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India Globalization Capital Snips Stake In Sricon

By Pallavi S

  • 11 Feb 2010

American Stock Exchange-listed blank cheque firm India Globalization Capital (IGC), that owns stake in infrastructure and materials companies operating in India, has reduced stake in one of the portfolio companies by eliminating a previous debt taken from the firm to focus on its other subsidiary.

IGC has reduced stake in Sricon from 63% to 22% and has said it will look to exit the company in the future while concentrating on its other firm Techni Bharathi Ltd (TBL) where also it owns a majority stake.

The transaction is more of an accounting work. IGC had, in March 2008 bought 63% of Sricon for $30 million and subsequently borrowed approximately $17.9 million from the company. It has now eliminated the debt to Sricon and proportionately reduced ownership in the company.

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Post restructuring, IGC’s balance sheet will have total assets of approximately $36 million against total liabilities of approximately $12.5 million including $5.1 million in interest bearing debt. Its book value at the end of the quarter ended December’09 (including the minority interest in Sricon) is approximately $23.5 or about $1.82 per basic share.

Maryland-based IGC has three core businesses: highway and heavy construction, mining & quarrying, and civil construction and engineering.

Ram Mukunda, CEO of Indian Globalization Capital, said in a statement, the plan for next 12 months is to focus on: executing construction business primarily through TBL to increase contracts for infrastructure build-out in India and pursue collection of claims for work done for TBL clients worth $22 million; increasing production from rock quarries and; leveraging shipping hub and logistics for the increasing sale of iron ore mined in India and shipped through its facilities to meet the growing demand in China.

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For the third quarter of fiscal year 2010 ended December 31, 2009, IGC had total revenue of $5.9 million compared to $3.8 million in the year ago period (even as the Sricon’s business is not accounted for in the last quarter).

In the same period, IGC reported consolidated net loss of $6.2 million(inclusive of a one-time non-cash charge of $6 million), compared to a consolidated net loss of $2.3 million for the three months ended December 31, 2008.

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