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    indiaglobal-corresp091211.htm

India Globalization Capital, Inc.

4336 Montgomery Avenue

Bethesda, Maryland 20814

Phone: 301-983-0998

Fax: 240-465-0273

September 12, 2011

VIA EDGAR

Securities and Exchange Commission

100 F. Street, N.E.

Washington, D.C. 20549

Attn:  Mr. Rufus Decker

Accounting Branch Chief

Re:

India Globalization Capital, Inc.

Forms 10-K for the Year Ended March 31, 2011, Filed July 14, 2011

Definitive Proxy Statement on Schedule 14A filed on August 1, 2011

File No. 1-32830

Dear Mr. Decker:

This is our response to the SEC Staff’s follow-up comments in your letter of August 11, 2011 to India Globalization Capital, Inc. (“IGC”) in regard to the above-referenced filings.

Please note that in the next day or two we intend to file an amended 10-KA for the Year Ended March 31, 2011 with the revisions set out in this letter addressing your comments.  However, we are prepared to make further revisions in the event that you continue to have follow-up comments on Form 10-K for the Year Ended March 31, 2011 or on our revisions.

For your convenience, we have included each of the Staff’s comments in italics before each of IGC’s responses.  References in this letter to “we,” “our” or “us” mean IGC or its advisors, as the context may dictate.

ss:

India Globalization Capital, Inc.

John Selvaraj,

Treasurer, Principal Accounting

and Financial Officer

Form 10-K for the Year Ended March 31, 2011

General

1

Where a comment below requests additional disclosures or other revisions to be made, please show us in your supplemental response what the revisions will look like. These revisions should be included in an amendment to your filing.

IGC Response: Where we have provided proposed revisions in response to the Commission’s comments below, except as otherwise indicated in the responses we will include the revisions in an amendment to the Form 10-K for the year ended March 31, 2011 (the “2011 10-K”).

Risk Factors, page 8 General

2

We have read your response to comment two from our letter dated May 9, 2011. You mentioned that your CFO previously worked for Startec Global Communications. Please confirm whether your CFO, John Selvaraj or your CEO, Ram Mukunda previously worked for Startec Global Communications. Please provide a more robust explanation of his role at Startec Global Communications. Please tell us how long he worked at Startec Global Communications, including all of his roles at the company. Please provide us with a comprehensive description of his responsibilities at Startec Global Communications, including those that relate to the financial statements and financial reporting. Please tell us whether he was responsible for
the preparation of the financial statements including whether he reviewed the financial statements or prepared the financial statements.

IGC Response: Mr. John Selvaraj worked at Startec Global Communications for a total of 10 years from the end of 1997 to 2007. Mr. Selvaraj held progressively responsible positions. Between 1999 and 2005 he worked as the Vice President of Finance and Accounting Operations.  While in this position, Mr. Selvaraj’s responsibilities included consolidation of accounts for the company’s operations in US, Canada, Europe and Asia. Also during this period, several directors within the Finance and Accounting Department, including directors and staff for Accounting, Treasury, Payroll/Employee Stock Options, Taxes and one independent accounting
staff responsible for SEC filings, reported to Mr. Selvaraj.  He did not prepare the financial statements or the SEC filings himself, but was responsible for reviewing them.  The individuals responsible for preparing the statements and filings reported to him.

Management's Discussion and Analysis, page 19 General

3

We have read your response to comment eight from our letter dated May 9, 2011. Please tell us where you have included this disclosure in your Form 10-K for the year ended March 31, 2011. Otherwise, please show us in your supplemental response what your revisions will look like.

IGC Response: We have not included the information in our 2011 10-K and we are unable to revise our filing because we do not generate the information on the break-up of sales and related information for products and services, as these are not the basis on which operating decisions are made.  However, we note your comments and in order to enhance our disclosures, we have initiated a process of augmenting our information and reporting systems to provide data on net sales of tangible products and revenues from services as well as the related information. We reiterate that when the information systems are able to retrieve the required information, we
will provide the necessary disclosures in our future filings.

2

Liquidity and Capital Resources, page 26

4

We have read your response to comment 10 from our letter dated May 9, 2011. Please tell us where you have included this disclosure in your Form 10-K for the year ended March 31, 2011. This disclosure should address your significant use of cash in operating activities for each period presented.

IGC Response: We have included disclosures on the significant use of cash in operating activities in the section marked ‘Liquidity and capital resources’ of the management discussion and analysis. Considering the size and scope of our operations, we believe the disclosures provided address the significant use of cash in operating activities for each period presented.

Financial Statements Consolidated Balance Sheet, page F-2

5

Your total stockholders' equity as presented on your consolidated balance sheets does not agree to your total stockholders' equity as presented in your consolidated statement of stockholders' equity on page F-5. This difference appears to be due to your presentation of non-controlling interest outside of your total stockholders' equity on your balance sheet. Please refer to FASB ASC 810-10-50-1A and address the need to revise your financial statements accordingly.

IGC Response: The difference is due to the presentation of the non-controlling interest balance outside the stockholders’ equity on the balance sheet. However, please note that non-controlling interest has been presented together with the stockholders equity and not as either a liability or temporary equity. We have amended the statements to present non-controlling interest as part of the stockholder’s equity on the balance sheet such that the total on the balance sheet is the same as the total in the statement of stockholder’s equity.  Please see the revised balance sheet below and in Exhibit 1, with the revisions
tracked.

3

INDIA GLOBALIZATION CAPITAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of March 31,

2011 (as restated)

2010 (as restated)

ASSETS

Current assets:

Cash and cash equivalents

$

1,583,284

$

842,923

Accounts receivable, net of allowances

3,312,051

4,783,327

Inventories

133,539

162,418

Advance taxes

41,452

119,834

Deferred income taxes

-

25,345

Dues from related parties

-

3,114,572

Prepaid expenses and other current assets

1,474,838

2,054,462

Total current assets

$

6,545,164

$

11,102,881

Property, plant and equipment, net

1,231,761

1,748,436

Investments in affiliates

6,428,800

8,443,181

Investments-others

877,863

810,890

Deferred income taxes

-

4,075,461

Goodwill

410,454

6,146,720

Restricted cash

1,919,404

2,169,939

Other non-current assets

748,623

872,184

Total assets

$

18,162,069

$

35,369,692

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Short term borrowings and current portion of long term debt

$

901,343

$

1,389,041

Trade payables

1,311,963

1,839,405

Accrued expenses

349,149

461,259

Notes payable

3,920,000

4,120,000

Dues to related parties

-

149,087

Other current liabilities

94,892

149,942

Total current liabilities

$

6,577,347

$

8,108,734

Other non-current liabilities

1,209,479

1,107,498

Total liabilities

$

7,786,826

$

9,216,232

Shares potentially subject to rescission rights (4,868,590 shares issued and outstanding)

3,082,384

-

Stockholders' equity:

Common stock — $0001 par value; 75,000,000 shares authorized; 14,890,181 issued and

   outstanding at March 31, 2011 and 12,989,207 issued and outstanding at March 31, 2010

$

1,490

$

1,300

Additional paid-in capital

38,860,319

36,805,724

Accumulated other comprehensive income

(2,502,596

)

(2,578,405

)

Retained earnings (Deficit)

(29,692,907

)

(9,452,000

)

Non-controlling interest

$

626,553

$

1,376,841

Total stockholders' equity

$

7,292,859

$

26,153,460

Total liabilities and stockholders' equity

$

18,162,069

$

35,369,692

4

Consolidated Statements of Comprehensive Income, page F-4

6

Please ask your auditors to address the need to revise their report to indicate that they audited your consolidated statements of comprehensive income.

IGC Response: The auditor acknowledges that they audited the consolidated statements of comprehensive income.  The term ‘consolidated statements of income’ currently used collectively refers to the consolidated statements of operations and consolidated statements of other comprehensive income. However, the auditor has agreed that they will revise the language in their report to specifically include consolidated statements of comprehensive income in future audit reports.

Consolidated Statements of Operations, page F-3

7

In response to comment 29 from our letter dated February 25, 2011, you indicated that you would disclose that cost of revenues is exclusive of depreciation and amortization. You also indicated that you would also remove the gross profit subtotal in your future filings. Please note that your subtotal, revenues less cost of revenues (excluding depreciation), represents a gross profit presentation. Please revise your Statement of operations to remove the subtotal revenue less cost of revenues (excluding depreciation) for all periods presented.

IGC Response: Please see the revised Consolidated Statement of Operations with the subtotal line removed as shown in the response to comment 8 and in Exhibit 2 (revisions tracked).

8

Please revise your statements of operations to include your $5.8 million impairment loss - goodwill as a component of operating income (loss).

IGC Response: Please see the revised Consolidated Statement of Operations with goodwill as a component of operating income (loss) as shown below and in Exhibit 2 (revisions tracked).

5

INDIA GLOBALIZATION CAPITAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Year ended March 31,

2011 (as restated)

2010 (as restated)

     Revenues

$

4,073,919

$

17,897,826

     Cost of revenues

(3,914,655

)

(15,671,840

)

     Selling, General and Administrative expenses

(7,283,089

)

(5,614,673

)

     Depreciation

(785,066

)

(603,153

)

     Impairment loss – goodwill

(5,792,849)

-

     Impairment loss – investments

(2,184,599)

-

Operating income (loss)

(15,886,339

)

(3,991,840

)

     Interest expense

(1,395,433

)

(1,221,466

)

     Amortization of debt discount/Loss on extinguishment of debt

(191,804

)

(356,436

)

     Interest Income

262,826

210,097

     Other Income

301,182

281,782

     Loss on dilution of stake in Sricon

-

(2,856,088

)

     Equity in earnings of affiliates

-

16,446

Income before income taxes and minority interest attributable to non-controlling interest

$

(16,909,568

)

(7,917,505

)

      Income taxes benefit/ (expense)

(4,100,385

)

3,109,704

Net income

$

(21,009,953

)

(4,807,801

)

     Non-controlling interests in earnings of subsidiaries

769,046

18,490

Net income / (loss) attributable to common stockholders

$

(20,240,907

)

$

(4,789,311

)

Earnings per share attributable to common stockholders:

      Basic

$

(1.34

)

$

(0.42

)

      Diluted

$

(1.34

)

$

(0.42

)

Weighted-average number of shares used in computing earnings per share amounts:

      Basic

15,108,920

11,537,857

      Diluted

15,108,920

11,537,857

Statement of Cash Flows, page F-6

9

Please confirm that your line item, "Interest expense (including non-cash)" does not include any cash component. Otherwise, address the appropriateness of this adjustment to reconcile net income (loss) to net cash.

IGC Response: We confirm that the item does not include any cash component.

6

Note 2 - Summary of Significant Accounting Policies, page F-10

i) Accounts Receivable, page F-12

10

We have read your response to comment 14 from our letter dated May 9, 2011. Please provide the following:

·

We note that you had collected $3.2 million out of the total receivable amount of $4.8 million as of the date of your prior response. Please tell us the amount outstanding as of March 31, 2011 and address the collectability of such amounts;

IGC Response: As of March 31, 2011, out of the balance of $1.6 million ($4.8 million minus $3.2 million) we had collected an additional $0.34 million. The total amount outstanding relating to this transaction as of March 31, 2011 was therefore $1.26 million. We assessed the collectability of the balance as of March 31, 2011 and based on our assessment, we fully provided for the balance as of that date.

·

We note that you have $3.3 million of accounts receivable as of March 31, 2011. This balance appears high given your fiscal year 2011 revenues of $4.1 million. Please provide us an aging schedule for these receivables and address the collectability of such amounts. Address the need to discuss the aging of your accounts receivable in Management's Discussion and Analysis; and

IGC Response: Based on your comment, we note the need to provide an aging analysis for our accounts receivable in cases where the receivable balances appear to be too high relative to the revenue. We will provide the necessary details in similar circumstances in our future filings.

Of the $3.3 million in accounts receivable as of March 31, 2011, a total of about $2.37 million is due from the National Highway Authority of India (“NHAI”) and the Cochin International Airport.  These amounts were awarded to our subsidiary TBL in two separate binding arbitrations. Typically, the awards can take as much as two to three years to collect. There is sometimes a risk with respect to such awards that the organization ordered to pay the award may not still be in business when the collection process is complete. However, in our case, NHAI is a government of India organization and the Cochin International Airport is partially owned by the state government of Kerala.  We are
not aware of any risk that either of these entities will become insolvent in the next several years.  Therefore, we believe that the receivables from these entities, though aged beyond 90 days with the expectation that they could age up to three years, will eventually be collected. We expect to realize these receivables and continue to work towards hastening the process of collection. The remaining $.93 million is normal trade receivables, with $.66 million less than 30 days old.  An aging report is set out below.

Aging of accounts receivable as at March 31, 2011:

0-30 days

31-60 days

61-90 days

More than 90 days

Total

$
657,119

$
13,327

$
263,727

$
2,377,878

$
3,312,051

·

You indicate on page 24 that your selling, general and administrative expenses for 2011 include a $1.52 million write-off of bad debts that were considered to be irrecoverable. Please tell us and revise your disclosures to indicate how these receivables arose and the facts and circumstances that resulted in your determination that such amounts are irrecoverable.

IGC Response: A significant portion of the write off for bad debt was for the account receivable which resulted from the sale of iron ore to China that has been discussed in the earlier comment letters and our responses and in the response to th