SEC Company Response from IGC Pharma, Inc. (IGC) (CIK 0001326205) (IGC) — Mar 10, 2014
IGC Pharma, Inc. (IGC) (CIK 0001326205)
Date: March 10, 2014 · CIK: 0001326205 · Accession: 0001185185-14-000497
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-32830
Letter
VIA EDGAR Securities and Exchange Commission Office of Beverages, Apparel and Mining March 31, 2013 Filed July 16, 2013 Form 8-K Filed July 1, 2013 File No. 001-32830
Dear Ms. Jenkins:
This is our response to the SEC Staff’s comments in your letter of January 28, 2014 to India Globalization Capital, Inc. (“IGC”) regarding the above-referenced filings.
Please note that the Company has spoken with Mr. John Coleman, the Mining Engineer, to clarify the issues raised in your comments one through eleven.
If the proposed revisions to the Form 10-K set forth in this letter and attached proposed amended Form 10-K for the Fiscal Year Ended March 31, 2013 are acceptable to you, we will file the required Form 10-K/A as soon as possible.
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 our advisors, as the context may dictate.
Form 10-K for the Fiscal Year Ended March 31, 2013
General
1.
We note your disclosure of estimated values associated with mineral reserves. For instance on page 4 you state that four properties have an estimated $500 million of iron ore reserves calculated at a price of $125 per metric ton. Please note that estimated values of reserves should only be included in your filing if supported by a final bankable feasibility study using the historical three-year average commodity price.
IGC response: We agree. We will no longer use words that are defined in Industry Guide 7. We have scanned the Form 10-K for “estimated reserves” and “reserves”. These occur in two places that are relevant to the Staff’s comment:
·
Page 4 of Form 10-K: The reference will be deleted as shown in the attached proposed amended Form 10-K.
·
Page 7 of Form 10-K: The reference will be deleted as shown in the attached proposed amended Form 10-K.
2.
Please forward to our engineer as supplemental information and not as part of your filing, your information that establishes the legal, technical, and economic feasibility of your materials designated as reserves, as required by paragraph (c) of Industry Guide 7. The information requested includes, but is not limited to:
·
Property and geologic maps
·
Description of your sampling and assaying procedures
·
Drill-hole maps showing drill intercepts
·
Representative geologic cross-sections and drill logs
·
Description and examples of your cut-off calculation procedures
·
Cutoff grades used for each category of your reserves and resources
·
Justifications for the drill hole spacing used to classify and segregate proven and probable reserves
·
A detailed description of your procedures for estimating reserves
·
Copies of any pertinent engineering or geological reports, and executive summaries of feasibility studies or mine plans which including the cash flow analyses
·
A detailed permitting and government approval schedule for the project, particularly identifying the primary environmental or construction approval(s) and your current location on that schedule.
Please provide this information on a CD, formatted as Adobe PDF files. Please also provide the name and phone number for a technical person whom our engineer may call if he has technical questions about your reserves. You may ask to have this information returned by making a written request at the time it is furnished, as provided in Rule 12b-4 of Regulation 12B. If you have questions concerning the above request, please contact John Coleman, Mining Engineer at (202) 551-3610.
IGC response: We currently do not have a U.S. based study. We have spoken with Mr. Coleman and have agreed that references to reserves will be removed from our filings until the studies have been completed. We note that there are only two places where we refer to “reserves” and the references are on Page 4 and Page 7. We agree to remove both references.
3.
Please be advised that if your company does not have a mineral reserve you must be in the exploration stage pursuant to the definitions in paragraph (4) of Industry Guide 7. As such, your filing should be substantially revised to remove terms such as production, development, and ore so that readers understand that you are an exploration stage company without a mineral reserve.
IGC response: We agree. We have scanned the document for key words and revised the document as shown in the attached proposed amendment to Form 10-K:
·
Production”: We will replace this word with “beneficiation.”
·
“Development”: We believe that there are no uses in Form 10-K that fall within the meaning or spirit of Industry Guide 7.
·
“Ore”: We use the expression “iron ore” and not the word “ore” by itself to describe what we do. We propose to make the changes shown in the attachment.
·
“Property/Properties”: We propose the changes tracked on Page 4.
·
“Mining activities” and “mines”: We propose the changes tracked on the attachment and explicitly state that we have no reserves.
·
“Reserves”: We propose the changes on pages 4 and 7.
Item 2. Properties page 11
4.
Please insert a small-scale map showing the location and access to each property, as suggested in paragraph (b)(2) of Industry Guide 7.
IGC response: As we do not identify material properties we are not including any small-scale maps.
5.
Please disclose the information regarding your land and mineral rights for each of your material properties pursuant to paragraph (b)(2) of Industry Guide 7. If you have identified properties in your filing that are not material, include a statement to that effect in your disclosure and clarify your intentions. For each material property include the following information:
·
The nature of your ownership or interest in the property.
·
A description of all interests in your properties, including the terms of all underlying agreements and royalties.
·
An outline of the process by which mineral rights are acquired at the location including details concerning the basis of entitlement and duration of your mineral rights, surface rights, mining claims or concessions.
·
An indication of the type of rights or claims such as placer or lode, exploration or exploitation, State or Federal, patented or unpatented, lease or concession.
·
Please include certain identifying information, such as the property names, claim numbers, grant numbers, mining concession name or number, and dates of recording and expiration such that your claims may be distinguished from other claims that may exist in the area or your properties. If necessary, include this information as an exhibit to your filing.
·
The conditions that must be met to retain your rights, claims or leases, including the quantification and timing of all necessary payments.
·
The area of your claims, either in hectares or in acres.
IGC response: We do not disclose any material properties.
6.
Please disclose the information required under paragraph (b) of Industry Guide 7 for all material properties listed under this heading. For any properties identified that are not material, please include a statement to that effect, clarifying your intentions. For each material property include the following information:
·
The location and means of access to your property, including the modes of transportation utilized to and from the property.
·
A brief description of the rock formations and mineralization of existing or potential economic significance on the property.
·
A description of any work completed on the property and its present condition.
·
The details as to modernization and physical condition of the plant and equipment, including subsurface improvements and equipment.
·
A description of equipment, infrastructure, and other facilities.
·
The current state of exploration of the property.
·
The total costs incurred to date and all planned future costs.
·
The source of power and water that can be utilized at the property.
If applicable, provide a clear statement that the property is without known reserves and the proposed program is exploratory in nature.
IGC response: We do not disclose any material properties.
7.
Please expand your disclosure concerning the exploration plans for the properties as required by paragraph (b)(4)(i) of Industry Guide 7. The exploration plan should address the following points:
·
Disclose a brief geological justification for each of the exploration projects written in non-technical language.
·
Give a breakdown of the exploration timetable and budget, including estimated amounts that will be required for each exploration activity, such as geophysics, geochemistry, surface sampling, drilling, etc. for each prospect.
·
If there is a phased program planned, briefly outline all phases.
·
If there are no current detailed plans to conduct exploration on the property, disclose this prominently.
·
Disclose how the exploration program will be funded.
·
Identify who will be conducting any proposed exploration work and disclose their qualifications.
IGC response: We do not disclose any properties.
8.
In an appropriate section of your filing, provide a brief description of the QA/QC protocols including sample preparation, controls, custody, assay precision and accuracy as it relates to your exploration plans. This would apply to exploration and operational analytical procedures. In your response please indicate the location of this disclosure.
IGC response: We currently have no exploration plans. We agree to disclose this information when we have exploration plans.
9.
Please provide an overview of the exploration and mining permit requirements for companies operating in the countries in which you have projects. Include in you overview the permits required to explore or mine, any fees or bonding requirements necessary to explore or mine, the Government agencies responsible for any applicable permits, and a discussion pertaining to the time frame to obtain any permits or approvals to explore or mine. In your response clearly describe the permits that have been issued to your company.
IGC response: We have no plans for exploration. We agree to disclose this information when we have plans for exploration.
10.
For each of your mines and processing facilities please disclose your annual production, including the tons and grade of the materials, and the capacity and utilization of your facilities pursuant to the Instructions of Item 102 of Regulation S-K.
IGC response: We have no mines or mine processing facilities. We have beneficiation plants that were not operating in FYE 2013. The MD&A on Page 18 states “The revenue reported for 2013 and 2012 is from trading of ore in India and China.” We make no reference to production or processing. We believe that this disclosure does not apply. However, we agree that in the future we will disclose this information once the beneficiation plants are operational.
11.
Please summarize the capital expenditures for your projects including the type and amount of the expenditure.
IGC response: We have no planned capital expenditure related to exploration, development or production.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, page 13
Critical Accounting Policies and Estimates, page 16
12.
We note your policy for revenue recognition from construction/project related activity and contracts for supply/commissioning of complex plant and equipment. We also note on page F-13 you have Build-Operate-Transfer (BOT) Contracts. We note that there is an extended time period before you collect on some of these revenues. Tell us and revise to provide the following:
·
A sufficiently detailed explanation of how you recognize revenue on these contracts, how you account for billings and costs and where these accounts are presented on the balance sheet. Provide the age of this long-term receivable and the effect that customer verification and approval have on collection and revenue recognition.
IGC response: The reference to Long Term receivables on page F-13 is from a BOT contract that was in Sricon. We no longer own a majority of Sricon and therefore there are no BOT contracts on our balance sheet. Further, we do not have any long-term receivables. We agree to remove the reference.
·
Please disclose the amount of your long-term accounts receivable discussed on page F-13 for the periods presented and clarify which line item of your consolidated balance sheets includes these amounts.
IGC response: We have no long-term accounts receivables in FYE 2013. We propose to remove item l) Accounts –Long Term from future filings if there is none to report or disclose any related existing amounts as detailed as required above.
Result of Operations, page 18
Fiscal year ended March 31, 2013 compared to fiscal year ended March 31, 2012, page 18
Revenue, page 18
13.
We note your revenue has increased about 91.2% in fiscal 2013 from fiscal 2012.
Please revise to discuss the primary drivers that are responsible for the underlying increase of your revenue and discuss whether the overall increase is attributable to increases in prices or increases in the volume of trading of ore in India and China. Refer to Item 303(a)(3)(iii) of Regulation S-K.
IGC response: The increase in revenue in fiscal year ended March 31, 2013 is mainly due to an increase in the volume of trading of iron ore.
14.
We note you disclose that the revenue reported for fiscal 2013 and fiscal 2012 is from “trading of ore in India and China.” However, we also note form page seven that your subsidiary, TBL, contributed 10% of your revenue in construction area for the year ended March 31, 2013. Please clarify the inconsistent disclosures or revise your discussion of revenue to include revenue generated from your construction business.
IGC response: Total revenue was $8.03 million for the year ended March 31, 2013, as compared to $4.19 million for the year ended March 31, 2012, an increase of 91.2%. For fiscal 2013, about $7.2 million is from trading of iron ore in India and China and about $.84 million is from construction work done in India. Please see the revision to our disclosure on the attached proposed amendment to Form 10-K for fiscal year ended March 31, 2013.
Cost of Revenue, page 18
15.
We note your revenue increased 91.2% but cost of revenue increased only about 34.8% in 2013 from 2012. In addition, your cost of revenue as a percentage of revenue also decreased in fiscal 2013. Please revise your disclosure to describe the cost components included in your cost of revenues for the periods reported and discuss any events that caused the material change in the relationship between costs and revenue. Refer to Item 303(a)(3)(ii) of Regulation S-K.
IGC response: The cost of revenue decreased in fiscal 2013 as a percentage of revenue. The decrease is primarily because the cost associated with the construction revenue realized as a result of a court order in fiscal 2013 was booked in a prior year. Therefore the cost of overall revenue as a percentage of overall revenue decreased for fiscal 2013 over that of fiscal 2012.
Please see the revision to our disclosure on the attached proposed amendment to Form 10-K for fiscal year ended March 31, 2013.
Balance sheet explanations, page 19
16.
We note from page F-2 that your accounts receivable, net of allowances has decreased about 35%, but your revenue has increased 81.2% in fiscal 2013 from 2012. Please describe your accounts receivable and discuss t
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CORRESP
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filename1.htm
indiaglobalcorresp030714.htm
India Globalization Capital, Inc.
4336 Montgomery Avenue
Bethesda, Maryland 20814
Phone: 301-983-0998
Fax: 240-465-0273
March 10, 2014
VIA EDGAR
Securities and Exchange Commission
100 F. Street, N.E.
Washington, D.C. 20549
Attn: Ms. Tia Jenkins
Senior Assistant Chief Accountant
Office of Beverages, Apparel and Mining
Re:
India Globalization Capital, Inc.
Form 10-K for the Fiscal Year Ended
March 31, 2013
Filed July 16, 2013
Form 8-K Filed July 1, 2013
File No. 001-32830
Dear Ms. Jenkins:
This is our response to the SEC Staff’s comments in your letter of January 28, 2014 to India Globalization Capital, Inc. (“IGC”) regarding the above-referenced filings.
Please note that the Company has spoken with Mr. John Coleman, the Mining Engineer, to clarify the issues raised in your comments one through eleven.
If the proposed revisions to the Form 10-K set forth in this letter and attached proposed amended Form 10-K for the Fiscal Year Ended March 31, 2013 are acceptable to you, we will file the required Form 10-K/A as soon as possible.
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 our advisors, as the context may dictate.
Form 10-K for the Fiscal Year Ended March 31, 2013
General
1.
We note your disclosure of estimated values associated with mineral reserves. For instance on page 4 you state that four properties have an estimated $500 million of iron ore reserves calculated at a price of $125 per metric ton. Please note that estimated values of reserves should only be included in your filing if supported by a final bankable feasibility study using the historical three-year average commodity price.
IGC response: We agree. We will no longer use words that are defined in Industry Guide 7. We have scanned the Form 10-K for “estimated reserves” and “reserves”. These occur in two places that are relevant to the Staff’s comment:
·
Page 4 of Form 10-K: The reference will be deleted as shown in the attached proposed amended Form 10-K.
·
Page 7 of Form 10-K: The reference will be deleted as shown in the attached proposed amended Form 10-K.
2.
Please forward to our engineer as supplemental information and not as part of your filing, your information that establishes the legal, technical, and economic feasibility of your materials designated as reserves, as required by paragraph (c) of Industry Guide 7. The information requested includes, but is not limited to:
·
Property and geologic maps
·
Description of your sampling and assaying procedures
·
Drill-hole maps showing drill intercepts
·
Representative geologic cross-sections and drill logs
·
Description and examples of your cut-off calculation procedures
·
Cutoff grades used for each category of your reserves and resources
·
Justifications for the drill hole spacing used to classify and segregate proven and probable reserves
·
A detailed description of your procedures for estimating reserves
·
Copies of any pertinent engineering or geological reports, and executive summaries of feasibility studies or mine plans which including the cash flow analyses
·
A detailed permitting and government approval schedule for the project, particularly identifying the primary environmental or construction approval(s) and your current location on that schedule.
Please provide this information on a CD, formatted as Adobe PDF files. Please also provide the name and phone number for a technical person whom our engineer may call if he has technical questions about your reserves. You may ask to have this information returned by making a written request at the time it is furnished, as provided in Rule 12b-4 of Regulation 12B. If you have questions concerning the above request, please contact John Coleman, Mining Engineer at (202) 551-3610.
IGC response: We currently do not have a U.S. based study. We have spoken with Mr. Coleman and have agreed that references to reserves will be removed from our filings until the studies have been completed. We note that there are only two places where we refer to “reserves” and the references are on Page 4 and Page 7. We agree to remove both references.
3.
Please be advised that if your company does not have a mineral reserve you must be in the exploration stage pursuant to the definitions in paragraph (4) of Industry Guide 7. As such, your filing should be substantially revised to remove terms such as production, development, and ore so that readers understand that you are an exploration stage company without a mineral reserve.
IGC response: We agree. We have scanned the document for key words and revised the document as shown in the attached proposed amendment to Form 10-K:
·
Production”: We will replace this word with “beneficiation.”
·
“Development”: We believe that there are no uses in Form 10-K that fall within the meaning or spirit of Industry Guide 7.
·
“Ore”: We use the expression “iron ore” and not the word “ore” by itself to describe what we do. We propose to make the changes shown in the attachment.
·
“Property/Properties”: We propose the changes tracked on Page 4.
·
“Mining activities” and “mines”: We propose the changes tracked on the attachment and explicitly state that we have no reserves.
·
“Reserves”: We propose the changes on pages 4 and 7.
Item 2. Properties page 11
4.
Please insert a small-scale map showing the location and access to each property, as suggested in paragraph (b)(2) of Industry Guide 7.
IGC response: As we do not identify material properties we are not including any small-scale maps.
5.
Please disclose the information regarding your land and mineral rights for each of your material properties pursuant to paragraph (b)(2) of Industry Guide 7. If you have identified properties in your filing that are not material, include a statement to that effect in your disclosure and clarify your intentions. For each material property include the following information:
·
The nature of your ownership or interest in the property.
·
A description of all interests in your properties, including the terms of all underlying agreements and royalties.
·
An outline of the process by which mineral rights are acquired at the location including details concerning the basis of entitlement and duration of your mineral rights, surface rights, mining claims or concessions.
·
An indication of the type of rights or claims such as placer or lode, exploration or exploitation, State or Federal, patented or unpatented, lease or concession.
·
Please include certain identifying information, such as the property names, claim numbers, grant numbers, mining concession name or number, and dates of recording and expiration such that your claims may be distinguished from other claims that may exist in the area or your properties. If necessary, include this information as an exhibit to your filing.
·
The conditions that must be met to retain your rights, claims or leases, including the quantification and timing of all necessary payments.
·
The area of your claims, either in hectares or in acres.
IGC response: We do not disclose any material properties.
6.
Please disclose the information required under paragraph (b) of Industry Guide 7 for all material properties listed under this heading. For any properties identified that are not material, please include a statement to that effect, clarifying your intentions. For each material property include the following information:
·
The location and means of access to your property, including the modes of transportation utilized to and from the property.
·
A brief description of the rock formations and mineralization of existing or potential economic significance on the property.
·
A description of any work completed on the property and its present condition.
·
The details as to modernization and physical condition of the plant and equipment, including subsurface improvements and equipment.
·
A description of equipment, infrastructure, and other facilities.
·
The current state of exploration of the property.
·
The total costs incurred to date and all planned future costs.
·
The source of power and water that can be utilized at the property.
If applicable, provide a clear statement that the property is without known reserves and the proposed program is exploratory in nature.
IGC response: We do not disclose any material properties.
7.
Please expand your disclosure concerning the exploration plans for the properties as required by paragraph (b)(4)(i) of Industry Guide 7. The exploration plan should address the following points:
·
Disclose a brief geological justification for each of the exploration projects written in non-technical language.
·
Give a breakdown of the exploration timetable and budget, including estimated amounts that will be required for each exploration activity, such as geophysics, geochemistry, surface sampling, drilling, etc. for each prospect.
·
If there is a phased program planned, briefly outline all phases.
·
If there are no current detailed plans to conduct exploration on the property, disclose this prominently.
·
Disclose how the exploration program will be funded.
·
Identify who will be conducting any proposed exploration work and disclose their qualifications.
IGC response: We do not disclose any properties.
8.
In an appropriate section of your filing, provide a brief description of the QA/QC protocols including sample preparation, controls, custody, assay precision and accuracy as it relates to your exploration plans. This would apply to exploration and operational analytical procedures. In your response please indicate the location of this disclosure.
IGC response: We currently have no exploration plans. We agree to disclose this information when we have exploration plans.
9.
Please provide an overview of the exploration and mining permit requirements for companies operating in the countries in which you have projects. Include in you overview the permits required to explore or mine, any fees or bonding requirements necessary to explore or mine, the Government agencies responsible for any applicable permits, and a discussion pertaining to the time frame to obtain any permits or approvals to explore or mine. In your response clearly describe the permits that have been issued to your company.
IGC response: We have no plans for exploration. We agree to disclose this information when we have plans for exploration.
10.
For each of your mines and processing facilities please disclose your annual production, including the tons and grade of the materials, and the capacity and utilization of your facilities pursuant to the Instructions of Item 102 of Regulation S-K.
IGC response: We have no mines or mine processing facilities. We have beneficiation plants that were not operating in FYE 2013. The MD&A on Page 18 states “The revenue reported for 2013 and 2012 is from trading of ore in India and China.” We make no reference to production or processing. We believe that this disclosure does not apply. However, we agree that in the future we will disclose this information once the beneficiation plants are operational.
11.
Please summarize the capital expenditures for your projects including the type and amount of the expenditure.
IGC response: We have no planned capital expenditure related to exploration, development or production.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, page 13
Critical Accounting Policies and Estimates, page 16
12.
We note your policy for revenue recognition from construction/project related activity and contracts for supply/commissioning of complex plant and equipment. We also note on page F-13 you have Build-Operate-Transfer (BOT) Contracts. We note that there is an extended time period before you collect on some of these revenues. Tell us and revise to provide the following:
·
A sufficiently detailed explanation of how you recognize revenue on these contracts, how you account for billings and costs and where these accounts are presented on the balance sheet. Provide the age of this long-term receivable and the effect that customer verification and approval have on collection and revenue recognition.
IGC response: The reference to Long Term receivables on page F-13 is from a BOT contract that was in Sricon. We no longer own a majority of Sricon and therefore there are no BOT contracts on our balance sheet. Further, we do not have any long-term receivables. We agree to remove the reference.
·
Please disclose the amount of your long-term accounts receivable discussed on page F-13 for the periods presented and clarify which line item of your consolidated balance sheets includes these amounts.
IGC response: We have no long-term accounts receivables in FYE 2013. We propose to remove item l) Accounts –Long Term from future filings if there is none to report or disclose any related existing amounts as detailed as required above.
Result of Operations, page 18
Fiscal year ended March 31, 2013 compared to fiscal year ended March 31, 2012, page 18
Revenue, page 18
13.
We note your revenue has increased about 91.2% in fiscal 2013 from fiscal 2012.
Please revise to discuss the primary drivers that are responsible for the underlying increase of your revenue and discuss whether the overall increase is attributable to increases in prices or increases in the volume of trading of ore in India and China. Refer to Item 303(a)(3)(iii) of Regulation S-K.
IGC response: The increase in revenue in fiscal year ended March 31, 2013 is mainly due to an increase in the volume of trading of iron ore.
14.
We note you disclose that the revenue reported for fiscal 2013 and fiscal 2012 is from “trading of ore in India and China.” However, we also note form page seven that your subsidiary, TBL, contributed 10% of your revenue in construction area for the year ended March 31, 2013. Please clarify the inconsistent disclosures or revise your discussion of revenue to include revenue generated from your construction business.
IGC response: Total revenue was $8.03 million for the year ended March 31, 2013, as compared to $4.19 million for the year ended March 31, 2012, an increase of 91.2%. For fiscal 2013, about $7.2 million is from trading of iron ore in India and China and about $.84 million is from construction work done in India. Please see the revision to our disclosure on the attached proposed amendment to Form 10-K for fiscal year ended March 31, 2013.
Cost of Revenue, page 18
15.
We note your revenue increased 91.2% but cost of revenue increased only about 34.8% in 2013 from 2012. In addition, your cost of revenue as a percentage of revenue also decreased in fiscal 2013. Please revise your disclosure to describe the cost components included in your cost of revenues for the periods reported and discuss any events that caused the material change in the relationship between costs and revenue. Refer to Item 303(a)(3)(ii) of Regulation S-K.
IGC response: The cost of revenue decreased in fiscal 2013 as a percentage of revenue. The decrease is primarily because the cost associated with the construction revenue realized as a result of a court order in fiscal 2013 was booked in a prior year. Therefore the cost of overall revenue as a percentage of overall revenue decreased for fiscal 2013 over that of fiscal 2012.
Please see the revision to our disclosure on the attached proposed amendment to Form 10-K for fiscal year ended March 31, 2013.
Balance sheet explanations, page 19
16.
We note from page F-2 that your accounts receivable, net of allowances has decreased about 35%, but your revenue has increased 81.2% in fiscal 2013 from 2012. Please describe your accounts receivable and discuss t