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  • India Globalization Capital, Inc. (IGC) Announces Profitable Third Quarter 0 comments
    Feb 14, 2013 2:43 PM | about stocks: IGC

    India Globalization Capital has announced financial results for the third quarter ending Dec. 31, 2012.

    "We are pleased to report profitability this quarter due to our considerable efforts to realign and focus our equipment, processes and people on the iron ore mining business, cut costs from unprofitable construction contracts and renegotiate or extinguish expense liabilities and debt," said Ram Mukunda, CEO of India Globalization Capital. "Our revenues for the quarter rose dramatically to nearly $4 million, and we achieved earnings of $0.01 per share."

    The company's total revenue was $3,933,906 for the three months ending Dec. 31; this is compared with $986,799 for the corresponding time period of 2011. This revenue increase resulted from a rise in trading activity as the company gears up for production in its mines. One revenue component of $802,746 was the result of closing out a construction contract that TBL, the company's Indian subsidiary, was engaged in. In the next fiscal year beginning in April, TBL projects that revenue and margins will rise as iron ore prices are expected to trend up from increased infrastructure activity in China, India, the U.S., and other locations across the globe. It is the company's current expectation to begin purchasing low-grade iron ore after the Chinese New Year and winter and to begin transporting it to plants for further beneficiation and sale to customers. IGC has four mines in Inner Mongolia and three beneficiation plants with more than $500 million in estimated reserves measured at $125 per ton.

    During the three months that ended Dec. 31, IGC reported a GAAP net income of $310,892 and a GAAP EPS of $0.01 per share, as contrasted with a consolidated net loss of $1,901,375 and a GAAP EPS loss of $0.09 for the same three-month period of 2011. The substantial earnings shift is due to four factors: a significant cut in SG&A as the company aligns its resources for mining and trading; redeployment of construction equipment for mining; a marked decrease in high interest loans and liability; and a rise in iron ore trading revenue as well as revenue associated with the closure of a construction contract. As IGC beneficiates iron ore by converting low-grade iron ore to high-grade iron ore - in an environment where iron prices are trending higher - the arbitrage between low- and high-grade iron ore will increase and drive the company's margins and earnings higher. IGC has put a great deal of energy into aligning its resources and integrating its mining business, and the company predicts that, based on current iron ore pricing trends, its next fiscal year will be profitable.

    IGC's selling, general, and administrative expenses for the period ending Dec. 31 were $153,789, as compared with $968,890 for the same period in 2011. The company has significantly cut employees and overheads and eliminated recurring contracts associated with construction activity.

    IGC's cash and cash equivalents, along with restricted cash, was around $2.1 million for the period ending Dec. 31. The company's stockholders' equity was around $15.6 million as of Dec. 31, as compared with around $15.8 million for the period ending March 31, 2012.

    The company's total reported assets were around $21.4 million as of Dec. 31, compared with around $25.3 million as of March 30, 2012.

    "We are now filling orders from our Chinese customers through our trading operations," said Mukunda. "We expect to increase this activity as we expand our suppliers beyond India and China. In the future, the lower margin trading business is expected to transition to higher margins as we supply high-grade iron ore from our beneficiation plants. As reported in Bloomberg, in September 2012 China approved $158 billion for infrastructure as part of a stimulus plan that is expected to boost the demand for commodities. Iron ore prices have started to recover from their lows of $86 per ton in September 2012 to around $125 per ton. We have about $500 million of iron ore deposits, four mine sites, and three beneficiation plants. Our short term strategy is three-pronged: 1) Start supplying high grade iron ore from our beneficiation plants; 2) Expand the supply chain for raw materials beyond India and China; and 3) Actively look at consolidating more mines in the Inner Mongolia region that can be accretive to the company."

    For more information, visit www.indiaglobalcap.com

    Sign up for "The Mission Report" at www.MissionIR.com

    Stocks: IGC
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