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    indiaglobal-corresp102111.htm

India Globalization Capital, Inc.

4336 Montgomery Avenue

Bethesda, Maryland 20814

Phone: 301-983-0998

Fax: 240-465-0273

October 21, 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.

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

Definitive Proxy Statement on Schedule 14A Filed 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 October 13, 2011 to India Globalization Capital, Inc. (“IGC”) regarding the above-referenced filings.

Please note that we will call your office in a few days and if there are any minor modifications we will make them immediately.  On the other hand, if the proposed revisions to the Form 10-K set forth in this letter are acceptable to you, we will file an amended 10-K/A for the year ended March 31, 2011 with the revisions set out in this letter and the revisions set out in our letter dated September 12, 2011 that addressed your comments dated August 11, 2011.  We thank you in advance for this accommodation.

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

1

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

Financial Statements

Consolidated Balance Sheet, page F-2

1. We note your response to comment five from our letter dated August 11, 2011 as well as Exhibit I — Revised Balance Sheet. Please revise your stockholders’ equity section to provide a subtotal for India Globalization Capital, Inc.’s (i.e. parent’s) equity. Refer to ASC 810-10-45-16 and 810-1055-4I for guidance.

IGC answer: We have incorporated the sub-total to disclose the equity of the parent, as shown in Exhibit 1.

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

 i) Accounts Receivable, page F-12

2. We note your response to comment 10 from our letter dated August 11, 2011. You indicate that the $2.37 million accounts receivable due from the National Highway Authority of India (“NHAI”) and the Cochin International Airport can take as long as two to three years to collect. It therefore appears that this receivable should be classified as long-term as of March 31, 2011 and 2010. Please revise accordingly.

IGC answer: The receivables of $2.37 million as of March 31, 2011 are ‘current’ and ‘due’.  They are backed by arbitration awards that have been won by the Company.  The awards are granted after a due process of arbitration, as required for any disputes where one of the contracting parties is the government.  These receivables are assessed as ‘current’ and ‘due’ as of every balance sheet or reporting date because the assessment is made from a contractual perspective. Further, given the nature of the contracting parties in these cases (i.e. government departments), the Company believes that there is no risk of non-collection despite the time it may take to collect. It could be 30 days or as explained much longer, we just don’t know.  However contractually they are due immediately upon award.

In our earlier response we were making the following point: We stated that the maximum time period of two to three years to indicate that even though these receivables are treated as ‘current’ and ‘due’ for periods in excess of a year, given the credit rating of the customer, the government or government agencies in these cases, the receivables should not be impaired.  Therefore, in the absence of a clear ability to assess when we expect to collect, we based our assessment on when they were contractually due.  As they are due immediately, the Company believes that the classification of these receivables as ‘current’ as of March 31, 2011 and March 31, 2010 continues to be appropriate.

We propose to add a new Note 28 to the financial statements explaining the above.  Please see Exhibit 2.

Note 19 - Deconsolidation page F-25

Note 25 - Impairment page F-28

3. We note your response to comment 12 from our letter dated August 11, 2011 and have the following additional comments.

·

Given the significance of Sricon as it related to your March 31, 2010 financial statements, we continue to believe that the audited financial statements were necessary and appropriate for your investors. Please expand your proposed risk factor disclosures to clarify such audited financial statements were not available when you filed your March 31, 2010 Form 10-K. See Note 5 to Rule of Regulation S-X;

IGC answer: We propose to add the following language to the risk factor that we provided in our letter of September 12, 2011: “Further, we did not have the audited financial statements of Sricon for fiscal years ended March 31, 2010 when we prepared our financial statements for that period.” The revised risk factor is shown as Exhibit 3.

·

You indicate that substantial portions of your assets are invested in Sricon and you may be unable to obtain sufficient financial information to accurately value your investment. Please revise your disclosure to indicate that you currently do not have sufficient financial information and the lack of such financial statements may impact your ability to accurately value your investment. This risk factor disclosure should be included in the footnotes to your financial statements as well;

IGC answer: We propose to change the title of the risk factor to the following: “Substantial portions of our assets are invested in Sricon.  We currently do not have sufficient financial information about Sricon and the lack of such financial statements may impact our ability to accurately value our investment in Sricon.”  The revised risk factor is shown as Exhibit 3.  In addition we have expanded Note 25 to our financial statements as shown in Exhibit 4 to include elements of the risk factor disclosure.

2

·

Please ensure that the disclosures in your financial statements include detailed information similar to the information you provided in your supplemental response to comment 12 from our letter dated August 11, 2011;

IGC answer: The revised Note 25 in Exhibit 4 reflects the inclusion of a detailed explanation of the methodology as well as an explanation of the information available to us at the time the impairment tests were carried out.

·

Please ensure that your disclosure identifies the Sricon financial information you relied on (e.g., December 31, 2009 unaudited balance sheet prepared in accordance with Indian GAAP); and

IGC answer: We have identified the above in Note 25 as set out in Exhibit 4.

·

Specifically disclose the valuation methodology used to determine the recoverability of your receivable and investment in Sricon as of March 31, 2011 and 2010.

IGC answer: We have disclosed the methodology used to determine the recoverability of our receivable and investment in Sricon.  Please refer to the revised Note 25 in Exhibit 4.

Exhibit 1

Parent’s equity subtotal added:

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

Total equity attributable to the parent

$

6,666,306

$

24,776,419

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

3

Exhibit 2

NOTE 28 - CERTAIN AGED RECEIVABLES

The accounts receivable as of March 31, 2011 and March 31, 2010 include certain aged receivables in the amount of $2.37 million and $2.30 million respectively.  These receivables are due from the National Highway Authority of India (“NHAI”) and the Cochin International Airport.  The Government of India owns NHAI, and the Cochin International Airport is partially owned by the State Government of Kerala.  The receivables have been due for periods in excess of one year as of fiscal year ended March 31, 2011 and March 31, 2010.  These receivables have been classified as current for the following reasons:

The receivables occurred and became due when TBL, our subsidiary in India, won two separate arbitration awards against each of these organizations. The arbitration awards stipulate that interest be accrued for the period of non-payment.  However, the receivables do not have an interest component as we will try and use the accrued interest as negotiating leverage for an earlier payment.  Although the receivables are contractually due, and hence its classification as current, it may take us anywhere from the next 30 days to two years to actually realize the funds, depending on how long these organizations want to delay paying.  We continue to carry the full value of the receivables, without interest and without any impairment, because the Company believes that there is minimal risk that these organizations will become insolvent and unable to make payment.

Exhibit 3

Revision to Risk Factor proposed as Exhibit 6 in letter dated September 12, 2011:

Substantial portions of our assets are invested in Sricon.  We currently do not have sufficient financial information about Sricon and the lack of such financial statements may impact our ability to accurately value our investment in Sricon.

We own 22% of the outstanding stock of Sricon Infrastructure Private Limited (“Sricon”). Despite our efforts to obtain current audited financial statements and other information from Sricon, they have refused to voluntarily supply such information. We have initiated legal actions, petitioning the Company Law Board (“CLB”) in India to compel Sricon to supply the relevant information for the financial years ended March 31, 2011 and 2010.  While we expect the CLB to ultimately grant us relief and while we have been able to obtain some information, including unaudited financial statements through December 31, 2009, contract claims Sricon is pursuing in the courts and independent valuations of Sricon’s real estate plant and machinery, all of which we have used in testing the impairment of the our receivable and investment in Sricon, the absence of other current financial information makes it difficult to accurately assess the value of our investment in Sricon. Further, we did not have the audited financial statements of Sricon for the year ended March 31, 2010 when we prepared our financial statements for that period.

In order to protect our investment in Sricon the Company has taken the following additional steps. In November 2010 the Company petitioned the high Court of Nagpur, India, for relief on its receivable and informed the court that it had a claim on Sricon’s assets. In January 2011 the Company received an order from the Company Law Board  in India, a quasi-court that has jurisdiction over Indian companies, freezing all assets and stopping Sricon from incurring additional liability. The CLB also ordered Sricon to allow the Company to inspect its books. The January order notwithstanding, we further petitioned the CLB to compel Sricon to provide financial information and grant access to review and inspect the book of records, including financials, bank data, board meetings, property, plant and equipment register, and other relevant information as required. Pursuant to the CLB order, the Company has visited Sricon to conduct inspections in January 2011, February 2011, April 2011 and June 2011. While we have been able to obtain some information, we are not able to monitor Sricon on a day-to-day basis nor do yet have complete financial information for Sricon.  This makes it difficult to accurately monitor the value of our investment in Sricon. As at March 31, 2011 we carry the Sricon investment on our books at $6.4 million and this value may be reduced in the future.

Exhibit 4

ORIGINAL NOTE 25 – IMPAIRMENT

“For the Financial Year Ended March 31, 2011 the Company conducted an impairment test on the investment in Sricon. Effective October 1, 2009, the Company reduced its investment in Sricon from 63% to 22%. After this event, the Company continued to account for the investment in Sricon based on the equity method of accounting. However the Company entered into a management dispute with Sricon after the Company was not able to obtain the financial statements of Sricon after March 31, 2010. The Company has conducted the impairment test based on the information available to it and the recoverable value of assets that it can ascertain. Based on such impairment test, the Company has concluded that the investment in Sricon needs to be impaired by $2,184,599.”

Proposed revision to the impairment note:

NOTE 25 – IMPAIRMENT

Effective October 1, 2009, the Company reduced its investment in Sricon from 63% to 22%.  For the financial year ended March 31, 2010 the Company conducted an impairment test on the 22% investment in Sricon using the discounted cash flow methodology.  The Company had access to the unaudited financial information of Sricon up to the period ended December 31, 2009, but did not have audited financial statements of Sricon for the year ended March 31, 2010.  The Company used information from the unaudited December 31, 2009 financial statements, recoverable values of property, plant and equipment not used in the operations of the Company based on independent third party valuations and Sricon’s history of winning and renewing contracts in determining the discounted cash flow.  Based on the impairment test applied at the end of March 31, 2010, the Company concluded that the recoverable value of its investment in Sricon exceeded the total of the value of its receivable in Sricon and its investment in Sricon.  Therefore no impairment was provided with respect to the receivable and investment in Sricon.

In January 2011, the Company Law Board in India (CLB), a body that has jurisdiction over companies in India, granted the Company’s petition to stay any transactions, such as purchases, sales or a further creation of liability on Sricon’s fixed properties including land and plant and machinery. Further, based on CLB orders representati