BETHESDA, MD — (Marketwire) — 07/14/11 — India Globalization Capital, Inc. (NYSE Amex: IGC), a company competing in the rapidly growing materials and infrastructure industry in India, announced its financial results for the fiscal year ended March 31, 2011.
Ram Mukunda, CEO of India Globalization Capital, said: „As we realigned our business from construction to materials and mining, we have deemphasized the construction portion of our business. This year we have written down three components of our balance sheet: The first is a write down of our assets in Sricon. While the write down totals $6 million, we expect to pursue a settlement with them, in court if necessary. The second is a write down of the goodwill in TBL. As we have shifted from construction to mining and quarrying, this resulted in a $5.7 million impairment of the good will attributed to TBL. The third is a provision of $4.1 million against the deferred tax assets (primarily related net operating loss carry forwards and acquisition costs) recorded on our balance sheet. As this is a provision on our balance sheet, the tax assets continue to be available to IGC as and when it generates profits.“
Today, through agreements with local partners, we have two rock quarries profitably operational, which we are in the process of expanding, and our iron business, while in great demand, is currently curtailed because of the temporary ban on mining in the state of Karnataka. We have taken steps to mitigate some of the effects by shifting our operations to states and ports that are not closed. The expectation is that Karnataka will reopen this year. We continue to see robust demand from China for iron ore. Also, our steps to mitigate the effects of the Karnataka ban include diversifying our sources for iron ore including a strategy to shift operations to other states in India and acquire mines and mining assets in and outside India.
Reflecting the write downs and provisions in the FYE March 31, 2011, the Company reported GAAP EPS loss of ($1.34) versus a GAAP EPS loss of ($0.42) for FYE 2010.
Total revenue was $4.07 million for the FYE March 31, 2011, compared to $17.89 million for the FYE March 31, 2010. Our overall revenue for FYE 2011 was lower than FYE 2010 for two reasons: (1) none of the construction revenue from Sricon is included in FYE 2011, and (2) the temporary ban on mining in Karnataka constrained our iron ore business. However, moving forward when the ban is lifted, we expect to resume exports as we continue to see robust demand for ore and we have over $200 million of orders.
Selling, general and administrative (SG&A) expenses for FYE 2011, including one-time charges, were about $7.2 million, which includes certain write-offs. Since the global financial crisis the Company has taken strong steps to reduce its SG&A and align skill, management and resources to its business plan.
For FYE 2011, the operating loss including some of the write-offs was $7.9 million compared to an operating loss including deconsolidation charges of $3.99 million for FYE 2010.
As of FYE 2011, the Company-s stockholders- equity was about $6.7 million. The Company reported total assets of $18.16 million on March 31, 2011 versus $35.37 million on March 31, 2010. The decrease in total assets is mostly due to the write-offs described above. The Company reported cash, cash equivalents, and restricted cash used as deposits of about $3.5 million. The Company reported short-term and long-term borrowings of about $4.82 million.
Our plan for the next 12 months are to focus on: (1) increasing production from the rock quarries, (2) establishing a crusher for the iron ore on the East Coast of India to begin fulfilling the back log, (3) aggressively pursuing the collection of delayed construction claims, associated with previously completed construction, (4) aggressively pursuing a settlement with Sricon, and (5) acquiring mines or mining rights.
The recently filed 10-K for FYE March 31, 2011 also contains a restatement of the financial statements for FYE March 31, 2010, previously disclosed on a Form 8-K filed on June 15, 2011. The restatements reflect two errors in the financial statements for FYE 2010. The first was an inadvertent error in the calculation of the fully diluted EPS. It was previously reported as (0.40) per share and has now been corrected to (0.42) per share. The second error was in the classification of the Sricon depreciation post deconsolidation, within the cash flow statement.
As the deconsolidation of Sricon took place on October 1, 2009, the reclassification affected both the quarter ended December 31, 2009 and the financial statements for the FYE March 31, 2010. Both statements have been corrected and the amended statements are included in the Form 10-K for the current year.
The Company has already taken concrete steps to increase the quality of our reporting and help eliminate errors in reporting. „We have hired the Indian branch of a global network of professional firms providing audit, tax and advisory services. Their role in helping us with the preparation of our filings includes a quality check using reporting software to ensure completeness, as well as advice on important accounting matters. We believe that their U.S. GAAP and SEC reporting expertise will enhance our overall reporting and help eliminate errors,“ said Ram Mukunda.
About IGC:
Based in Bethesda, Maryland, India Globalization Capital (IGC) is an infrastructure and materials company operating in India that builds roads, bridges and highways, and provides materials to the infrastructure industry in India and China. The company has three core competencies: Highway and Heavy Construction, Mining & Quarrying, and Civil Construction and Engineering. For more information about IGC, please visit the company-s web site at .
Forward-Looking Statements:
Some of the statements contained in this press release that are not historical facts constitute forward-looking statements under the federal securities laws. Forward-looking statements can be identified by the use of the words „may,“ „will,“ „should,“ „could,“ „expects,“ „plans,“ „anticipates,“ „believes,“ „estimates,“ „predicts,“ „intends,“ „potential,“ „proposed,“ or „continue“ or the negative of those terms. These statements reflect management-s current views and are subject to risks and uncertainties that could cause actual results to differ materially from those projected, expressed or implied in these statements. Factors that could cause actual results to differ, relate to: (i) ability of the parties to successfully execute on contracts and business plans, (ii) ability to raise capital and the structure of such capital including the exercise of warrants, (iii) exchange rate changes between the U.S. dollar and the Indian rupee, and (iv) weather conditions in India. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. Other factors and risks that could cause or contribute to actual results differing materially from such forward looking statements have been discussed in greater detail in the Company-s Annual Report on Form 10-K for the year ended March 31, 2011 filed with the Securities and Exchange Commission.
Contact: John Selvaraj 301-983-0998
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