India Globalization Capital, Inc. (Amex: IGC.U - News), (Amex: IGC.WS - News), (Amex: IGC - News), a company developing infrastructure in India, announced today that its Indian subsidiary, Sricon Infrastructure Private Ltd., was awarded a $103 million construction contract from Hindustan Steelworks Construction Limited (HSCL) for the construction of rural roads in the state of Madhya Pradesh (MP). The work is expected to commence in the second fiscal quarter of 2008 and continue for a period of three years. This latest contract increases the company's backlog of orders through its subsidiaries from about $246 million to about $349 million. Madhya Pradesh (MP) is India's 7th most populous state and is geographically located in the center of the country.
Sricon, based in Nagpur, Maharashtra, has engaged in civil engineering construction activities since 1974, with a core focus on highway and heavy construction. This construction contract adds to the company's growing pipeline of activities, which include road widening projects and industrial infrastructure development of power plants and water supply systems, as well as mining and quarrying activities. The contract to build rural roads was awarded by Hindustan Steelworks Construction Limited (HSCL), a Government of India enterprise. It consists of building around 150 miles of roads with around 33 bridges and culverts. Most of our work will be around 90 miles from Sricon's head quarters in Nagpur.
According to the World Bank, about 40 percent of villages in India do not have all-weather roads and remain cut off during the monsoon season. As part of a fairly massive effort to modernize Indian infrastructure and reach beyond major metro areas to the populations in rural areas, the Government of India has articulated a plan to build over 228,000 miles of new rural roads and upgrade an additional 230,000 miles of existing rural roads at a cost of around $26 billion. The rural road-building program is called Pradhan Mantri Gram Sadak Yojana (PMGSY).
"We are excited to work with HSCL to bring present day opportunities to a large part of the Indian population by improving basic infrastructure. Our efforts to help modernize key areas of India are beginning to take shape as we are also in various stages of contract renewals and contract tendering, with bids out for the construction of roads, highways, bridges, overpasses, as well as civil engineering and construction of high-temperature cement and steel plants. Our companies, Sricon and TBL, have an established track record of winning contracts. We have bids out on over $360 million worth of additional work and we look forward to playing a key role in other critical construction jobs throughout the country," Said Ram Mukunda, CEO of IGC.
"Sricon brings forth a long history of supporting the growth of major cities throughout India. Their ability to quickly and effectively build new roads in these villages makes them a strong partner as we continue to advance our efforts to improve the entire infrastructure of these areas. We are very pleased to work with IGC and look forward to making a real impact in the lives of people living in the rural parts of MP," Said K. Parthasarathy, Chairman and Managing Director of HSCL.
Based in Bethesda, Maryland, IGC operates through two infrastructure companies in India, Sricon Infrastructure Private Limited ("Sricon") and Techni Bharathi, Limited ("TBL"). IGC owns sixty-three percent of Sricon and seventy-seven percent of TBL. IGC has three core competencies: 1) Highway and other heavy construction, 2) Mining & quarrying and 3) Civil construction and engineering of high temperature plants. The Company's medium term plans are to expand each of these lines of business.
Most of IGC's operations are based in India. The company has offices in Maryland, Mauritius, Nagpur, Cochin, Delhi and Bangalore. Copies of the Form S-3 and IGC's other filings with the SEC containing information about IGC, our Indian operations and other relevant documents, are available at no charge at the SEC's Internet site.
Hindustan Steelworks Construction, Limited (HSCL) is a Government of India Public Sector undertaking under the Indian Ministry of Steel. HSCL began in 1965 with the objective of building an expertise in the construction of steel plants. It has grown well beyond the construction of integrated steel plants and diversified its activity to the construction of infra structure and heavy industrial construction including roads, bridges, power, coal, mining, oil refineries, dry dock, railways, airports, etc. It is credited with building the highest multi-flue chimney in Asia. The company maintains a website.
The Government of India maintains a website for PMGSY.
This press release may contain forward-looking statements. These statements reflect management's current views and are subject to risks and uncertainties that could cause actual results to differ materially from those projected, expressed or implied in these statements. Factors, which could cause actual results to differ, relate to: (i) the ability of the parties to successfully execute on the contracts and business plan, (ii) our ability to raise additional capital and the structure of such capital including the exercise of warrants, and (iii) changes in the exchange rate between the US dollar and the Indian Rupee. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Other factors and risks that could cause or contribute to actual results differing materially from such forward looking statements have been discussed in greater detail in the company's definitive proxy statement and supplement filed with the SEC and incorporated by reference into the Form S-3.