Preliminary Copies

 

INDIA GLOBALIZATION CAPITAL, INC.

4336 Montgomery Avenue

Bethesda, MD, 20814

(301) 983-0998

 

To the Stockholders of India Globalization Capital, Inc.:

 

 

You recently received our proxy statement dated February 6, 2008 (the “Proxy Statement”) concerning the upcoming special meeting of the stockholders of India Globalization Capital, Inc. (“we,” “us” or “IGC”). The Proxy Statement includes a proposal to approve the “Acquisition Proposal” of IGC acting directly or indirectly through one or more newly formed affiliates, consisting of the following proposed acquisitions: (a) acquisition of a 63% equity interest in Sricon Infrastructure Private Limited (“Sricon”), (b) the acquisition of convertible preference shares, and a direct equity interest in Techni Bharathi Limited (“TBL”) and (c) the acquisition from Odeon Limited of convertible preference shares of TBL, which when converted along with the convertible preference shares purchased directly from TBL would result in IGC owning a 77% equity interest in TBL.

 

Please note that we have rescheduled the special meeting of our stockholders to 10:00 a.m., Eastern Time, on Thursday, March 6, 2008, at the offices of Seyfarth Shaw, LLP, 815 Connecticut Avenue, N.W., Suite 500, Washington, D.C. 20006-4004.

 

Since we sent you the Proxy Statement, we have had further discussions with Sricon and TBL, and they have agreed in principle to loan us an aggregate of approximately $23,000,000 conditioned upon, and subsequent to, the consummation of the transactions contemplated by the Acquisition Proposal.  These loans, if made, would not change the terms of the Acquisition Proposal or any of the other proposals we have asked you to vote on at the special meeting of stockholders. The consummation of the transactions contemplated by the Acquisition Proposal is not conditioned on Sricon and TBL making the loans to us.

 

One of the potential uses of the loan proceeds may be to repurchase from a limited number of stockholders all or a portion of the shares of stock that they hold in exchange for each of the stockholders agreeing to vote such shares in favor of the Acquisition Proposal.  While we do not have any such agreements currently in place, we anticipate that the repurchases would be structured in a manner that would provide for settlement of the repurchases subsequent to the consummation of the transactions contemplated by the Acquisition Proposal (the “Acquisition”).  The funds for the repurchases would come solely from the Sricon and TBL loans, and we estimate that we could spend up to the total proceeds of the loans to repurchase shares.  Alternatively, we may use some or all the loan proceeds for general corporate purposes but currently have no specific plans for the use of the proceeds in this fashion.

 

Enclosed is a supplement to the Proxy Statement containing additional information concerning the Sricon and TBL loans and our proposed use of the loan proceeds. We urge you to read this material carefully. In particular, you should carefully consider the discussion in the section entitled “Additional Risk Factors” beginning on page 19 of the supplement.  We have also enclosed a new proxy card for your use if you have not yet voted on the matters to be considered at the special meeting or if you wish to change your prior vote after reviewing the supplement.

 

If you have any questions or need assistance in voting your shares, please call me at (301) 983-0998.

 

 

Sincerely yours,

/s/ Ram Mukunda                

Ram Mukunda

 

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SUPPLEMENT TO PROXY STATEMENT FOR SPECIAL MEETING OF

STOCKHOLDERS OF

INDIA GLOBALIZATION CAPITAL, INC.

 

MARCH 6, 2008

 

 

The following information amends and supplements the proxy statement dated February 6, 2008 (the “Proxy Statement”) previously sent to the stockholders of India Globalization Capital, Inc. (“we,” “us” or “IGC”) and should be read in conjunction with the Proxy Statement, which is incorporated herein by reference.

 

THE SRICON AND TBL LOANS

 

Terms of the Loans

 

 

Subsequent to the mailing date of the Proxy Statement, the Company has entered into agreements in principle with Sricon and TBL pursuant to which Sricon and TBL will loan us up to an aggregate of approximately $23,000,000 following the consummation of the transactions contemplated by the Acquisition Proposal on the following terms:

 

 

·	Sricon will lend us up to approximately $17,000,000 and TBL will lend us up to approximately $6,000,000.

·	The loans will bear interest at a rate equal to the applicable federal rate at the time the loans are made.

·	Principal and interest on the loans will be due and payable upon the earlier of the first anniversary of the loans and the consummation of the sale of all or substantially all of the assets or stock of IGC.

·	The loans may be prepaid at any time without penalty.

·	Our obligations under the loans will be unsecured.

 

The loans will be conditioned upon he consummation of the transactions contemplated by the Acquisition Proposal.  The terms of the Acquisition Proposal and the other proposals to be voted on at the special meeting of the stockholders remain unchanged, and the consummation of the transactions contemplated by the Acquisition Proposal is not conditioned on Sricon and TBL making the loans to us. When we enter into definitive agreements with respect to the loans, we will file a Form 8-K with the Securities and Exchange Commission which will include copies of the loan agreements as exhibits.

Use of Loan Proceeds

One of our potential uses of the loan proceeds not expressly contemplated by our prospectus or the Proxy Statement may be to repurchase from a limited number of stockholders in privately negotiated transactions all or a portion of the shares of stock that they hold in exchange for such stockholders agreeing to change their vote to vote in favor of the proposals presented at the stockholders meeting or granting us a proxy to vote their shares in our discretion.  We anticipate that the repurchases would be structured in a manner that would provide for settlement of the repurchases subsequent to the consummation of the transactions contemplated by the Acquisition Proposal and would be conditioned upon the approval and completion of the Acquisition Proposal.  We will not repurchase shares for an aggregate repurchase price in excess of the proceeds of the loans from Sricon and TBL.  At this time, we have not entered into any agreements with any stockholders with respect to the repurchase of our shares.  These shares would be purchased at prices to be negotiated between us and the stockholders, although we expect that the per share price would be equal to the per share amount held in trust for payment to the holders of our common stock who vote against the Acquisition Proposal and request conversion of their shares. The amount in the trust account in which a substantial portion of the proceeds of our initial public offering is deposited (the “Trust Account”) as of December 31, 2007 was approximately $5.92 per share (net of estimated taxes).  We intend to retire any shares repurchased in this fashion, reducing the number of our outstanding shares.  Alternatively, we may use some or the entire loan proceeds for general corporate purposes but currently have no specific plans for the use of the proceeds in this fashion.

Shares of our common stock that are purchased in such transactions will not be counted towards whether the holders of 20% or more of the shares of common stock issued in our initial public offering (“Public Shares”) have voted against the transaction and demanded that we convert their shares to their pro rata share of the Trust Account.  Our amended and restated certificate of incorporation provides that we cannot complete the Acquisition if the holders of 20% or more of the Public Shares vote against the Acquisition Proposal and demand conversion of their shares into a pro rata portion of the Trust Account.  While we expect that the purchase price of any shares we repurchase will be approximately equal to the price per share payable upon conversion, the shares repurchased will be voted in favor of the Acquisition Proposal and will not be eligible to elect conversion.  Accordingly, any repurchased shares would not be included with the shares that elect conversion.

 

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Impact of the Loans On Us

 

As the loans and any stock repurchases would occur subsequent to, and be conditioned upon, the Acquisition Proposal, we do not anticipate that the loans or stock repurchases structured in the manner described above will have any impact on the funds available to our stockholders upon conversion of their shares or upon our liquidation if the Acquisition Proposal is not approved by our stockholders.

 

If we borrow the funds from Sricon and TBL we anticipate that we will not have sufficient cash remaining to repay the loans after payment of the purchase price for the acquisition of Sricon and TBL stock and the payments to any of our stockholders that elect to convert their shares into cash.  Accordingly, unless we receive sufficient revenues from the target companies or from holders of our warrants exercising the warrants we will likely need to raise additional funds to repay the loans.  Among the methods we may use to raise funds include the sale of additional equity securities, or the sale of debt securities together with equity securities, such as warrants, which would dilute our existing stockholders.

 

As disclosed in our Proxy Statement in the section entitled “Additional Investment Activity – Wind Farm Purchase Agreement”, we have also entered into a Contract Agreement dated April 29, 2007, as subsequently amended (“CWEL Purchase Agreement”), with Chiranjjeevi Wind Energy Limited, Arul Mariamman Textiles Limited, and Marudhavel Industries Limited (collectively, “CWEL”) pursuant to which IGC 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 (the “CWEL Acquisition”).  At closing, the purchase price for the 24-mega watt wind energy farm is INR 1,140,000,000 (approximately $28,500,000 based on a conversion ratio of $0.025 per INR.).  The price is subject to revision based on the prices of major components at closing. We have previously made a $250,000 deposit toward the purchase price.  The actual payments made to CWEL will be spread over nine to twelve months.  We noted in our Proxy Statement that we anticipate obtaining a credit facility for about $22.1 million to help finance the CWEL Acquisition.  We have not yet obtained this credit facility, and if the Sricon and TBL loans remain outstanding, it may be more difficult or expensive for us to obtain this facility than it would if we did not enter into the Sricon and TBL loans.  The CWEL Acquisition is not part of the Acquisition Proposal, and you will not be voting on the CWEL Acquisition at the stockholders meeting.

 

Impact of the Loans on Sricon and TBL

 

We believe that Sricon and TBL are capable of maintaining operations at their current levels with the portion of the purchase price they would respectively retain if they made the proposed loans to us.  However, without obtaining capital from other sources, they may lack sufficient capital in the short term to permit them to bid on larger build, operate and transfer (“BOT”) contracts, which could impact their long term revenues.  We believe that Sricon and TBL could obtain capital from other sources if the need arises, but the additional cost of that capital could negatively impact their earnings.

 

In the Proxy Statement, we identified a number of potential uses for the capital provided by us to the targets in order to improve their earnings margins.  See “The Acquisition Proposal – Industry Background: Infrastructure - Sricon Infrastructure Private Limited (Sricon) – Sricon Projections” and “The Acquisition Proposal – Industry Background: Infrastructure - Techni Bharathi Limited (TBL) – Short/Medium Term Margin Expansion” in the Proxy Statement.  These uses included paying vendors for raw materials in a more timely fashion, purchasing additional equipment and lowering interest costs by, among other things, improving the balance sheets of the targets.  We believe that if we repay the loans when due that Sricon and TBL should have sufficient capital on hand to apply to the first two of these uses over the next year.  However, the loans to us may result in a delay in the projected margin increases attributable to lowering interest costs depending on when the loans are repaid.  If we are unable to repay the loans on time, Sricon and TBL may not be able to maintain the projected margin improvements in future years.

 

 

INTERESTS OF OUR DIRECTORS AND OFFICERS IN THE ACQUISITION

 

 

If we are unable to consummate the Acquisition by March 8, 2008, we will be forced to liquidate.  When you consider the recommendation of our board of directors that you vote in favor of adoption of the Acquisition Proposal, you should keep in mind that certain of our directors and officers have interests in the Acquisition that are different from, or in addition to, your interest as a stockholder. These interests include, among other things, that if the Acquisition is not approved and we are required to liquidate, the stock and units issued to our executives and directors prior to the consummation of our public offering, including those purchased by our executives and directors in the private placement immediately preceding the public offering, will be worthless, because these shares will not participate in any distribution of the assets held in our Trust Account. As of the record date, our present and past executives, directors and advisors owned a total of 2,500,000 shares of our common stock and 170,000 of our Units. In addition, Richard Prins has received an option to purchase 71,250 units, at a strike price of $7.50, from the Underwriters Purchase Option (UPO) that we granted to the underwriter, Ferris, Baker Watts and Ranga Krishna, our Chairman of the Board, is entitled to receive 446,226 shares of our common stock if we consummate the Acquisition under the terms of a $4,300,000 loan made by Dr. Krishna to us, which loan shall be due and payable upon the earlier of 10 days after the completion of the Acquisition and December 24, 2008. The note evidencing the loan provides that Dr. Krishna will have no recourse against the Trust Account for repayment of the loan if we do not consummate a business combination.  Accordingly, if we do not consummate a business combination we may not have the funds available to repay Dr. Krishna’s loan,

 

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     Mr. Suhail Nathani is a partner at the law firm of ELP in Mumbai, India. He is also one of our directors. His law firm is responsible for the legal due diligence and for drafting the purchase agreements. Our board of directors took the relationship into consideration, and debated the potential conflicts before approving the hiring of ELP for representing us in India. Nathani did not take part in the board’s approval process of choosing ELP as our Indian legal council. One of the key considerations that the board took into account was the experience that Nathani and other ELP partners have in mergers, acquisitions, Indian and US securities law and cross border relations. While ELP is paid their standard fee for the work they did and continue to do for us, there is no arrangement of a success fee of any kind associated with the Acquisition Proposal.

 

     In addition, we anticipate that following the completion of the Acquisition, Ranga Krishna will serve as the chairman of our board of directors, Ram Mukunda will serve as the executive chairman, president and chief executive officer, Sudhakar Shenoy, Suhail Nathani and Richard Prins will remain on our board of directors. Each of our directors and officers will, following the Acquisition, be compensated in such manner, and in such amounts, as our board of directors may determine to be appropriate, subject in the case of our officers to the requirements of any employment agreements entered into with them.

 

 

SELECTED SUMMARY HISTORICAL FINANCIAL INFORMATION

 

 Selected Summary Historical Financial Information

All three companies IGC, Sricon and TBL, have fiscal years that end at March 31. The following financial information is provided to assist you in your analysis of the financial aspects of the proposed acquisition transactions. IGC’s historical information is derived from (i) its audited financial statements as of March 31, 2007 and for the period from its inception (April 29, 2005) to March 31, 2007, and (ii) its unaudited condensed financial statements as of December 31, 2007 and for the nine months ended December 31, 2007 and 2006. Sricon’s historical information is derived from (i) its audited financial statements as at March 31, 2006 and 2007 and for the years ended March 31, 2005, 2006 and 2007, and (ii) its unaudited condensed financial statements as of December 31, 2007 and for the nine months ended December 31, 2007 and 2006.   TBL’s historical information is derived from (i) its audited financial statements as at March 31, 2006 and 2007, and for the years ended March 31, 2005, 2006 and 2007, and (ii) its unaudited condensed financial statements as of December 31, 2007 and for the nine months ended December 31, 2007 and 2006.  The information is only a summary and should be read in conjunction with each of IGC’s, Sricon’s and TBL’s historical financial statements and related notes.  The historical results included below and elsewhere herein are not indicative of the future performance of IGC, Sricon and TBL.

India Globalization Capital, Inc.

Selected Summary Statement of Income Data

(Amounts in US Dollars, except share data and as stated otherwise)		From Inception (April 29, 2005) to March 31, 2006				Year Ended March 31, 2007				Nine Months Ended December 31, 2006				Nine Months Ended December 31, 2007
Interest income		$	210,584			$	3,171,818			$	2,414,645			$	1,836,957
Income (loss) before income taxes			(398,840)				2,302,855				1,814,816				(118,277)
Provision for Income taxes			(45,000)				(784,858)				(623,625)				(40,026)
Net income (loss)			(443,840)				1,517,997				1,191,191				(78,251)
Weighted average shares outstanding – basic and diluted			3,191,000				13,974,500				13,974,500				13,974,500
Net income (loss) per share – basic and diluted		$	(0.14)			$	0.11			$	0.09			$	(0.01	)

India Globalization Capital, Inc.

Selected Summary Balance Sheet Data

		March 31, 2006				March 31, 2007				December 31, 2007
ASSETS
Investments held in trust fund		$	65,825,016			$	66,104,275			$	66,938,208
LIABILITIES AND STOCKHOLDERS' EQUITY
Common stock subject to possible conversion			12,762,785				12,762,785				12,762,785
Total stockholders’ equity		$	50,170,702			$	52,923,699			$	52,845,448

 

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Sricon Infrastructure Private Limited

Selected Summary Statement of Income Data

 

		Year Ended																				Nine months ended
(Amounts in Thousand US Dollars except share data and as stated otherwise)		March 31, 2003				March 31, 2004				March 31, 2005				March 31, 2006				March 31, 2007				December 31, 2006				December 31, 2007
Revenue		$	4,580			$	15,298			$	11,477			$	11,011			$	10,604			$	8,404			$	16,865
Income before income taxes			320				646				907				668				778				265				2,756
Income taxes			(69)				(199)				(363)				(186)				(368)				(108)				(561)
Net Income			251				446				544				482				410				157				2,195
Earning per share - basic and diluted		$	0.12			$	0.11			$	0.19			$	0.16			$	0.14			$	0.05			$	0.75
Weighted average number of shares outstanding			95,200				183,259				2,932,159				2,932,159				2,932,159				2,932,159				2,932,159

Sricon Infrastructure Private Limited

Selected Summary Balance Sheet Data

(Amounts in Thousand US Dollars)		As of March 31, 2003				As of March 31, 2004				As of March 31, 2005				As of March 31, 2006				As of March 31, 2007				As of December 31, 2007
ASSETS
Accounts receivables		$	234			$	2,223			$	2,128			$	2,083			$	2,751			$	11,442
Unbilled receivables			357				984				974				2,980				2,866				1,896
Inventories			43				71				154				248				71				325
Property and equipment, net			1,461				3,098				3,424				4,347				4,903				5,599
BOT Project under progress			-				-				-				1,584				3,080				-
LIABILITIES
Short-term borrowings and current portion of long-term debt			-				359				5,103				3,868				3,646				3,940
Due to related parties			217				1,553				1,724				1,604				2,264				1,210
Long-term debt, net of current portion			404				1,089				1,278				1,855				2,182				2,264
Other liabilities			462				1,267				1,307				697				1,913				1,820
Total stockholders’ equity		$	1,189			$	2,822			$	2,760			$	3,740			$	4,289			$	9,219

 

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 Techni Bharathi Limited

Selected Summary Statement of Operations Data

		Year Ended																				Nine months ended
(Amounts in Thousand US Dollars, except share data and as stated otherwise)		March 31, 2003				March 31, 2004				March 31, 2005				March 31, 2006				March 31, 2007				December 31,  2006				December 31, 2007
Revenue		$	13,145			$	8,773			$	8,954			$	2,285			$	4,318			$	396			$	5,042
Income (loss) before income taxes			722				(2,609	)			(3,823	)			(2,369	)			401				(1,220	)			3,184
Income taxes			322				(63	)			515				62				135				12				(202	)
Net (loss)/income			400				(2,672	)			(3,308	)			(2,307	)			536				(855	)			2,982
Earnings (loss) per share
Basic		$	0.09			$	(0.62	)		$	(0.77	)		$	(0.54	)		$	0.13			$	(0.30	)		$	0.66
Diluted		$	0.09			$	(0.62	)		$	(0.77	)		$	(0.54	)		$	0.13			$	(0.30	)		$	0.66
Weighted average number of shares outstanding
Basic			4,287,500				4,287,500				4,287,500				4,287,500				4,287,500				4,287,500				4,287,500
Diluted			4,287,500				4,287,500				4,287,500				4,287,500				4,287,500				4,287,500				4,287,500

Techni Bharathi Limited

Selected Summary Balance Sheet Data

(Amounts in Thousand US Dollars)		As of March 31,  2003				As of March 31, 2004				As of March 31, 2005				As of March 31, 2006				As of March 31, 2007				As of December 31, 2007
ASSETS
Cash and cash equivalents		$	200			$	107			$	83			$	69			$	1,208			$	157
Inventories			4,728				4,922				4,459				4,182				1,284				1,585
Prepaid and other assets			1,777				2,070				1,765				1,275				1,231				75
Property, plant and equipment (net)			3,622				3,985				3,463				2,417				2,265				2,106
LIABILITIES
Short term borrowings and current portion of long-term loan			1,495				6,614				6,291				8,125				6,079				4,142
Trade payable			3,348				2,738				3,341				987				1,502				886
Long term debts, net of current portion			4,883				2,892				3,897				3,656				2,333
Advance from customers			1,488				2,755				3,057				2,997				1,877				846
Total Stockholders' equity		$	2,927			$	320			$	(3,032	)		$	(5,438	)		$	(4,895	)		$	(1,172	)

 

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UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENT

The following unaudited pro forma condensed balance sheet combines the historical balance sheets of Sricon, TBL and IGC as of December 31, 2007, giving effect to the Acquisition as if it had been consummated on December 31, 2007.

The following unaudited pro forma condensed statement of operations for the nine months ended December 31, 2007 combines the condensed unaudited statements of operations of TBL for the nine  months ended December 31,  2007 and the condensed unaudited statement of operations of Sricon for the nine months ended December 31, 2007 with the unaudited statement of operations of IGC for the nine months period ended December 31, 2007, giving effect to the Acquisition as if it had occurred at the beginning of the periods presented.

The following unaudited pro forma statement of operations for the fiscal year ended March 31, 2007 combines the audited statements of operations of TBL for the fiscal year ended March 31, 2007 and the audited statement of operations of Sricon for the fiscal year ended March, 2007 with the audited statement of operations of IGC for the fiscal year ended March 31, 2007, giving effect to the Acquisition as if it had occurred at the beginning of the periods presented.

The historical financial information has been adjusted to give effect to pro forma events that are directly attributable to the Acquisition, are factually supportable and are expected to have a continuing impact on the combined results.

In addition to the Acquisition Proposal we expect to fund a wind energy farm that will be constructed by CWEL. The 24-mega watt wind energy farm is expected to cost INR 1,140,000,000 (about USD 28.5 million, at an exchange rate of INR 40 per USD). We expect to fund the construction of the wind energy farm through a yet to be formed, wholly owned Indian subsidiary called IGC-Power. We expect to invest approximately USD 6,150,000 in equity to capitalize IGC-Power, transfer the deposit of $250,000 from CWEL to IGC-Power and anticipate obtaining a credit facility for about USD 22.1 million. No arrangements have yet been made for the debt financing.  We expect to file a Form 8-K setting forth the details of the debt financing if and when the arrangements are finalized.  Because the wind farm has not yet been constructed, the pro forma financial statements do not reflect the impact of the proposed wind farm because such inclusion would constitute a forecast or projection.  However, the $250,000 we have paid as a deposit on the wind farms is reflected on the pro forma statements.

The unaudited pro forma condensed unaudited balance sheet information at December 31, 2007, and the unaudited pro forma condensed statement of operations for the nine months ended December 31, 2007, and the fiscal year ended March 31, 2007, have been prepared using two different levels of approval of the transaction by the IGC stockholders, as follows:

·	Assuming No Exercise of Redemption Rights: This presentation assumes that none of the IGC stockholders exercise their redemption rights; and
·	Assuming Maximum Exercise of Redemption Rights: This presentation assumes that stockholders holding 2,259,770 common stock exercise their redemption rights.

In addition, a third case is also presented:  After the business transaction is consummated and conditioned on the business combination being consummated, we expect that our subsidiaries Sricon and TBL will loan IGC up to about $23 Million.  We may use some or all of this cash to purchase IGC shares from a limited number of our shareholders.  We expect to pay no more than an amount equal to the per share amount in escrow as of the closing, expected to be about $5.92 per share.  The Pro Forma scenario presented here assumes that all $23 Million will be used to purchase shares and maximum exercise of redemption rights.

·	Assuming that we use $23 Million to purchase and retire shares and assuming Maximum Exercise of Redemption Rights.

We are providing the following information to aid you in your analysis of the financial aspects of the acquisition.

We derived the pro forma information for the nine months ended December 31, 2007 from the condensed unaudited condensed financial statements of Sricon for the nine months ended December 31, 2007, the condensed unaudited financial statements of TBL for the nine months ended December 31, 2007 and from the unaudited condensed financial statements of IGC for the nine months ended December 31, 2007.

We derived the pro forma information for the fiscal year ended March 31, 2007 from the audited financial statements of Sricon, TBL and IGC for the fiscal year ended March 31, 2007.

This information should be read together with IGC’s audited and unaudited financial statements and related notes, the Sricon audited and unaudited financial statements and related notes, the TBL audited and unaudited financial statements and related notes and other financial information included elsewhere in the proxy statement.

 

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The unaudited pro forma condensed information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma condensed financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience. IGC, Sricon and TBL have not had any historical relationships prior to the Acquisition. Accordingly, no pro forma adjustments were required to eliminate activities among the companies.

In the proposed acquisition of Sricon, IGC intends to acquire 4,041,676 newly-issued equity shares directly from Sricon and 351,840 equity shares from the promoters so that at the conclusion of the transactions contemplated by the Sricon Subscription Agreement, IGC will own   approximately   63% of the outstanding equity shares of Sricon in exchange for consideration consisting of: (i) INR 120,000,000 (approximately $3,000,000 at an exchange rate of INR 40 per USD) in cash at closing for the Sale Shares, representing a price per share of INR 341.06 (approximately $8.53 per share at an exchange rate of INR 40 per USD), (ii) INR 1,030,000,000 (approximately $25,750,000 at an exchange rate of INR 40 per USD) in cash at closing for the New Sricon Shares, representing a price per share of INR 254.84 approximately $6.37 at an exchange rate of INR 40 per USD).

In the proposed acquisition of TBL, IGC intends to acquire 7,150,000 newly-issued equity shares and 12,500,000 newly-issued 6% compulsorily convertible preference shares (CPS), which may be converted to 2,100,000 shares of common stock, directly from TBL, and 5,000,000 convertible preference shares of TBL (the “TBL Preference Shares”) from Odeon so that at the conclusion of the transactions contemplated by the TBL Subscription Agreement, IGC will own, assuming both convertibles are converted, approximately 77% of the outstanding equity shares of TBL on a fully-diluted basis for consideration consisting of: (i) INR 275,000,000 (approximately  $6,875,000 at an exchange rate of INR 40 per USD) in cash at closing for the 7,150,000 new equity shares, representing a price per share of INR 38.46 (approximately $0.96 at an exchange rate of INR 40 per USD), (ii) INR 125,000,000 (approximately $3,125,000 at an exchange rate of INR 40 per USD) in cash at closing for the CPS, representing a price per share of INR 10.00 (approximately $0.25 at an exchange rate of INR 40 per USD) and (iii) $2,000,000 in cash at closing for the TBL convertible preference shares acquired from Odeon, representing a price per share of $0.40.

The Acquisition will be accounted for as a business combination with IGC as the accounting acquirer. The determination of IGC as the accounting acquirer has been made based on an evaluation of the relevant factors and circumstances of the Acquisition, including among other factors that IGC stockholders will own a majority stake of the acquired companies upon consummation of the Acquisition, and that certain members of IGC’s board of directors will serve on the board of directors of the acquired companies.  Under the purchase method of accounting, the assets and liabilities of Sricon and TBL acquired by IGC will be recorded as of the acquisition date at their respective fair values, and added to those of IGC.

The purchase price for the respective acquisitions will be determined based on the cash consideration given in exchange for the issued and outstanding shares of Sricon and TBL.  The allocation of the purchase price including the evaluation and computation of deferred taxes, if any, resulting from the Acquisition reflected in the unaudited pro forma condensed financial statements is preliminary and subject to change based on finalization of IGC’s valuation of the acquired assets and liabilities of Sricon and TBL. The pro forma information presented, for the purchase price allocation, is based on preliminary estimates of the fair values of assets acquired and liabilities assumed in connection with the Acquisition.  These preliminary estimates are based on available information and certain assumptions we consider reasonable and may be revised as additional information becomes available. These preliminary valuation estimates were derived by management and are reflected in the fair values in these unaudited pro forma condensed financial statements. The final purchase price allocation for the Acquisition will be dependent upon the finalization of asset and liability valuations, which may depend in part on prevailing market rates and conditions. A final determination of these fair values will include assistance provided by an independent appraiser, which will be completed subsequent to the consummation of the Acquisition. These final valuations will be based on the actual net tangible and intangible assets that existed as of the closing date of the Acquisition. Any final adjustments may change the allocations of purchase price, which could affect the fair value assigned to the assets acquired and liabilities assumed and could result in a material change to the unaudited pro forma condensed financial statements, including the amount recorded in respect of goodwill.

9

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SELECTED UNAUDITED PRO FORMA CONDENSED BALANCE SHEET INFORMATION

AS OF DECEMBER 31, 2007

		Consolidated				Consolidated				Consolidated
		Assuming No				Assuming Maximum				Assuming Maximum
		Exercise of				Exercise of				Buy Back of Stock
		Redemption Rights				Redemption Rights				and Maximum Recemption
Total Current Assets		$	77,301,079			$	64,256,552			$	41,256,552
Property and equipment, net			7,704,887				7,704,887				7,704,887
Goodwill			13,068,689				13,068,689				13,068,689
Total Assets			102,759,290				89,714,763				66,714,763
Long-term debt, net of current portion			3,028,474				3,028,474				3,028,474
Minority Interest			14,980,406				14,980,406				14,980,406
Total stockholders’ equity			65,349,484				52,304,957				29,304,957

10

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UNAUDITED PRO FORMA CONDENSED BALANCE SHEET

AS OF DECEMBER 31, 2007

														Pro Forma					Consolidated									Consolidated									Consolidated
		Sricon				TBL				IGC				Adjustments					Assuming No									Assuming									Assuming
																			Exercise of									Maximum									Maximum
																			Redemption									Exercise of									Buy Back of
																			Rights									Redemption									Stock and
																												Rights									and Maximun
																																					Redemption
ASSETS
Current Assets:
Cash and cash equivalents		$	866,436			$	156,882			$	2,208,160				66,938,208		(a)		$	55,659,040				(12,762,785	)	(h)		$	42,614,513				(23,000,000	)	(a)		$	19,614,513
															35,750,000		(a)							(281,742	)	(h)
															(32,340,721	)	(a)
															(5,000,000	)	(a)
															(5,182,287	)	(d)
															(4,216,988	)	(e)
															(1,769,400	)	(f)
															(1,601,250	)	(g)
															(150,000	)	(a)
Accounts Receivable			11,442,073				644,041				-									12,086,114									12,086,114									12,086,114
Unbilled Receivables			1,895,829				-				-									1,895,829									1,895,829									1,895,829
Inventories			325,004				1,585,455				-									1,910,459									1,910,459									1,910,459
Investments held in Trust Fund			-				-				66,938,208				(66,938,208	)	(a)			-									-									-
Interest Receivable - Convertible Debenture			-				-				217,479									217,479									217,479									217,479
Convertible debenture in MBL			-				-				3,000,000									3,000,000									3,000,000									3,000,000
Loan Acquisition Costs			-				-				237,705				150,000		(a)			-									-									-
															(387,705	)	(a)
Prepaid Taxes			-				-				49,289									49,289									49,289									49,289
Restricted cash			-				40,393													40,393									40,393									40,393
Prepaid expenses and other current assets			818,272				74,790				7,625									900,687									900,687									900,687
Due from related parties			1,455,065				86,725				-									1,541,790									1,541,790									1,541,790
Total Current Assets			16,802,679				2,588,285				72,658,466									77,301,079									64,256,552									41,256,552
Property and equipment, net			5,598,892				2,105,995				-				-					7,704,887									7,704,887									7,704,887
Goodwill			-				-				-				13,068,689		(a)			13,068,689									13,068,689									13,068,689
Investment – others			92,401				78,660				-									171,061									171,061									171,061
Deposit towards acquisitions			-				-				3,670,000				(3,409,279	)	(a)			260,721									260,721									260,721
Restricted cash, non-current			240,222				178,208				-									418,430									418,430									418,430
Deferred acquisition costs			-				-				233,189				1,601,250		(g)			699,117									699,117									699,117
															(1,135,322	)	(a)
Deferred tax assets, net of valuation allowance			-				166,153				891,547									1,057,700									1,057,700									1,057,700
Other assets			814,001				1,263,605				-									2,077,606									2,077,606									2,077,606
Total Assets		$	23,548,195			$	6,380,906			$	77,453,202								$	102,759,290								$	89,714,763								$	66,714,763
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Short-term borrowings and current portion of long-term debt		$	3,940,048				4,142,008				-									8,082,056									8,082,056									8,082,056
Trade payables			788,086				885,831				-									1,673,917									1,673,917									1,673,917
Advance from Customers			1,134,020				-													1,134,020									1,134,020									1,134,020
Accrued expenses			-				-			$	851,613				(87,287	)	(d)			547,337									547,337									547,337
															(216,989	)	(e)
Notes payable to stockholders			-				-				5,095,000				(5,095,000	)	(d)			-									-									-
Deferred trust interest			-				-				281,742				(281,742	)	(h)			-									-									-
Note Payable to Oliveira Capital, LLC			-				-				3,847,214				(3,847,214	)	(e)			-									-									-
Due to Underwriters			-				-				1,769,400				(1,769,400	)	(f)			-									-									-
Due to related parties			1,209,962				-				-									1,209,962									1,209,962									1,209,962
Other current liabilities			2,507,840				915,734				-									3,423,574									3,423,574									3,423,574
Total current liabilities			9,579,956				5,943,574				11,844,969									16,070,867									16,070,867									16,070,867
Long-term debt, net of current portion			2,264,373				764,101				-									3,028,474									3,028,474									3,028,474
Advance from Customers			-				845,606				-									845,606									845,606									845,606
Deferred taxes on income			664,438				-				-									664,438									664,438									664,438
Other liabilities			1,820,015				-				-									1,820,015									1,820,015									1,820,015
Total Liabilities		$	14,328,782			$	7,553,281			$	11,844,969								$	22,429,400								$	22,429,400								$	22,429,400
Minority Interest			-				-				-				14,980,406		(a)			14,980,406									14,980,406									14,980,406
Common stock subject to possible conversion, 2,259,770 at conversion value			-				-				12,762,785				(12,762,785	)	(h)			-									-				-					-
STOCKHOLDERS’ EQUITY
Preferred Stock			-				1,182,033				-				(1,182,033	)	(a)			-									-									-
Common stock			674,000				988,000				1,397				(1,662,000	)	(a)			2,173				(226	)	(h)			1,947				(389	)	(a)			1,558
															226		(h)
															550		(a)
Additional paid-in capital			726,000				199,000				51,848,145				35,750,000		(a)			67,877,154				(12,762,559	)	(h)			55,114,595				(22,999,611	)	(a)			32,114,984
															(36,675,000	)	(a)
															12,762,559		(h)
															3,266,450		(a)
Money received pending allotment			3,239,279												(3,239,279	)	(a)			-									-									-
Retained earnings			4,079,895				(3,097,878	)			995,906				(982,017	)	(a)			(2,529,843	)			(281,742	)	(h)			(2,811,585	)			-					(2,811,585	)
															(152,786	)	(e)
															281,742		(h)
															(387,705	)	(a)
															(3,267,000	)	(a)
Accumulated other comprehensive (loss) income			500,239				(443,530	)			-				(56,709	)	(a)			-									-									-
Total stockholders’ equity			9,219,413				(1,172,375	)			52,845,448									65,349,484									52,304,957									29,304,957
Total liabilities and stockholders’ equity		$	23,548,195			$	6,380,906			$	77,453,202								$	102,759,290								$	89,714,763								$	66,714,763

See Notes to unaudited Pro Forma Condensed Balance Sheet

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NOTES TO UNAUDITED PRO FORMA CONDENSED BALANCE SHEET

AS OF DECEMBER 31, 2007

The unaudited condensed pro forma balance sheet combines the balance sheets of Sricon, TBL and IGC as of December 31, 2007 assuming that the Acquisition had been completed as of December 31, 2007. The historical balance sheets used in the preparation of the pro forma financial statements have been derived from Sricon’s, TBL’s and IGC’s unaudited financial statements as of December 31, 2007. Pro forma adjustments are necessary to record the accounting for the Acquisition, including a preliminary allocation of purchase price to the estimated fair values of assets and liabilities acquired. No pro forma adjustments were required to conform Sricon’s or TBL’s accounting policies to IGC’s accounting policies. Descriptions of the adjustments included in the unaudited pro forma condensed balance sheet are as follows:

(a)

(i) Reflects the release of IGC’s restricted cash held in trust to cash and cash equivalents as a result of the acquisition for the payment of the purchase prices of Sricon and TBL as well as the payment of unpaid acquisition costs.

Amount released from escrow		$	66,938,208
Described in Note b		$	35,750,000
$2,000,000 for the purchase of CPS from Odeon and $3,000,000 for the purchase of shares from the promoters of Sricon.		$	5,000,000

(ii) Estimated total purchase price is derived as the payment of approximately $35,750,000 in cash.  We have a deposit with CWEL in the amount of $250,000.  The components of the purchase price for Sricon and TBL are summarized as follows:

		Sricon				TBL				Total
New Equity Shares		$	25,750,000			$	6,875,000			$	32,625,000
New Preference Shares			-				3,125,000				3,125,000
Equity Shares Purchased from existing shareholders			3,000,000				-				3,000,000
Preference Shares Purchased from existing shareholders			-				2,000,000				2,000,000
Allocation of estimated acquisition costs			746,941				388,381				1,135,322
		$	29,496,941			$	12,388,381			$	41,885,322

Amount paid for the subscription of new equity shares		$	32,625,000
Amount paid for new preference shares		$	3,125,000
Total shown in Pro Forma		$	35,750,000

 

 

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In accordance with Statement of Financial Accounting Standards, or SFAS, No. 141 “Business Combination”, under the purchase method of accounting, the total estimated purchase price for each Sricon and TBL has been allocated to Sricon’s and TBL’s net tangible and intangible assets based on their estimated fair values as of the date of the consummation of the purchase. The estimated purchase price included on the accompanying unaudited pro forma condensed balance sheet is based on the preliminary allocation of purchase price to the estimated fair values of assets acquired and liabilities assumed, and is subject to material changes upon receipt of the final valuation as described in the introduction to these unaudited pro forma condensed financial statements.  The preliminary estimate of the purchase price allocation, including recognition of goodwill, is as follows:

 

 

			Sricon				TBL				Total
Current assets		$	26,808,187			$	9,676,767			$	36,484,954
Property and equipment, net			3,527,302				1,618,904				5,146,206
Other non current assets			722,373				1,296,530				2,018,903
Goodwill			7,466,211				5,602,478				13,068,689
Short-term borrowings and current portion of long-term debt			(2,482,230	)			(3,184,012)				(5,666,242	)
Other Current liabilities			(3,553,142	)			(1,384,885	)			(4,938,027	)
Long-term debt, net of current portion			(1,426,555	)			(587,374	)			(2,013,929	)
Other non-current liabilities			(1,565,205	)			(650,027	)			(2,215,232	)
Total		$	29,496,941			$	12,388,381			$	41,885,322

 

 

Goodwill is calculated as the difference between tangible and intangible net assets (liabilities) acquired and the estimated purchase price.   In accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” if the management of IGC determines that the value of goodwill or intangible assets with indefinite lives has become impaired, IGC will incur an accounting charge for the amount of impairment during the fiscal quarter in which the determination is made.

(iii) Reflects the elimination of deferred acquisition costs as of December 31, 2007

(iv) Reflects the elimination of each of Sricon’s, TBL’s, and IGC historical capital stock amounts, paid-in capital, treasury stock, accumulated deficits and other comprehensive income and the resulting adjustment to minority interest.  Minority interest is generated as IGC is purchasing 63% and 77% of Sricon and TBL respectively.

(v)

After the consummation of the business transaction we will borrow up to an aggregate of $23 million from our subsidiaries Sricon and TBL.  The interest paid to our subsidiaries would be eliminated in the intercompany eliminations, except for the minority share.  We estimate using an annualized interest of 3%, the minority interest component that would not be eliminated to be about $230,000 for the period of one year.  This amount is not included in the Pro Forma.

(vi)	As part of obtaining investors in the Bridge Loan we agreed to pay Ferris Baker, Watts and Maxim

Group a total of $300,000.  Of this amount, $150,000 is due upon a successful business combination.

(vii)  A total of $170,000 was expensed in the December quarter.  This amount reflects the differed acquisition cost related to the MBL transaction which the Company believes is improbable.

(viii) With respect to the Bridge loan we agreed to compensate the lenders with 550,000 shares of our common stock.  These shares are due at the closing of a successful business combination.  We estimated using the Black-Scholes model the value of these shares to be $3,267,000.

 

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(b) This amount reflects the adjustment to the provision (benefit) for income taxes as a result of net operating losses generated for Federal and State income tax purposes on a combined basis.

(c)

i.

For December 31, 2007: The basic shares include shares sold in the IPO, founder’s shares and shares sold in the private placement and shares awarded to the Bridge Investors.   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, through December 31, 2007, was applied using the treasury method of calculating the fully diluted shares.   The calculation for fully diluted shares includes 2,905,608 shares and excludes 20,468,392 shares from the EPS computations.  In the event that there is maximum redemption, a total of 2,259,770 could potentially be redeemed.  The shares outstanding for the maximum redemption scenario are the shares in the case of no redemption less 2,259,770.  For the third case involving a share purchase from a limited number of our investors, the number of shares bought is calculated at a purchase price of $5.92 per share.

ii.

For FYE March 31, 2007: The basic shares include shares sold in the IPO, founder’s shares and shares sold in the private placement and shares awarded to the Bridge Investors.   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, through March 31, 2007 was applied using the treasury method of calculating fully diluted shares.   The calculation for fully diluted shares includes 2,972,025 shares and excludes 20,401,975 shares from the EPS computations. In the event that there is maximum redemption, a total of 2,259,770 could potentially be redeemed.  The shares outstanding for the maximum redemption scenario are the shares in the case of no redemption less 2,259,770.  For the third case involving a share purchase from a few of our investors, the number of shares bought is calculated at a purchase price of $5.92 per share.

(d) Reflects the repayment of notes payable to the founding stockholders inclusive of accrued interest.

 

(e) Reflects the repayment of notes payable to Oliveira Capital, LLC inclusive of accrued interest.

 

(f) Reflects the payment of deferred compensation due to the underwriters arising from the IPO.

(g) Reflects the payment of acquisition costs inclusive of payments to Ferris, Baker Watts, Inc. and SG Americas Securities, LLC., our underwriters.

(h)

(i) Assuming No Exercise of Redemption Rights

Reflects the transfer of common stock subject to possible conversion and deferred trust interest to common stock, additional paid in capital and retained earnings.

(ii) Assuming Maximum Exercise of Redemption Rights

Reflects the payment of common stock subject to possible conversion and deferred trust interest.

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UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2007

														Pro Forma					Consolidated									Consolidated									Consolidated
		Sricon				TBL				IGC				Adjustments					Assuming No									Assuming									Assuming
																			Exercise of									Maximum									Maximum
																			Redemption									Exercise of									Buy Back of
																			Rights									Redemption									Stock and
																												Rights									and Maximun
																																					Redemption
Revenue		$	16,865,236			$	5,041,565			$	-								$	21,906,801								$	21,906,801								$	21,906,801
Cost of revenue			(10,793,156	)			(3,803,513	)			-									(14,596,669	)								(14,596,669	)								(14,596,669	)
Gross profit			6,072,080				1,238,052				-									7,310,132									7,310,132									7,310,132
Selling, general and administrative expenses			(2,166,116	)			(139,719	)			-									(2,305,835	)								(2,305,835	)								(2,305,835	)
Depreciation			(335,468	)			(356,357	)			-									(691,825	)								(691,825	)								(691,825	)
Operating income			3,570,496				741,976				-									4,312,472									4,312,472									4,312,472
Legal and formation, travel and other start up costs			-				-				(670,534	)								(670,534	)								(670,534	)								(670,534	)
Interest expense			(899,760	)			(326,739	)			(1,284,700	)			46,087		(i)			(2,465,112	)								(2,465,112	)								(2,465,112	)
Interest income			53,393				34,953				1,836,957				249,216		(j)			1,616,033				(406,541	)	(k)			1,209,492				(716,810	)	(k)			492,682
															(558,486	)	(k)
Other Income			32,239				2,733,631				-									2,765,870									2,765,870									2,765,870
Income before income taxes			2,756,368				3,183,822				(118,277	)								5,558,730									5,152,189									4,435,379
Provision for income taxes, net			(560,623	)			(201,672	)			40,026				89,063		(b)			(633,206	)			137,577		(b)			(495,629	)			242,575		(b)			(253,054	)
Income after income taxes			2,195,745				2,982,150				(78,251	)								4,925,524									4,656,560									4,182,325
Provision for Dividend on Preference Stock and its Tax			-				(132,028	)			-									(132,028	)								(132,028	)								(132,028	)
Minority interest															(1,467,954	)	(p)			(1,467,954	)								(1,467,954	)								(1,467,954	)
Net Income		$	2,195,745			$	2,850,122			$	(78,251	)							$	3,325,542								$	3,056,578								$	2,582,343
Net income per share: basic		$	0.75			$	0.66			$	(0.01	)							$	0.23								$	0.25								$	0.31
Net income per share: diluted		$	0.75			$	664.75			$	(0.01	)							$	0.19								$	0.20								$	0.23
Weighted average number of shares outstanding - basic			2,932,159				4,287,500				13,974,500									14,524,500						(c)			12,264,730						(c)			8,379,595
Weighted average number of shares outstanding - diluted			2,946,732				8,037,500				13,974,500									17,430,108						(c)			15,170,338						(c)			11,285,203

 See Notes to unaudited Pro Forma Condensed Statement of Operations

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NOTES TO UNAUDITED PRO FORMA CONDENSED

STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2007

The unaudited pro forma condensed statement of operations for the nine months ended December 31,  2007 combines the unaudited condensed statements of operations of Sricon for the nine months ended December 31, 2007, the unaudited condensed statement of operations of TBL for the nine months ended December 31, 2007 and the unaudited condensed statement of operations of IGC for the nine months ended December 31, 2007, assuming that the Acquisition occurred at the beginning of the periods presented. The historical statements of operations of Sricon, TBL and IGC for the nine months ended December 31, 2007 have been derived from the companies’ unaudited statements of operations for such period.

Descriptions of the adjustments included in the unaudited pro forma condensed statements of operations are as follows:

 

(b) , (c) See page 14 for description.

(i) The amount reflects a decrease in the amount of IGC’s interest expense arising from the retirement of the Founding Stockholder’s notes.

(j) Reflects the reduction of deferred trust interest because of the redemption of common stock.

(k)

 

(i) Assuming No Exercise of Redemption Rights

Reflects a reduction of IGC’s interest income due to the payment of cash to the Promoters and shareholders of Sricon and TBL in connection with the Acquisition and retirement of Founding Stockholder notes, payment of the note payable to Oliveira Capital LLC, acquisition costs and the deferred compensation paid to the underwriters arising from the IPO.  The estimate of reduction in interest income is based on the combined entity having approximately $17,919,925 less in cash and cash equivalents, at an average rate of return consistent with that earned by IGC, of approximately 3.12% for the nine months ended December 31, 2007.

(ii) Assuming  Exercise of Redemption Rights

Reflects a reduction of IGC’s interest income due to the payment of cash to the Promoters and shareholders of Sricon and TBL in connection with the Acquisition and retirement of Founding Stockholder notes, payment of the note payable to Oliveira Capital LLC, acquisition costs and the deferred compensation paid to the underwriters arising from the IPO, payment of common stock subject to possible conversion and deferred trust interest.  The estimate of reduction in interest income is based on the combined entity having approximately $30,964,452 less in cash and cash equivalents, at an average rate of return consistent with that earned by IGC, of approximately 3.12% for the nine months ended December 31, 2007.

(iii) Assuming Share purchase and maximum redemption rights.

Reflects a reduction of IGC’s interest income due to the payment of cash to the Promoters and shareholders of Sricon and TBL in connection with the Acquisition and retirement of Founding Stockholder notes, payment of the note payable to Oliveira Capital LLC, acquisition costs and the deferred compensation paid to the underwriters arising from the IPO, payment of common stock subject to possible conversion, purchase of stock and deferred trust interest.  The estimate of reduction in interest income is based on the combined entity having approximately $53,964,452 less in cash and cash equivalents, at an average rate of return consistent with that earned by IGC, of approximately 3.12% for the nine months ended December 31, 2007.

 

(l) This amount reflects the adjustment to the provision (benefit) for income taxes as a result of net operating losses generated for Federal and State income tax purposes on a combined basis.

 

(p) See page 18 for description.

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UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS

 FOR THE YEAR ENDED MARCH 31, 2007

 

														Pro Forma					Consolidated									Consolidated									Consolidated
		Sricon				TBL				IGC				Adjustments					Assuming No									Assuming									Assuming
																			Exercise of									Maximum									Maximum
																			Redemption									Exercise of									Buy Back of
																			Rights									Redemption									Stock and
																												Rights									and Maximun
																																					Redemption
Revenue		$	10,604,093			$	4,318,000			$	-								$	14,922,093								$	14,922,093								$	14,922,093
Cost of revenue			(8,100,559	)			(2,656,000	)			-									(10,756,559	)								(10,756,559	)								(10,756,559	)
Gross profit			2,503,534				1,662,000				-									4,165,534									4,165,534									4,165,534
Selling, general and administrative expenses			(1,114,548	)			(458,000	)			-									(1,572,548	)								(1,572,548	)								(1,572,548	)
Depreciation			(243,309	)			(207,000	)			-									(450,309	)								(450,309	)								(450,309	)
Operating income			1,145,677				997,000				-									2,142,677									2,142,677									2,142,677
Legal and formation, travel and other start up costs			-				-				(765,047	)								(765,047	)								(765,047	)								(765,047	)
Interest expense			(532,717	)			(1,144,000	)			(103,916	)			41,200		(m)			(1,739,433	)								(1,739,433	)								(1,739,433	)
Interest income			65,874				16,000				3,171,818				32,526		(n)			2,689,114				(620,241	)	(o)			2,068,873				(1,114,904	)	(o)			953,969
															(597,104	)	(o)
Other Income			99,945				532,000				-									631,945									631,945									631,945
Income before income taxes			778,779				401,000				2,302,855									2,959,256									2,339,015									1,224,111
Provision for income taxes, net			(368,485	)			135,000				(784,858	)			178,377		(b)			(839,966	)			211,390		(b)			(628,576	)			316,458		(b)			(312,118	)
Income after income taxes			410,294				536,000				1,517,997									2,119,290									1,710,439									911,993
Provision for Dividend on Preference Stock and its Tax			-				-				-									-									-									-
Minority iinterest															(275,089	)	(p)			(275,089	)								(275,089	)								-
Net Income		$	410,294			$	536,000			$	1,517,997								$	1,844,201								$	1,435,350								$	911,993
Net income per share: basic		$	0.14			$	0.13			$	0.11								$	0.13								$	0.12								$	0.12
Net income per share: diluted		$	0.14			$	0.34			$	0.11								$	0.11								$	0.10								$	0.08
Weighted average number of shares outstanding - basic			2,932,159				4,287,500				13,974,500									13,974,500						(c)			11,714,730						(c)			7,829,595
Weighted average number of shares outstanding - diluted			2,932,159				4,287,500				13,974,500									16,946,525						(c)			14,686,755						(c)			10,801,620

 

See Notes to unaudited Pro Forma Condensed Statement of Operations

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NOTES TO UNAUDITED PRO FORMA CONDENSED

STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED MARCH 31, 2007

The unaudited pro forma condensed statement of operations for the year ended March 31, 2007 combines the audited statements of operations of Sricon for the fiscal year ended March 31, 2007, the audited statement of operations of TBL for the fiscal year ended March 31, 2007 and the audited statement of operations of IGC for the fiscal year ended March 31, 2007, assuming that the Acquisition occurred at the beginning of the periods presented. The historical statements of operations of Sricon, TBL and IGC the fiscal year ended March 31, 2007 have been derived from the companies’ audited statements of operations for such period.

Descriptions of the adjustments included in the unaudited pro forma condensed statements of operations are as follows:

 

(b), (c) See page 14 for description.

(m) The amount reflects a decrease in the amount of IGC’s interest expense arising from the early retirement of the Founding Stockholder’s notes.

(n) Reflects the reduction of deferred trust interest because of the redemption of common stock.

(o)

 

(i) Assuming No Exercise of Redemption Rights

Reflects a reduction of IGC’s interest income due to the payment of cash to the Promoters and shareholders of Sricon and TBL in connection with the Acquisition, retirement of Founding Stockholder notes, early repayment of notes payable to Oliveira Capital LLC, acquisition costs and the deferred compensation paid to the underwriters arising from the IPO, payment of common stock subject to possible conversion and deferred trust interest.  The estimate of reduction in interest income is based on the combined entity having approximately $12,318,014 less in cash and cash equivalents, at an average rate of return consistent with that earned by IGC, of approximately 4.85% for the fiscal year ended March 31, 2007.

(ii) Assuming Maximum Exercise of Redemption Rights

Reflects a reduction of IGC’s interest income due to the payment of cash to the Promoters and shareholders of Sricon and TBL in connection with the Acquisition, retirement of Founding Stockholder notes, early repayment of notes payable to Oliveira Capital LLC, acquisition costs and the deferred compensation paid to the underwriters arising from the IPO.  The estimate of reduction in interest income is based on the combined entity having approximately $25,113,325 less in cash and cash equivalents, at an average rate of return consistent with that earned by IGC, of approximately 4.80% for the fiscal year ended March 31, 2007.

(iii) Assuming Share purchase and maximum redemption rights.

Reflects a reduction of IGC’s interest income due to the payment of cash to the Promoters and shareholders of Sricon and TBL in connection with the Acquisition and retirement of Founding Stockholder notes, payment of the note payable to Oliveira Capital LLC, acquisition costs and the deferred compensation paid to the underwriters arising from the IPO, payment of common stock subject to possible conversion, purchase of stock and deferred trust interest.  The estimate of reduction in interest income is based on the combined entity having approximately $48,113,325 less in cash and cash equivalents, at an average rate of return consistent with that earned by IGC, of approximately 4.85% for the fiscal year ended March 31, 2007.

 

(p) Represents the minority interest of the Promoters of Sricon and TBL.

 

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ADDITIONAL RISK FACTORS

 

 

You should carefully consider the following additional risk factors, together with all of the other information included in this Supplement, along with the risk factors and other information contained in the Proxy Statement, before you decide whether to vote or instruct your vote to be cast on the proposals described in the Proxy Statement. We make various statements in this section, which constitute “ forward-looking statements.” See “Forward-Looking Statements” in the Proxy Statement. We refer to Sricon Infrastructure Private Limited as Sricon and Techni Bharathi Limited as TBL.

 

 

RISKS ASSOCIATED WITH THE ACQUISITIONS AND OUR BUSINESS

 

If we are unable to repay the loans from Sricon and TBL when due, they may have difficulty competing for future large build, operate and transfer (“BOT”) contracts.

 

We believe that Sricon and TBL will ultimately require the full amount of the purchase prices we are paying to them in connection with the Acquisition Proposal in order to expand their operations and the scope of BOT contracts on which they can bid. If we are unable to repay the loans on time, Sricon and TBL may be required to find alternatives sources of funding for such expansion, and the costs and timing of obtaining such funding may make it more difficult for these companies to expand the scope of BOT contracts for which they can compete.

 

RISKS RELATED TO THE ACQUISITION PROPOSAL

 

If we are unable to consummate the Acquisition Proposal by March 8, 2008 we will be forced to liquidate.

 

If we do not effect a business combination by March 8, 2008, we will dissolve and promptly distribute only to our public stockholders the amount in our trust account inclusive of the $1,769,400 attributable to the underwriters’ non-accountable expense allowance, plus any remaining net assets. If we are unable to consummate the Acquisition, we do not believe that we will be able to effect another business combination by March 8, 2008.

 

Our directors may have certain conflicts in determining to recommend the Acquisition Proposal, since certain of their interests, and certain interests of their affiliates and associates, are different from, or in addition to, your interests as a stockholder.

 

IGC’s management and directors have interests in and arising from the Acquisition Proposal that are different from, or in addition to, your interests as a stockholder, which could result in a real or perceived conflict of interest. These interests include the fact that certain of the shares of common stock owned by our management and directors, or their affiliates and associates, would become worthless if the Acquisition Proposal is not approved and we otherwise fail to consummate a business combination prior to our liquidation date and that our chairman of the board is entitled to receive additional shares of common stock if we consummate a business combination prior to our liquidation date under the terms of a loan he made to us.  Furthermore, if we do not consummate the business combination, we may not have sufficient assets available to repay the loan made by our chairman.

 

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RISKS RELATED TO THE USE OF LOAN PROCEEDS TO REPURCHASE OUR SHARES

 

Our stockholders may have claims against us with respect to the use of loan proceeds to repurchase our shares.

 

The prospectus for our initial public offering does not expressly provide that we may use funds to repurchase shares of our capital stock.  The prospectus expressly provides that any remaining proceeds from the public offering after effecting a business combination shall be used to finance the operations of the target businesses, which may include subsequent acquisitions. While we do not intend to use funds raised in our public offering for the share repurchase, there may be stockholders that take the view that since our prospectus did not contemplate any such repurchases, our effecting such repurchases with borrowed funds could be deemed inconsistent with our prospectus.  Stockholders may also take the view that, notwithstanding the fact the amount of the repurchases will not exceed the amount of the borrowed funds, we are in effect using the excess proceeds of the public offering for the share repurchase in violation of our representations in the prospectus.  In addition, since we anticipate repurchasing the shares at a price approximately equal to the price payable to a stockholder upon conversion of their shares into cash if the Acquisition Proposal is approved, stockholders may assert that the shares so repurchased be aggregated with shares that stockholders elect to convert into cash to determine whether sufficient shares have elected conversion to preclude us from consummating the Acquisition.  If a stockholder chose to bring such claims in court and was successful, they may be entitled to rescission (under which a successful claimant has the right to receive the total amount paid for his or her shares pursuant to an allegedly deficient prospectus, in this instance $6.00 per share, plus interest and less any income earned on the shares and any amount received from sale of the originally-attached warrants, in exchange for surrender of the shares) or damages (compensation for loss on an investment caused by alleged material misrepresentations or omissions in the sale of the security). Such claims may entitle stockholders asserting them to more than the pro rata shares of the Trust Account to which they are entitled on conversion or liquidation. Because of our current financial condition, we have not made or requested from our advisors a formal comprehensive analysis of our potential liability for any such claims.  We cannot predict whether stockholders will bring such claims, how many might bring them or the extent to which they might be successful. Moreover, attendant litigation could result in delay in payments to our public shareholders of Trust Account funds on conversion of their shares or liquidation of IGC and in added costs to us in defending such litigation.

 

We may issue equity securities in a private placement, which would dilute your equity interest in us.

 

While we may receive revenue from the target businesses or proceeds from the exercise of our warrants, we may need to raise additional capital to repay the loans from Sricon and TBL.   We may raise all or a portion of such financing by the sale of equity securities or the sale of debt securities with an equity feature.  The issuance of any additional equity securities would dilute your equity position in us.  The issuance of any additional equity securities, including the exercise of warrants, would dilute your equity position in us.

 

 

FORWARD-LOOKING STATEMENTS

 

     We believe that some of the information in this supplement constitutes forward-looking statements within the definition of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as “may,” will,” “should,” “believes,” “expects,” “intends,” “anticipates,” “thinks,” “plans,” “estimates,” “seeks,” “predicts,” “potential” or similar words or the negative of these words or other variations on these words or comparable terminology. You should read statements that contain these words carefully because they discuss future expectations, contain projections of future results of operations or financial conditions or state or other forward looking information.

 

     While we believe it is important to communicate our expectations to our stockholders, there may be events in the future that we are not able to accurately predict or over which we have no control. The risk factors and cautionary language discussed in this supplement provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described by us in our forward-looking statements, including among other things:

 

    ·  The number of our stockholders voting against the Acquisition Proposal.

 

    ·  Our ability to win licenses, contracts and execute.

 

 

     You should be aware that the occurrence of the events described in these risk factors and elsewhere in this supplement could have a material adverse effect on our business, financial condition and results of operations.

 

     You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this supplement.

 

     All forward-looking statements included herein attributable to us or any person acting on either party’s behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this supplement or to reflect the occurrence of unanticipated events.

 

     Before you grant your proxy or instruct how your vote should be cast or vote on the proposals described in this proxy statement, you should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this supplement could have a material adverse effect on us.

 

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OUR SPECIAL MEETING

DATE, TIME AND PLACE

The special meeting of the stockholders of IGC will now be held at 10:00 a.m., Eastern Time, on Thursday, March 6, 2008, at the offices of Seyfarth Shaw, LLP, 815 Connecticut Avenue, N.W., Suite 500, Washington, D.C. 20006-4004. The matters to be voted on at the meeting and the record date remain unchanged.

 

HOW TO VOTE OR CHANGE YOUR VOTE

 

 

After carefully reading and considering the information contained in the Proxy Statement and this supplement, if you have not yet voted on the matters to be considered at the special meeting or wish to change your vote, please complete and sign the enclosed proxy card. Then return the enclosed proxy card in the return envelope provided herewith as soon as possible, so that your shares may be represented at our special meeting.  For further details regarding voting your shares, including alternatives to utilizing the proxy card, and changing or revoking a previously delivered proxy, please see “Our Special Meeting – Voting Your Shares” and  “Our Special Meeting – Revoking Your Proxy” in the Proxy Statement.

 

 

WHERE YOU CAN FIND ADDITIONAL INFORMATION

 

 

We file reports, proxy statements and other information with the SEC as required by the Securities Act of 1933. You may read and copy reports, proxy statements and other information filed by us with the SEC at the Securities and Exchange Commission public reference room located at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. You may also obtain copies of the materials described above at prescribed rates by writing to the Securities and Exchange Commission, Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.

 

 

We file our reports, proxy statements and other information electronically with the SEC. You may access information on us at the SEC web site containing reports, proxy statements and other information at: http://www.sec.gov. If you would like additional copies of this supplement, or if you have questions about the Acquisition Proposal, you should contact:

 

 

India Globalization Capital, Inc.

4336 Montgomery Avenue

Bethesda, Maryland 20814

Phone: 301-983-0998

 

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