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On September 26, I ran across this little article. It begins, “Shares of India Globalization Capital Inc. (IGC) soared 27% in active premarket trade Wednesday, after the Maryland-based infrastructure and cannabis pharmaceutical company said...” anything. An Indian capital company, based in Maryland, whose business is infrastructure and cannabis exists. It could have said literally anything and made me curious.

Unable to let my ensuing flash flood of questions roll off like raindrops from a platypus's back, I had to find out what this company… was. I bought a few shares along the way; turns out I like at least one of their products. 48 hours later, those shares were up 67% and the market cap sat at well over $200 million. Why?

The above-linked article says the company has agreed “to distribute ‘Nitro G’”. But it doesn’t say what Nitro G is (besides “energy drink”), who makes it, or how to find out more. IGC’s own press release about the deal doesn’t say any of that either. Far as I can find, neither does anyone in the whole internet (don’t bother seeing here, here, here, or here for unhelpfully similar regurgitations of the same press release). It sure sent their stock price soaring, though. So… what is Nitro G, and for the love of money, what is IGC?

Business Lines
Thankfully, the company seems to be aware that they’re… different. As soon as you land on their website, they mercifully start explaining themselves:

WE HAVE TWO BUSINESSES:


1) THE FIRST IS A LEGACY INFRASTRUCTURE BUSINESS THAT CONSISTS OF HEAVY EQUIPMENT RENTAL, REAL ESTATE MANAGEMENT, AND TRADING COMMODITIES LIKE ORE AND BUILDING MATERIALS. MOST OF THIS BUSINESS IS CONDUCTED IN OUR SUBSIDIARY TBL.


2) THE SECOND IS A U.S. BASED CANNABIS PHARMACEUTICAL BUSINESS FOCUSED ON USING CANNABIS EXTRACTS FOR THE TREATMENT OF MANY DISEASES: IGC PHARMA

Interestingly, I haven’t been able to access the infrastructure website. Every time I’ve tried, in both Chrome and Edge, I get this:

The pharma business’s website, however, seems to be alright. At the top of the homepage you can find the company’s 2018 letter to investors and friends. In that letter, CEO Ram Mukunda acknowledges, “So much is converging for IGC all at the same time… this is an appropriate time for us to update our investors and friends with an accurate… status report.” After suggesting that we “set aside some time and a comfortable reading spot”, he gets down to business--though, because the letter was posted before the Nitro G deal was announced, he of course doesn’t mention it.

Following is a rundown of IGC as a company and my reasons for buying in, albeit with the most speculative of funds. The rundown is broken into three main sections: the legacy infrastructure business (hold); Hyalolex, IGC’s flagship cannabis product (buy); Nitro G (sell or hold). So set aside some time and a comfortable reading spot and let’s join our new friend Ram Mukunda in getting down to… whatever his platypusesque business is.

Legacy Infrastructure
The legacy infrastructure business has two arms: heavy equipment rental in India through their subsidiary Techni Bharathi Private Ltd (“TBL”), and commodities trading in Hong Kong through TBL’s subsidiary IGC Enterprises Ltd.

It used to have a third arm, Cabaran Ultima, which managed real estate in Malaysia. They’ve shut down that business and are now working on selling Cabaran. According to their most recent 10-K, “During the fiscal year 2018, we streamlined our legacy infrastructure business to infrastructure commodity trading, and heavy equipment rental.”

Techni Bharathi Private Ltd (“TBL”)
Page 17 of the 10-K mentioned above says TBL supplies “equipment and operators to construction companies. This business is very small and limited to the city of Kochi in Kerala, India. In fiscal year 2018 we have three customers all of which are construction companies.”

As it turns out, Kochi--colloquially known as the Queen of the Arabian Sea--is a pretty good city to limit an infrastructure equipment business to. In August 2018, the S&P 400 component JLL (JLL) named it “the top future mega city of India” because of “its strong economic fundamentals, current and proposed infrastructure and growth in real estate in the last few years.” IGC’s goal for TBL “is to maintain annual revenue of $3 to $5 million and focus on growing margin by reducing the cost of money and by modest investments in heavy equipment.”

It’s hard to say very much about the history of IGC’s infrastructure business for a number of reasons. One of them is that over the years, they have reorganized so many parts of this business so many times that it’s tantamount to unfollowable. For example(s): They have bank accounts in Mauritius, India, Hong Kong and Malaysia in addition to the US; they have a non-operating subsidiary called IGC Mauritius which in turn owns four subsidiaries--five until 2017, when they moved TBL from IGC Mauritius’s umbrella to IGC’s; they have three other “non-operating subsidiaries [which] don’t have a material impact on the balance sheet or statement of operations.” And so on.

The second reason it's hard to talk about their operating history is the fact that the IGC website offers SEC filings dating back only to 2016 even though the company went public in 2007. Finally, they seem genuinely unexcited about their infrastructure business and so don’t say much about it, at least compared to their cannabis business.

For me, the infrastructure business, which is pretty much conducted within the TBL subsidiary these days, is a hold. It’s not a sell because they streamlined it in 2017/18 by exiting pretty much all of it except equipment rental and commodities trading, and the equipment arm of it operates in a very fertile city for its types of activities.

IGC Enterprises (“IGC-E”)
This subsidiary of TBL is IGC’s commodities trader, based in Hong Kong. It seems intended to be a compliment to TBL’s activities: “our differentiation is based primarily on price and industry knowledge of commodity requirements for infrastructure projects.”

The 10-K says that when it comes to buying, IGC-E is opportunistic and will work with traders from any South Asian country. When they buy, it’s generally for four principle customers. Also, “For the level of business and the value of each trade, the number of customers we have is adequate and does not constitute inordinate customer risk. We limit our exposure by contractually ensuring that every purchase has a vetted legitimate buyer and ensuring rapid closing of transactions.”

Infrastructure Conclusion
It looks to me like IGC is working hard to simplify their infrastructure business, which gives me hope that soon, it will be easy to follow--or at least easier than it is now--and profitable enough to justify itself and help fund the cannabis business. I get the impression that they would have left this business like they left Cabaran if they didn’t have what they feel is a pretty good thing going with somewhere between four and seven regular customers between equipment rental and trading. If they can achieve their goal of maintaining revenue of $3 million to $5 million a year, this could turn into a nice “set-it-and-forget-it” situation that provides some extra cash to the parent company every year.

Cannabis
IGC’s entry into the cannabis space occurred in late 2013 when they acquired a patent and its accompanying data from the University of South Florida (“USF”). Since then, they’ve begun two new cannabis projects: a blockchain-based network and the Nitro G deal.

Hyalolex
IGC owns eight patents as of this writing, two of which relate to Hyalolex. To understand Hyalolex, we first have to understand something about Alzheimer’s, which is the first condition Hyalolex is intended to treat.

Alzheimer’s begins 15 to 20 years before symptoms appear, with a slow buildup of plaques and tangles. “Plaques” are fragments of protein which are normally broken down and eliminated from the body; in an Alzheimer’s brain, they aren’t broken down and instead accumulate between nerve endings, impairing neural function. “Tangles” are protein fibers that have gotten twisted around microtubules in the brain; eventually, they cause those microtubules to collapse.

The original Hyalolex patent was filed after Dr. Chuanhai Cao and his team at USF found not only that microdoses of THC reduce the buildup of plaques and tangles, but also that at such small doses, “THC is non-toxic to neurons, a finding that is contrary to massive amounts of research and data showing that THC is neurotoxic at normally ingested levels.” Once IGC owned that first patent, they formulated it into a liquid “that will not cause inebriation”, which they codenamed IGC-AD1. This became their second patent on Hyalolex.

They then began working out their marketing campaign for it, which they named “Drops of Clarity.” The word “hyalolex” comes from the Greek word hyalo, meaning roughly “clear” and the Greek word lex, meaning roughly “words”.

“Drops of Clarity”
IGC’s marketing plan for Hyalolex is described fairly well in several places, including an interview with Ram Mukunda.

Like the company itself, the marketing plan for Hyalolex broadly has two arms: dispensaries and the FDA. Getting a new drug through the FDA’s gauntlet of paperwork takes years and huge money. Therapix (TRPX) is a company that’s basically betting its whole future on making it through that gauntlet before it runs out of money. GW Pharmaceuticals (GW) made big news recently when they became the first company to accomplish such a feat with a cannabis-derived drug.

So to fund their FDA effort, IGC will get Hyalolex into dispensaries, starting with the ones in California. They’ve also already entered into a Memorandum of Understanding with German distributor MediCann. From the stockholders letter:

Rather than conducting a nationwide launch, we are deliberately entering one market at a time, at least for now. It allows us to focus on  understanding a market and how we can maximize our value to our audiences, including patients, caregivers, docs and dispensaries.

Given IGC’s history of rampant repositioning and reorganizing, I find the above excerpt comforting. They’re being careful to get it right this time, and they’re moving slowly so that whatever changes they have to make along the way will be (relatively) easy to execute without disrupting huge amounts of progress.

Starting small will also make it immensely easier to build out their blockchain-based “universal cannabis platform applicable to solving multiple industry challenges”. The idea here is that growers, dispensaries, customers, and whatever other relevant parties have so far been plagued by “transactional difficulties, inadequate product labeling, [and problems with] product identification assurance ("PIA") and product origin assurance”. This platform would provide a way to synthesize everyone’s information and bring about some order. Information on this project is sparse so far, but if it works, IGC could become an important cannabis technology company.

Hyalolex Conclusion
I like Hyalolex. It’s still speculative, but it seems realistic. I’m willing to bet on it for at least four reasons:

It seems to really work.

It came from novel research, which IGC has exclusive rights to.

The company is bringing it to market carefully and consciously, with the intention to learn everything they can from the process. This will make future product launches easier and faster.

Once they can fund the application process, an FDA-approved pharmaceutical product seems realistic.

Nitro G
Finally, we come to the deal that put IGC on my radar. What is Nitro G? Who makes it? Why did it spike share prices? Why has (apparently) no one answered any of these questions? Here’s what I've found.

Liquid Nitro is an energy drink company founded in 2006. Their product lineup includes at least three varieties that come in two-serving cans and at least four varieties of “shooter” (think 5-Hour Energy). Nitro G will be a new, “hemp/CBD-infused” Liquid Nitro product, though there doesn’t seem to be a mention anywhere of whether it will be in a can or a shooter.

On both their website and their... other website… Liquid Nitro displays evidence of a few sponsorships they’ve gathered, all for sports that you feel like doing when you’re hopped up on energy drinks (racing, fighting, skating). As of this writing, they don’t seem to mention the IGC deal anywhere, not even on their News page.

With the possible exceptions of their sports sponsorships, it looks like Liquid Nitro’s marketing is pretty dismal--despite naming two marketing companies as partners. Both their (redundant?) websites are tacky and incomplete, and so is their Facebook. It seems like no wonder I’d never heard of them, and no wonder that no one seems to know what Nitro G is. Frankly, they might have more to gain from this deal than IGC--which is a shame if it’s true because IGC paid 797,000 shares of stock to land the deal.

Nitro G Conclusion
Still, I am (very cautiously) optimistic about the Nitro deal because of how IGC has been handling Hyalolex. They seem to know how to take a product with zero recognizability and and give themselves at least a respectable chance of making it profitable. Also, this could be a way to get into recreational cannabis stores. I wouldn’t be shocked if that turned out to be one of the main reasons they made this deal. To me, IGC’s Nitro G business starts out as a weak hold or a sell.

Conclusion Conclusion: Buy or Sell?
I say buy a little with money you can stand to lose, if the platypus that is IGC intrigues you. That is, if you’ll enjoy following its story. If you won’t, then by all means, go invest in a different cannabis stock that’s more… normal. Keep in mind, this was a penny stock relatively recently. As we all know, microcap companies are extra risky.

Personally, I’m curious enough to stick around for a while. What in the actual world are they going to do with TBL? Will Hyalolex work out? Will their “universal cannabis platform” change the industry for the better? And of course, what were they thinking when they took the Nitro G deal? We’re all looking for reasons to feel lucky that we were alive and investing when the cannabis industry went public and, strange as it is, I feel like stranger things have happened than an IGC ten-bagger.
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