Bethesda, Maryland, Sept. 13, 2012 (GLOBE NEWSWIRE) -- India Globalization Capital, Inc. (NYSE MKT:IGC) (NYSE Amex: IGC), a company competing in the rapidly growingmaterials industry in India and China, announced that it isrestructuring its rock aggregate business. As previously announced, we have been reviewingour rock aggregate assets in India in order to streamline thebusiness and enhance shareholder returns. Today, as a part ofthat review, IGC announces that it has successfully restructuredits two rock aggregate crushers, cutting our annualized fixed costsby approximately $600,000. Ram Mukunda, CEO of IGC said, "Our two rockaggregate crushers have been operating well for the past severalyears. We have spent considerable time and resourcesdeveloping this business. However, we expect uncertainty inthe regulatory environment that could hurt the business in themedium term. We have therefore decided that it isstrategically better to close the two existing crushers, end thejoint venture in Nagpur, lease out some of the equipment, andredeploy the remaining resources to the iron ore business. With the acquisition of iron ore beneficiation plants and miningassets in China that have about $550 million of high grade orereserves, our priority is the iron ore business." The Indian government recently declared thatrock aggregate is a minor mineral not subject to royaltyrefund. This action will dramatically reduce the operatingmargin for all rock aggregate operators. Further, thegovernment has ruled that crushers within a 25 km radius of Nagpurwill have to be moved. As a result, IGC's 49% joint venturecrusher in Nagpur will eventually have to be moved to anothermining site. This move would entail the deployment ofsignificant new capital that would not generate satisfactoryreturns. By being proactive on restructuring the rockaggregate crushing business, we maintain flexibility with theequipment and stay ahead of any impending regulatory changes thatcould adversely affect our business.
We believe that the iron ore business in Indiawill soon become viable again. The Supreme Court in Indiarecently allowed the reopening of 18 mines in Karnataka. Itis expected that more mines will also be reopened. Further,the government has said that it expects to reduce the export dutyon iron ore, which would make Indian ore more competitive in theglobal markets. Mukunda added, "We are gearing up for theeventual opening of this market with a view towards leveraging ourstrategic positioning in both India and China."Once fully operational, our three-beneficiationplants in China can generate an aggregate of 200,000 to 250,000tons of refined ore per year. Prices for iron ore arecurrently about $100 per ton with an expectation that they willincrease by the end of the year. Once fully integrated andoperating efficiently our projection is to generate a net income ofabout 20%. We expect to enhance these volumes with low gradeore shipped from India, which will be processed into high grade orein our beneficiation plants. Mukunda concluded, "We still seestrong demand for steel in Northern China and believe that ourstrategy of positioning the company on building iron ore assetswill create significant shareholder value." About IGC: Based in Bethesda, Maryland, India GlobalizationCapital (IGC) is a materials and infrastructure company operatingin India and China. We currently supply Iron ore toSteel Companies operating in China. For more informationabout IGC, please visit IGC's Web site at www.indiaglobalcap.com. Forinformation about Ironman, please visit www.hfironman.com. Forward-looking Statements: Some of the statements contained in this pressrelease that are not historical facts constitute forward-lookingstatements under the federal securitieslaws. Forward-looking statements can be identified bythe use of the words "may," "will," "should," "could," "expects,""post", "plans," "anticipates," "believes," "estimates,""predicts," "intends," "potential," "proposed," "confident" or"continue" or the negative of those terms. Theseforward-looking statements are based on the existing beliefs,assumptions, expectations, estimates, projections andunderstandings of the management of IGC concerning PRC Ironman withrespect to future events at the time these statements aremade. These statements are not a guarantee of futuredevelopments and are subject to risks, uncertainties and otherfactors, some of which are beyond IGC's control and are difficultto predict. Consequently, actual results may differmaterially from information contained in the forward-lookingstatements as a result of future changes or developments in ourbusiness, our competitive environment, infrastructure demands, Ironore availability and governmental, regulatory, political, economic,legal and social conditions in China.
Factors that could cause actual results todiffer, relate to the (i) ability of IGC to successfully execute oncontracts and business plans, (ii) ability to raise capital and thestructure of such capital including the exercise of warrants, (iii)exchange rate changes between the U.S. dollar, the Chinese RMB andthe Indian rupee, (iv) weather conditions in China and India, (v)uncertainties with respect to the People's Republic of China'slegal, regulatory and licensing environment, and (vi) ability ofthe Company to access ports on the coasts ofIndia. Readers are cautioned not to place undue relianceon these forward-looking statements. The Companyundertakes no obligation to publicly update any forward-lookingstatements, whether as a result of new information, future events,or otherwise. Other factors and risks that could cause orcontribute to actual results differing materially from suchforward-looking statements have been discussed in greater detail inIGC's Schedule 14A and Form 10-K for FYE 2012 filed with theSecurities and Exchange Commission on December 9, 2011 and on July16, 2012, respectively.
CONTACT: Investor Relations Contact: Mr. John Selvaraj 301-983-0998