,534
                                  )
                                  
                                  
                                  3,641,936Other
      income (expense):Interest
      income
                                  
                                  
                                  324,062
                                  
                                  
                                  
                                  1,836,957
                                  
                                  
                                  
                                  2,854,216Interest
      expense
                                  
                                  
                                  (1,244,350
                                  )
                                  
                                  
                                  (1,284,700
                                  )
                                  
                                  
                                  (2,511,199
                                  )Total
      Other income (expense)
                                  
                                  
                                  (920,288
                                  )
                                  
                                  
                                  (552,257
                                  )
                                  
                                  
                                  343,017Income
      (loss) before provision for income taxes
                                  
                                  
                                  2,490,651
                                  
                                  
                                  
                                  (118,279
                                  )
                                  
                                  
                                  3,984,953(Provision)
      benefit for income taxes
                                  
                                  
                                  (1,928,490
                                  )
                                  
                                  
                                  40,026
                                  
                                  
                                  
                                  (100,637
                                  )Income
      (loss) after provision for income tax
                                  
                                  
                                  562,161
                                  
                                  
                                  
                                  (78,251
                                  )
                                  
                                  
                                  3,884,316Provision
      for Dividend on Preference Stock and its Tax
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  (132,028
                                  )Minority
      interest
                                  
                                  
                                  (936,996
                                  )
                                  
                                  
                                  
                                  
                                  
                                  
                                  (1,471,613
                                  )Net
      income (loss)
                                  
                                  $
                                  (374,835
                                  )
                                  
                                  $
                                  (78,251
                                  )
                                  
                                  $
                                  2,280,675Weighted
      average number of shares outstanding:Basic
                                  
                                  
                                  8,780,107
                                  
                                  
                                  
                                  13,974,500Diluted
                                  
                                  
                                  8,780,107
                                  
                                  
                                  
                                  13,974,500Net
      income per share:Basis
                                  
                                  $
                                  (0.04
                                  )
                                  
                                  $
                                  (0.01
                                  )Diluted
                                  
                                  $
                                  (0.04
                                  )
                                  
                                  $
                                  (0.01
                                  )






12
 Table of Contents




Note
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Principles
of Consolidation:





The
consolidated financial statements include the accounts of the Company and its
subsidiaries. All material intercompany balances and transactions have been
eliminated.





Reclassifications




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




Revenue
Recognition




The
majority of the revenue recognized for the three and nine month period ended
December 31, 2008 was derived from the Company’s subsidiaries and as
follows:





Revenue
is recognized based on the nature of activity when consideration can be
reasonably measured and there exists reasonable certainty of its
recovery.




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




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




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




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




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




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




Policy
for Goodwill / Impairment





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




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





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




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




13
 Table of Contents





Impairment
of long – lived assets and intangible assets




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





Income
per common share:





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




For
December 31, 2008, the number of shares include shares sold in the IPO,
founder’s shares, shares sold in the private placement, shares awarded to the
investors in certain bridge loans made to the company, shares issued to our
investor relations firm and shares redeemed by the company.  The fully
diluted shares include basic shares plus the following: shares arising from the
exercise of warrants sold as part of the units in the offering plus shares
arising from the exercise of warrants issued to Oliveira Capital.   The UPO
issued to the underwriters (1,500,000 shares) is not considered in this
calculation as the strike price for the UPO is “out of the money” at $6.50 per
share. The historical weighted average per share, for our shares, for the three
month period ended December 31, 2008, was applied using the treasury method of
calculating the fully diluted shares.   The calculation for fully diluted
shares includes no shares and excludes 23,799,000 shares from the final EPS
computation.




Use
of estimates:





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





Income
taxes:





Deferred
income taxes are provided for the differences between the bases of assets and
liabilities for financial reporting and income tax purposes. A valuation
allowance is established when necessary to reduce deferred tax assets to the
amount expected to be realized.




Cash
and Cash Equivalents:





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







14
 Table of Contents





Recent
Pronouncements:





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





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





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




Note
3 – SHORT TERM BORROWINGS & CURRENT PORTION OF LONG-TERM DEBT


(Amounts
in Thousand US Dollars)





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




As
      ofDecember
      31, 2008
                        
                        
                        As
      ofMarch
      31, 2008Secured
                        
                        $
                        1,790,881
                        
                        
                        $
                        4,556Unsecured
                        
                        
                        260,341
                        
                        
                        
                        3,306Total
                        
                        
                        2,051,222
                        
                        
                        
                        7,862Add:Current
      portion of long term debt
                        
                        
                        702,801
                        
                        
                        
                        773Total
                        
                        $
                        2,754,023
                        
                        
                        $
                        8,635





The above
debt is secured by hypothecation of materials/stock of spares, Work in Progress,
receivables and property & equipment in addition to personal guarantee of
three directors & collaterally secured by mortgage of company’s land &
other immovable properties of directors and their relatives.





Note
4 - LONG TERM DEBT COMPRIMISES:


(Amounts
in Thousand US Dollars)





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


As
      ofDecember
      31, 2008
                            
                            
                            As
      ofMarch
      31, 2008Secured
                            
                            $
                            -
                            
                            
                            $
                            -Term
      loans
                            
                            
                            -
                            
                            
                            
                            632Loan
      for assets purchased under capital lease
                            
                            
                            2,185,955
                            
                            
                            
                            1,354Total
                            
                            
                            2,185,955
                            
                            
                            
                            1,986Less:
      Current portion (Payable within 1 year)
                            
                            
                            702,801
                            
                            
                            
                            773Total
                            
                            $
                            1,483,154
                            
                            
                            $
                            1,213








15
 Table of Contents




The
secured loans were collateralized by:




·        Unencumbered
Net Asset Block of the Company


·        Equitable
mortgage of properties owned by promoter directors/ guarantors


·        Term
Deposits


· Hypothecation of
receivables, assignment of toll rights, machineries and vehicles and
collaterally secured by deposit of    title deeds of
land


·        First
charge on Debt-Service Reserve Account





NOTE
5 - RELATED PARTY TRANSACTIONS




For the
three month period ended December 31, 2008, $22,000 was paid to SJS Associates
for Mr. Selvaraj’s consulting services.




The
Company had agreed to pay Integrated Global Network, LLC (“IGN, LLC”), an
affiliate of our Chief Executive Officer, Mr. Mukunda, an administrative fee of
$4,000 per month for office space and general and administrative services
totaling $16,000 for the three month period (January 20, 2009 payment
included).   The Company and IGN, LLC have agreed to continue the
agreement on a month-to-month basis.




NOTE
6 -COMMITMENTS AND CONTINGENCY





The
Founders are entitled to registration rights with respect to their shares of
common stock acquired prior to the Public Offering and the shares of common
stock they purchased in the Private Placement pursuant to an agreement executed
on March 3, 2006. The holders of the majority of these shares are entitled
to make up to two demands that the Company register these shares at any time
after the date on which the lock-up period expires.  In addition, the
Founders have certain “piggy-back” registration rights on registration
statements filed subsequent to the anniversary of the effective date of the
Public Offering. In addition, the holders of certain shares of common stock
of the Company and warrants to purchase Common Stock of the Company purchased
from the Company in private placements are entitled to demand and “piggy back”
registration rights.   We registered all of the shares entitled to
these registration rights for resale in a Form S-1 declared effective on
November 12, 2008.


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




NOTE
7 - INVESTMENT ACTIVITIES –




Contract
Agreement between IGC, CWEL, AMTL and MAIL





As
previously disclosed in our Form 8-K dated May 2, 2007 and Form 10-QSB for the
quarterly period ended December 31, 2007, on April 29, 2007, the Company entered
into a Contract Agreement Dated April 29, 2007 (“CWEL Purchase Agreement”) with
CWEL, Arul Mariamman Textiles Limited (AMTL), and Marudhavel Industries
Limited (MAIL), collectively CWEL. Pursuant to the CWEL Purchase Agreement, the
Company or its subsidiary in Mauritius will acquire 100% of a 24-mega watt wind
energy farm, consisting of 96 250-kilowatt wind turbines, located in Karnataka,
India to be manufactured by CWEL.





CWEL is a
manufacturer and supplier of wind operated electricity generators, towers and
turnkey implementers of wind energy farms.  On May 22, 2007, the
Company made a down payment of approximately $250,000 to
CWEL.  Pursuant to the First Amendment dated August 20, 2007 (as
previously disclosed in the Company’s Form 8-K dated August 22, 2007), if the
Company does not consummate the transaction with CWEL, approximately $187,500
will be returned to the Company.  As of the date of this filing, no
significant discussions have occurred involving the purchase of
CWEL.


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





NOTE
8 - COMMON STOCK





On August
24, 2005, the Company’s Board of Directors authorized a reverse stock split of
one share of common stock for each two outstanding shares of common stock and
approved an amendment to the Company’s Certificate of Incorporation to decrease
the number of authorized shares of common stock to 75,000,000. All references in
the accompanying financial statements to the number of shares of stock have been
retroactively restated to reflect these transactions.  On March 7,
2008 we redeemed and bought a total of 6,159,346 shares at $5.94 per
share.  At December 31, 2008 and 2007 we had 8,780,107 and 13,974,500
shares of common stock issued and outstanding respectively.   At
December 31, 2008 and 2007, 25,299,000 and 24,874,000 shares of common stock
respectively, were reserved for issuance upon exercise of redeemable warrants,
underwriters’ purchase option and warrants issued to Oliveira Capital,
LLC.




16
 Table of Contents







NOTE
9 -  BUSINESS COMBINATIONS





As
previously disclosed in our Form 8-K dated September 21, 2007 and Form 10-QSB
for the quarterly period ended September 30, 2007, on September 21, 2007, the
Company entered into a Share Subscription cum Purchase Agreement  (the
“Sricon Subscription Agreement”) dated as of September 15, 2007 with Sricon
Infrastructure Private Limited  (“Sricon”) and certain individuals
(collectively, the “Sricon Promoters”), pursuant to which the Company or its
subsidiary in Mauritius (IGC-M) will acquire (the “Sricon Acquisition”)4,041,676 newly-issued
equity shares  (the “New Sricon Shares”) directly from Sricon for
approximately $26 million and 351,840 equity shares from Mr. R. L. Srivastava
for approximately $3 million (both based on an exchange rate of INR 40 per USD)
so that at the conclusion of the transactions contemplated by the Sricon
Subscription Agreement the Company would ownapproximately63% of the outstanding
equity shares of Sricon.  The purchase price of $26 million was funded
with approximately $8.1 million in cash and a note for $17.9
million (computed at an exchange rate of approximately 40 INR to $1 USD).
 The expectation was that IGC would repay the note starting in October
2008. We are negotiating the note. Failure to repay the note could result
in  IGC having to decrease its ownership in Sricon by tendering all or
a portion of the Sricon shares it owns to Sricon to repay the note.  The
Sricon Acquisition was consummated on March 7, 2008.


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





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




NOTE
10 – PRIVATE PLACEMENT





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





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




NOTE
11 - SUBSEQUENT EVENTS




As stated
in Note 1, we announced our tender offer which expired on January 9, 2009 for
the exercise of our outstanding warrants. Under the tender offer, 11,943,878
warrants (50% of the warrants outstanding) were exercised, of which 2,706,350
warrants were exercised by exchanging 5 warrants and $0.55 for one share of
common stock and 9,237,528 warrants were exercised by surrendering 12 warrants
for one share of common stock. The offer resulted in the Company raising a total
of $297,698.50 in cash proceeds and issuing a total of 1,311,064 new shares of
common stock.


Following
the issuance of the shares relating to the warrant exercise, we have 10,091,971
shares of common stock outstanding. The remaining 11,855,122 warrants
outstanding after the tender offer will expire in accordance with their terms on
March 3, 2011.








17
 Table of Contents




Item2.  Management’s Discussion and
Analysis





The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed financial
statements and related notes that appear elsewhere in this Quarterly Report on
Form 10-Q.  In addition to historical consolidated financial
information, the following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward-looking statements. Factors that
could cause or contribute to these differences include those discussed below and
elsewhere in this Quarterly Report on Form 10-Q, as well as in our Annual Report
on Form 10-KSB filed on July 16, 2008.




Overview





In
response to India’s rapidly expanding economy, our primary focus is to
execute infrastructure projects through our subsidiaries such as
constructing interstate highways, rural roads, mining and quarrying, and
construction of high temperature cement and steel plants.





The
infrastructure development industry is the largest employer in India – the
construction industry alone employs more than 30 million
people.  According to the Business Monitor International (BMI), by
2012, the construction industry’s contribution to India’s GDP is forecasted to
be 16.98%.  However, the current global financial problems have begun
to impact India and China. While China recently responded by injecting a large
amount of capital into the economy, India has responded by cutting interest
rates.  Banks and lending institutions have continued to be reluctant
to increase lending.  The government of India is acutely aware of the
issues, and is actively involved in responding to the overall lack of
liquidity.
 
 Our
operations are subject to certain risks and uncertainties, including among
others, liquidity, dependency on India’s economy and government policies,
competitively priced raw materials, dependence upon key members of the
management team and increased competition from existing and new
entrants.  Our bank lines have been reduced significantly because of
two reasons. The first reason is an overall tightening of credit and the second
is that most of the assets that have been pledged to the banks are real estate
properties comprising mostly of land which has undergone significant erosion in
value.  We continue to work with the banks to restructure our loans,
pledge new assets and increase overall liquidity. One of the strategies we have
initiated is the creation of a wholly owned subsidiary in India called IGC-IMT
(India Globalization Capital, India Mining and Trading). We expect to pledge
assets on behalf of this company and obtain a senior secured credit
facility.  The subsidiary will be treated as our mining platform and
will also be responsible for the purchase of commodities used in
construction  such as cement, aggregate, bitumen, and
steel.





Sricon
Infrastructure Private Limited




Sricon
Infrastructure Private Limited (“Sricon”) was incorporated as a private limited
company on March 3, 1997 in Nagpur, India.  Sricon is an engineering
and construction company that is engaged in three business areas: 1) civil
construction of highways and other heavy construction, 2) mining and quarrying
and 3) the construction and maintenance of high temperature cement and steel
plants.  Sricon has a pan-India focus and its present and past clients
include various Indian government organizations.  Sricon employs over
800 individuals.  It currently has the capacity and prior experience
to bid on contracts that are priced at a maximum of $116 million.




Techni
Bharathi Limited




Techni
Bharathi Limited (“TBL”) was incorporated as a public (but not listed on the
stock market) limited company on June 19, 1982 in Cochin, India.  TBL
is an engineering and construction company engaged in the execution of civil
construction and structural engineering projects.  TBL has a focus in
the Indian states of Andhra Pradesh, Karnataka, Assam and Tamil Nadu. Its
present and past clients include various Indian government
organizations.




Core
Business Areas





Our core
business areas include (1) highway and heavy construction, (2) mining, quarrying
and construction and (3) maintenance of high temperature plants.




18
 Table of Contents




Customers





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





Foreign
Currency Translation





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




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




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





Average
      rate used for translating operations. INR to one
      U.S.D.
                          
                          
                          Rate
      used for translating Balance Sheet. INR to one U.S.D.Nine
      months ended December 31, 2007
                          
                          
                          40.27
                          
                          
                          
                          39.41Year
      ended March 31, 2008
                          
                          
                          40.12
                          
                          
                          
                          40.02Nine
      months ended December 31, 2008
                          
                          
                          44.59
                          
                          
                          
                          48.58




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.








19
 Table of Contents




Revenue
Recognition




The
majority of the revenue recognized for three month and nine month period ended
December 31, 2008 was derived from the Company’s subsidiaries and as
accordingly:





Revenue
is recognized based on the nature of activity when consideration can be
reasonably measured and there exists reasonable certainty of its
recovery.




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




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




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




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




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




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





Accounting
for Stock-Based Compensation




As of
December 31, 2008, we had not granted any stock options under our Employee Stock
Plan.




Goodwill




We
account for goodwill in accordance with SFAS No. 142, “Goodwill and Other Intangible
Assets”(“SFAS No. 142”). SFAS No. 142 requires the use of a
non-amortization approach to account for purchased goodwill and certain
intangibles. Under the non-amortization approach, goodwill and certain
intangibles are not amortized into results of operations, but instead are
reviewed for impairment at least annually and written down and charged to
operations only in the periods in which the recorded value of goodwill and
certain intangibles exceeds its fair value. We have elected to perform our
annual impairment test in November of each calendar year. An interim goodwill
impairment test would be performed if an event occurs or circumstances change
between annual tests that would more likely than not reduce the fair value of a
reporting unit below its carrying amount. For purposes of performing the
goodwill impairment test, we concluded there is one reporting unit. During
November 2008, we completed the required annual test, which indicated there was
no impairment.





Accounting
for Income Taxes




In
connection with preparing our financial statements, we are required to estimate
our income taxes in each of the jurisdictions in which we operate. This process
involves the assessment of our net operating loss carry forwards and credits, as
well as estimating the actual current tax liability together with assessing
temporary differences resulting from differing treatment of items, such as
reserves and accrued  liabilities, for tax and accounting purposes. We
then assess the likelihood that deferred tax assets will be recovered from
future taxable income, and to the extent we believe that recovery is not likely,
we must establish a valuation allowance. Based on historical results, we believe
that it is more likely than not that we will not realize the value of our
deferred tax assets and therefore have provided a full valuation allowance
against our net deferred tax assets.




20
 Table of Contents




Results
of Operations





Three
Months Ended December 31, 2008 Compared to Three Months Ended December 31,
2007




The
following results of operations discussion compares our consolidated company
results for the three months ended December 31, 2008 to the Combined Predecessor
Results of Operations for the three months ended December 31,
2007.  We believe this is a better measure of performance than
comparing the consolidated company results to pre-acquisition results because
there were no significant operating results before acquiring Sricon and TBL
companies.





Revenue -Total revenue
decreased to $3.8 million for the three months ended December 31, 2008, as
compared to $11.8 million for the three months ended December 31, 2007. As our
overall liquidity decreased, due to the global tightening of credit, we
initiated a pro-active approach of curtailing the number of contracts we work
on.  We have sub contracted our some of our contracts and cancelled
some of the new contracts.  As such, our revenue
decreased.




Operating Income (loss) -In
the three month period ending December 31, 2008, operating loss was ($1.4)
million, compared to operating margin of $2.5 million for the combined
predecessor companies for the three month period ending December 31,
2007.  In the quarter we had about $1.5 million of one time expenses
related to 1) contract cancellations, 2) costs associated with the warrant
tender offer and 3) legal costs associated with the raising of
capital.


Total Cost of Revenue and Operating
Expenses - Our total cost of revenue and operating expenses principally
consist of construction materials, employee compensation and benefits,
depreciation and amortization, startup costs, and general and administrative
expense. In the three month period ending December 31, 2008, total cost of
revenue and operating expenses decreased by $4.1 million or 44%, compared to the
three month period ending December 31, 2007.  The decrease is due to
less contracts executed during the 3 month period.  Total cost of
revenue and operating expenses includes one time expenses in the amount of 1.5
million related to legal costs related to the warrant tender offer, fundraising
activity and expenses related to curtailing the number of contracts
performed.
 
 Costs of Revenue- Costs
of revenue consists primarily of compensation and related fringe benefits for
project-related personnel, department management and all other dedicated project
related costs and indirect costs. Cost of revenue decreased by $4.6 million
or 61%, compared to the three month period ending December 31,
2007.  The decrease is due to fewer contracts executed during the 3
month period.





Selling, General and Administrative- Consist primarily of employee-related expenses, professional fees,
other corporate expenses and allocated overhead.. Selling, general and
administrative expenses increased by $710 thousand or 50%, compared to the
three month period ending December 31, 2007.  The increase in SG&A
stem from contract cancellations and legal costs associated with the warrant
tender offer and fund raising activity.





Net Interest Income (Expense)
– Net interest expense decreased by $114 thousand or 27% compared to the
three month period ending December 31, 2007.  The decrease was due to
one-time settlement income recorded in the period ended December 31,
2007.





Net Income (loss) –Net loss
was ($1.7) million for the three months ended December 31, 2008, as compared to
net income of $1.7 million for the three months ended December 31,
2007.  The December 31, 2008 net loss includes one time expenses in
the amount of 1.5 million as described above, as well as about $300,000 of
losses due to foreign exchange, as the dollar strengthened against the Indian
Rupee.





Nine
Months Ended December 31, 2008 Compared to Nine Months Ended December 31,
2007




The
following results of operations discussion compares our consolidated company
results for the nine months ended December 31, 2008 to the Combined Predecessor
Results of Operations for the nine months ended December 31, 2007.  We
believe this is a better measure of performance than comparing the consolidated
company results to pre-acquisition results because there were no significant
operating results before acquiring Sricon and TBL companies.





Revenue -Total revenue
increased 47% to $32.3 million for the nine months ended December 31, 2008,
as compared to $21.9 million for the nine months ended December 31,
2007..





Operating Income (loss) -In
the nine month period ending December 31, 2008, operating margin is $ 3.4
million, compared to a loss of ($4.3) million for the combined predecessor
companies for the nine month period ending December 31,
2007.





Total Cost of Revenue and operating
expenses - Our total cost of revenue and operating expenses principally
consist of construction materials, employee compensation and benefits,
depreciation and amortization, startup costs, and general and administrative
expense.  In the nine month period ended December 31, 2008, total cost
of revenue and operating expenses increased by $11.3 million or 64%, compared to
the nine month period ended December 31, 2007.  Total cost of revenue
and operating expenses includes one time expenses in the amount of about $2.0
million related to legal costs related to the warrant tender offer, fundraising
activity and expenses related to curtailing the number of contracts
performed.





Cost of Revenue- Cost
of revenue consists primarily of compensation and related fringe benefits for
project-related personnel, department management and all other dedicated project
related costs and indirect costs. Cost of revenue increased by $9.3 million
or 64%, compared to the nine month period ending December 31,
2007.







21
 Table of Contents




Selling, General and Administrative- Consist primarily of employee-related expenses, professional fees,
other corporate expenses and allocated overhead. Selling, general and
administrative expenses increased by $1.9 million or 83%, compared to the
nine month period ending December 31, 2007, due to one time costs related to
contract cancellation and legal costs as described before.





Net Interest Income (Expense)
– Net interest expense was $920 thousand compared to net interest income of
$1.6 million for the nine month period ending December 31,
2007.  .





Net Income (loss) –Net
income was $374 thousand for the nine months ended December 31, 2008, as
compared to a net income of $5 million for the nine months ended December 31,
2007. The December 31, 2007 net income does not include minority interest, but
does include one-time settlements. The net income for the nine months ended
December 31, 2008 includes  about $2 million of one-time expenses
related to  curtailing contracts, and  legal costs related
to the warrant tender offer and costs associated with fundraising
activities.




Liquidity
and Capital Resources




This
liquidity and capital resources discussion compares the consolidated company
results for the nine months period ended December 31, 2008 and
2007.  The Predecessor cash flow statements for the nine month ended
period December 31, 2007 are not available.




Cash used
for operating activities from continuing operations is our net loss adjusted for
certain non-cash items and changes in operating assets and liabilities. During
the nine month period ending December of 2008, cash used for operating
activities was ($8.4) million compared to cash provided for operating activities
of $2.8 million during the nine month period ending December of 2007. The uses
of cash in the nine month period ending December of 2008 relates primarily to
the payment of general operating expenses of our subsidiary companies and one
time expenses related to legal costs associated with the warrant tender offer,
increased fundraising activities, and increased expenses in curtailing
contracts.





During
the same nine month period ending December 2008, investing activities from
continuing operations provided $2.6 million of cash as compared to approximately
$ 419 thousand used during the comparable period in 2007.  This
increase of cash was caused by a $2 million redemption of
debentures.




Financing
cash flows from continuing operations consist primarily of transactions related
to our debt and equity structure. During the nine month period ending December
of 2008, there was financing cash used of approximately $162 thousand, compared
to cash used of approximately $ 3.6 million for the same nine month period of
2007. This significant decrease in cash used was due to paying off $5.5
million in bank lines and notes outstanding.


Our
future liquidity needs will depend on, among other factors, stability of
construction costs, interest rates, and a continued increase in infrastructure
contracts in India.  We believe that our current cash balances and
anticipated operating cash flow, are inadequate to sustain the rapid growth
envisioned for the Company.  As such we are taking measures to
severely constrain growth until we have visibility into increased
liquidity.  As of now our bank lines in India are frozen at the
amounts borrowed and outstanding.  We continue to explore funding
sources including bank lines, equity, convert, debt, etc. However, there can be
no assurance that we will be able to access additional credit
facilities.  We expect to curtail our growth plans to match the
currently available liquidity.





Off-Balance
Sheet Arrangements





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




Commitments




1)
Capital commitments




The
estimated amount of contracts remaining to be executed on capital account not
provided for as on December 31, 2008 are zero.




2)
Guarantees




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The
Company had outstanding financial / performance bank guarantees of approximately
USD 4 million as of December 31, 2008.




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





Forward-Looking
Statements





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




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





Item3.  Quantitative and Qualitative Disclosures About
Market Risk





The
primary objective of the following information is to provide forward-looking
quantitative and qualitative information about our potential exposure to market
risks.  Market risk is the sensitivity of income to changes in
interest rates, foreign exchanges, commodity prices, equity prices, and other
market-driven rates or prices.  The disclosures are not meant to be
precise indicators of expected future losses, but rather, indicators of
reasonably possible losses.  This forward-looking information provides
indicators of how we view and manage our ongoing market risk
exposures.





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





The steps
we are taking to alleviate and mitigate, some of the risk associated with
liquidity include the  following:  1) we are negotiating
with Sricon on the note, 2) we have asked the minority equity holders of TBL and
Sricon to pledge other assets to banks as the value of the assets currently
pledged has eroded, due to falling real estate prices, 3) we are restructuring
our holdings and creating a new subsidiary in India for the mining portion of
our business, 4) we are giving up contracts that we believe we cannot execute
with out increased working capital, 5) we are sub contracting out some of the
existing contracts to other contractors, 6) we are aggressively pursuing delay
claims against the previously executed contracts , 7) we are increasingly
entering into partnerships with other companies for new projects, 8) we are
shifting our focus from services to asset based infrastructure like quarrying,
mining.


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Item4. Controls and Procedures




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




The
Company, under the supervision of our principal executive officer and principal
financial officer, carried out an evaluation of the effectiveness of the design
and operation of its disclosure controls and procedures as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of
December 31, 2008.  Based upon that evaluation, management, including
our principal executive officer and principal financial officer, concluded that
the Company’s disclosure controls and procedures were effective in alerting it
in a timely manner to information relating to the Company required to be
disclosed in this report other than with respect to our procedures for including
the required auditor consents.




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




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




With
these programs in place, we believe our control procedures are 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 period
ended December  31, 2008, that materially affected, or is reasonably
likely  to  materially  affect,  the  Company's  internal
control over financial reporting.




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PART
II – OTHER INFORMATION




Item1.   Legal
Proceedings




The
Company is not a party to any pending legal proceeding other than routine
litigation that is incidental to our business.




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




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


Item 3.   Defaults
Upon Senior Securities


None


Item 4.  
Submission
of Matters to a Vote of Security Holders
  None





Item 5.   Other Information





None.





Item 6.   Exhibits





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




(a)
Financial Statements





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





(b)
Exhibits.




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






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SIGNATURES




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




INDIA GLOBALIZATION CAPITAL,
      INC.Date:
      February 17, 2009
              By:
              /s/ Ram
      MukundaRam
      MukundaChief
      Executive Officer and President (Principal Executive
    Officer)




Date:
      February 17, 2009
                  By:
                  /s/ John B.
      SelvarajJohn
      B. SelvarajTreasurer,
      Principal Financial and Accounting Officer











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