Final Results

RNS Number : 8364H

India Capital Growth Fund Limited

19 March 2015

 



19 March 2015

INDIA CAPITAL GROWTH FUND LIMITED

ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014

	31 Dec 2014	31 Dec 2013 (Restated)	% change
Per Ordinary Share
Market price	60.38p	35.50p	+70.1%
Net Asset Value (NAV) - Undiluted	74.26p	46.47p	+59.8%
Net Asset Value (NAV) - Diluted	69.83p	46.47p	+50.3%
Discount to Diluted NAV	13.5%	23.6%
Performance
Change in Total Return BSE Mid Cap Index (GBP)	+63.2%	-16.1%
Relative performance to the Index - Diluted	-13.0%	+6.9%
FX impact
INR Rupee/GBP Sterling	98.58	102.01	+3.4%

Key points:

·     Shareholders experienced very strong returns in 2014

o  Share price increased by 70% and diluted NAV by 50%

o  The INR Rupee relatively stable and held up well relative to other Emerging Markets

·     Successful launch of Subscription Share issue in August 2014

·     Company will continue its focus on companies with proven track records and high quality management teams

o  Supported by in-depth research provided by the Manager's Mumbai-based advisors

·     Outlook for the Company remains constructive

o  India potentially moving into a period of macro-economic and political stability

Enquiries:

Ocean Dial Asset Management Limited(Investment Manager)             

Robin Sellers

Amul Pandya                  020 7802 8907

Grant Thornton UK LLP (NOMAD)

Philip Secrett

Jen Clarke                       020 7383 5100

Numis Securities Limited (Broker)

Nathan Brown                

Hugh Jonathan               020 7260 1000

Apex Fund Services (Guernsey) Limited(Administrator)

Stephen Cuddihee          01481 706999

CHAIRMAN'S STATEMENT

I am delighted to report that India's equity markets had an outstanding 2014 and the Company more than fully participated in the market's rise. The net asset value (NAV) total return of the fund rose 59.8% on an undiluted basis, whilst the share price rose 70%, resulting in the discount to net asset value narrowing to 14% at the year end. This compares to a total return for the Company's notional index (BSE Mid Cap) of 63.2%, the Manager's Composite index of 53.6%, and the MSCI India index of 28.7%. All figures are quoted in Sterling terms, whose weak performance against the Rupee (falling 3.4%) also supported the growth in value.

Whilst the portfolio marginally underperformed the BSE Mid Cap index in 2014, this should not be judged as evidence of poor performance, far from it. The index does not represent a group of investible companies as per the Manager's investment process, principally because of the varied quality, underlying poor liquidity and constantly changing nature of its constituents. As a gauge of success one should rather focus on the substantial out performance of the Company's NAV to all the major equity indices in India, as well as our immediate competition, and the broader investment trust universe across global markets and sectors. The Manager, and most particularly the advisory team on the ground in Mumbai, is to be congratulated on this outstanding effort. I should also stress that this performance is no accident. Rather it is the consequence of the Manager adopting a diligent and consistent investment process that since 2010 has taken time and patience to build, throughout a lengthy period of heightened volatility and uncertainty in Indian equities for much of that time. The success of this process relies explicitly on the quality of the in-depth research of mid cap Indian equities provided from the Mumbai based analysts and thereby demonstrates the clear value of having "a foot on the ground". I should also add that as always, a significant portion of luck is involved when things go well. In our case this has come not only from the dramatic and rapid turnaround in India's political and macro-economic fortunes, but also the extent to which the small and midcap sector valuations recovered more swiftly than the main board stocks, enabling stronger performance. Progress also relies on the ongoing support of the Company's shareholders which, over this transformational period, has been hugely supportive and for which the Board remains grateful. A strong note of caution is advisable as we look ahead however. Not only is the market likely to be already pricing in much of the positive sentiment sweeping across India currently, but the share price and its discount to the net asset value of the portfolio both start this year from a considerably higher base than 12 months prior. One swallow doth not a summer make!

Whilst the Investment Manager's report will provide the details behind the performance of the portfolio over the year and the reasons behind it, it is likely that 2014 will be regarded as a major turning point in the fortunes of India's equity markets.  Since late 2013 foreign investors increased their exposure to the country swiftly after the appointment of Dr Raghuram Rajan as Governor of the Reserve Bank of India. The positive sentiment was significantly compounded by the surprising landslide victory for the BJP in India's national elections in May 2014, handing the newly elected Prime Minister Narendra Modi full control of the legislative assembly, the Lok Sabha. This is the first time since 1984 that the ruling party has won a majority in parliament, thereby greatly increasing the potential for meaningful economic reform. The utter routing of the Congress Party, which won just 44 seats, highlighted the Indian electorate's desire for a meaningful change. Modi brings precisely that; instantly injecting energy, transparency, efficiency and confidence into a battered economy. Thus it would appear that India is moving into a period of macro-economic and political stability which in turn should translate into higher levels of economic growth and increased corporate profitability.

At the time of writing following 10 months in office, the Government (whose popularity levels remain intact) has shown ample evidence of its desire to improve the country's prospects. This has been focused on increasing the level of economic output, reducing corruption, strengthening the country's fiscal position, as well as working hard to encourage foreign investors to view India as a credible investment destination. Thus substantial progress has already been made in dismantling the subsidy structure in petroleum products, intermediation of banking products to the masses, greater transparency and improved processes for approval of infrastructure projects, land acquisition reform and the opening up of key sectors such as insurance and defence to foreign participation. In addition the Government has been handed the dream scenario of collapsing global oil prices on a scale far exceeding all expectations. Crucially this has paved the way for a commencement of an interest rate easing cycle, as well as enabling Modi to use the lower oil price situation to improve the country's fiscal position through the dismantling of the subsidy system. A period of oil "lower for longer" would be a tremendous opportunity to support his efforts to raise GDP growth to a sustainably higher level.

Amidst all the euphoria, 2015 will doubtless provide many challenges for investors on a domestic Indian and an international level. The US Federal Reserve is likely to commence a monetary tightening cycle, to which Emerging economies are vulnerable, particularly those such as India, who remains dependent on foreign funds to meet their investment shortfalls. This, and ongoing political and economic turbulence in Europe, are unlikely to pass by without increased volatility across all markets. On the domestic front, in spite of the confluence of positive political and macro-economic factors, the domestic earnings recovery is currently lacklustre at best, and is not expected to materialise until the second half of the year. There is a risk that investors' patience could be severely tested if the earnings recovery falls short, given that market valuations and expectations are already on the higher side. Thus, I expect the Manager to continue to take a cautious approach, focusing on investing in companies with proven track records of delivering strong returns to shareholders and with management teams of the highest quality, at valuation levels that provide an ample margin of safety.

As from July 2014 the Company was registered with the Financial Conduct Authority (FCA) as a non EU Alternative Investment Fund ("AIF") and at the same time formally appointed Ocean Dial Asset Management Ltd (the "Manager") to be its UK appointed Alternative Investment Fund Manager ("AIFM"). The Manager is authorised as a small AIFM and will remain so until its risk adjusted assets under management reach €500m and importantly, provided the funds it manages remain unleveraged. Although somewhat lighter in touch than full regulation, the new regulation does provide an increased administrative and cost burden but with no obvious additional benefits to underlying investors.

Also of note to shareholders is that August 2015 could be the first opportunity the Company has to increase its share capital by 50%, through the exercise of the subscription shares (at a cost price of 61 pence per share) which were issued pre-emptively to shareholders 12 months earlier. Although the official exercise period does not commence until August 2016, subject to certain conditions being met prematurely, (the details of which can be found in the admission document issued prior to the admission of the subscription shares to trading on AIM), the Board may decide to call for an earlier exercise of the subscription shares prior to their official expiry, in order to increase the size of the Company's assets at an opportune time to further invest into Indian equities. In accordance with the requirements of the issuance of subscriptions shares, the Board will keep shareholders fully informed of all eventualities as and when they occur.

Looking forward to the next 12 months, the outlook for the Company remains constructive as it endeavours to take further advantage of the opportunities that arise in India. These are likely to arise from lower interest rates, a renewed investment cycle, and a continued recovery in foreign sentiment. As always, the journey will not be straight or smooth but I look forward to reporting back to you at the half year on further progress achieved.

Fred Carr

Chairman

18 March 2015

INVESTMENT MANAGER'S REPORT

2014 was a positive year for India on several fronts. Both the political and macroeconomic environment showed a marked improvement and this was reflected in the strong performance of the equity markets.

The game changing event of the year was the National Election in May. The Congress led administration, hampered by extensive coalition infighting, had presided over slowing growth, high inflation, corruption scandals, fiscal largesse and outward hostility towards foreign investors. In contrast, the opposition BJP with its charismatic leader Narendra Modi, ran a powerful campaign promising open and accountable governance to facilitate job creation and promote economic prosperity. The result was emphatic. For the first time in 30 years, and against best expectations, a single political party won a clear majority from Indian voters for a five year term. Thus the BJP won 283 seats out of 542, and with pre-election partners in support, the National Democratic Alliance (NDA) won a total of 336 seats. Equally telling was the drubbing received by the Congress party which managed a wretched 44 seats down from 206.

The size of the mandate delivered made it clear what the electorate expected from Modi. It was under his 12 year leadership as Chief Minister of Gujarat that the state achieved growth comfortably above the national average. This was done by fostering a cleaner, business friendly environment focused on infrastructure development and the promotion of inward investment from the rest of India as well as overseas. The issue was whether his achievements could be replicated at a national level and the new Government has started its term at a frenetic pace to do so. It is clear that the sheer size of India, coupled with the number of vested interests at all levels of society, makes top down big bang reform from the centre an unwise course of action. Instead the Government has focused its efforts on taking manageable steps to change the way the country operates. The first Budget, delivered 49 days after the election, stressed a commitment to bringing down the fiscal deficit and creating a more welcoming environment for foreign investors. The previous Government's optimistic fiscal deficit target of 4.1% of GDP was retained and a long term target of 3% by FY17 was put in place. Alongside various incentives to encourage infrastructure investment, the Cabinet also raised the FDI limits on insurance and defence from 26% to 49%. Furthermore, the collapse in the oil price was used to dismantle scale subsidies for diesel and petrol in order to help repair the nation's balance sheet.

Despite this positive change of direction, challenges remain on the political front. The BJP is a minority in the Upper House of Parliament where the opposition has been able to frustrate the legislative process. Notably, the Government has had to issue executive ordinances as a short term measure to bypass Parliament in order to impose changes to land acquisition and mining laws as well as to the aforementioned FDI limit in the insurance sector. While this is a strong signal of intent from the Government, it will have to continue to work hard and compromise in order to pass legislation. What is encouraging is the change that is taking place regionally. State spending is 40% higher than at the centre and a tangible transformation is happening at this level. In Rajasthan for example amendments to national labour laws were passed making it easier for corporates to hire and fire staff to encourage job creation. In Madhya Pradesh there is a target to increase land under irrigation by 45% over the next four years and to improve intra state connectivity by building 1,000km of new state highways. Orissa is planning 5,000km of additional roads whilst Haryana is planning labour law amendments similar to Rajasthan. Local governments are becoming more responsive to their electorate by competing for growth and investment. Their contribution to effecting advancement should not be under estimated.

The arrival of the new Government has coincided with an improvement to key macroeconomic indicators. The outgoing Congress administration was forced into initiating last ditch reforms towards the end of its term in order to ward off a sovereign credit rating downgrade. Government expenditure was cut to address the fiscal deficit and gold imports were effectively banned to help control the current account deficit. Furthermore, the Governor of the Reserve Bank of India ("RBI"), Dr Raghuram Rajan set out measures to help boost FX reserves and fight inflation. Indeed, the RBI surprised the market in January by hiking interest rates by 25 bps when CPI inflation was at 9.9%. These measures helped stabilise the currency which had been a cause for concern during the tapering of the Federal Reserve's quantitative easing programme, and as a consequence the Rupee comfortably outperformed its immediate peer group over the year.

In a bid to control the long standing issue of high inflation, for the first time in the RBI's history Dr Rajan introduced the concept of inflation targeting by articulating a strategy of reducing CPI growth to 8% by January 2015 and 6% by January 2016. The longer term slowdown in growth, five years of monetary tightening, lacklustre demand and a slowdown in investments saw CPI inflation fall below its expected trajectory, standing at 4.4% at the end of the year, whilst WPI inflation collapsed to 0.1%. In January 2015, the RBI articulated in an intra-meeting decision that it was sufficiently assuaged by the Government's efforts to maintain fiscal discipline to change the direction of monetary policy and initiate an easing cycle. That meeting saw interest rates being cut by 25bp and we foresee a 50-75bps reduction over the course of 2015. A high cost of capital has been a significant hindrance to growth in the investment side of the economy; lower rates will help the deleveraging process as well as ease pressure on stressed assets in the banking sector. Furthermore, banks were in the process of cutting deposit rates at the end of the year and lending rates should follow, encouraging a recovery in hitherto muted credit growth. Lower rates alongside structural reform should help underpin the economic recovery.

From a global perspective, India has been a beneficiary of the fall in commodity prices that occurred during the year. This is especially true in the case of oil which was both a large component of India's current account deficit and its subsidy bill. The Government has used the collapse in Brent Crude to end its politically sensitive intervention which had cost it US$10bn in FY14. Moreover, the lower oil price has been used to increase fuel duties, further aiding the Government in tax revenues. We believe this has given the Finance Ministry leeway in the February 2015 budget to increase state spending on infrastructure projects in order to initiate a recovery in the investment cycle.

Whilst the story has turned positive for India, the market performance for 2014 was largely driven by overseas flows - FIIs invested US$40bn over the year (US$15bn into equities and US$25bn into debt). Key risks emanate from a reversal of global fund flows away from the emerging world if the US Dollar continues to strengthen in step with stronger economic data; or indeed if global risk aversion "spikes" causing a flight to quality. On the domestic front, risks are concentrated on the extent and timing of the recovery in corporate earnings and the market's patience in this regard, plus any perceived shortfall by the Government on its promise of meaningful reform. "Key man risk" stalks the market, as the Indian economic recovery currently built into the investors' expectations is unthinkable without Modi at the helm.

Last year's report highlighted that "the political environment will be the single biggest driver for the market going into 2014". Returns this year reflected that as it became clear that the new Government is reforming the way that India operates as a country and that this is being supplemented by a robust monetary agenda from the RBI under the helm of Dr Rajan. Whilst these changes will take time to translate into corporate earnings and that equity returns are unlikely to mirror the recent run, we are confident that the right foundations are being laid for an extended period of healthy returns for patient investors.

Portfolio construction and performance

2014 saw the portfolio deliver GBP returns of 59.8% underperforming the S&P BSE Mid Cap index, the notional benchmark, which delivered a total return of 63.2%. In local currency terms the portfolio grew by 54.6% as the Rupee appreciated by 3.4% over the year against Sterling.

The positive performance was driven by a broad base (seven investments delivered returns in excess of 100%). The main contributors were Motherson Sumi Systems ("MSS") up 152.4% (4.2% weight) and Eicher Motors up 204.6% (3.4% weight). MSS is one of the world's largest manufacturers of rear-view mirrors and polymer components for passenger cars. Eicher Motors, a JV between Eicher and Volvo, is India's third largest commercial vehicle manufacturer. It also owns the Royal Enfield brand which sells the iconic "Bullet" motorcycle.

The top negative contributors were Aban Offshore down 30.7% and Idea Cellular down 21.8%. Aban is an oil rig supplier to offshore exploration and production companies and its share price was negatively impacted as a result of the sharp collapse in the value of oil coupled with concerns with capex being lowered amongst its customer base. The Manager continues to assess the potential impact of these concerns on return on invested capital going forwards. Idea Cellular is India's fourth largest mobile phone operator in number of subscribers and third largest in terms of revenue market share. The stock corrected on the back of concerns of cashflows being hit by aggressive bidding for upcoming telephone licences for spectrum. The Manager exited the position on valuation grounds with the stock having generated 61% returns over two years since investment.

The Manager continued to meet corporate executives throughout the year, with a focus on sectors linked to an improved policy environment and a revival in the investment cycle. This included infrastructure, capital goods, industrials and financial services. Whilst ensuring a rigid adherence to the investment philosophy, the election result coupled with proactive reform from the new Government, led the manager to tilt the portfolio towards companies which would benefit from an investment led recovery.

The majority of the direct beneficiaries of a cyclical upturn, especially in the infrastructure space, do not meet our quality criteria in terms of management integrity and balance sheet strength. With the exception of Gujarat Pipavav Port (an AP Moller-Maersk group commercial port project), the Manager sought exposure through indirect beneficiaries of the story. For instance, positions over the year have been built in Exide Industries (India's largest automotive and industrial battery manufacturer), Finolex Cables (India's largest electrical and telecom cable company), and The Ramco Cements (India's fifth largest cement company and most efficient in terms of cost of production with a focus on South India).

Despite the calibrated repositioning that took place over the year, portfolio turnover was 26.8%. The Manager continues to seek and retain exposure to companies with consistent and stable earnings that can compound over the long term. As such, the investment process of identifying well managed, free cashflow generating businesses with exceptional corporate governance will not be deviated from, regardless of the macroeconomic environment.

Top 10 holdings of ICG Q Limited as at 31 December 2014

Federal Bank (5.5% of the portfolio)

Federal Bank is an old private sector bank with a network of over 1,000 branches and a dominant presence in the southern Indian state of Kerala. The Bank's lending is dominated by the SME and retail segments (30% each of the loan book). We continue to believe that the Bank is a potential re-rating story, on the back of improving profitability and growth, aided by a healthy capital position. Based on the closing market price on 31 December 2014, the stock trades at a price to projected FY16 earnings ratio of 11.1x and 1.5x projected FY16 book value.

Motherson Sumi Systems (4.7% of the portfolio)

Motherson Sumi Systems (MSS), a Joint Venture with Sumitomo Wiring Systems, Japan, is one of the largest manufacturers of rear-view mirrors and polymer components for passenger cars in the world. MSS expanded its global presence through its acquisition of Visiocorp (2009) and Peguform (2011), becoming a Tier-I supplier of automotive components to major global Original Equipent Manufacturers ("OEM"). The company has been able to turn around both the subsidiaries and with rising margins, earnings growth is outpacing revenue growth. Based on the closing price on 31 December 2014, the stock trades at a price to projected FY16 earnings ratio of 24.3x.

Dewan Housing Finance (4.1% of the portfolio)

Dewan Housing (DHFL) is the third largest private sector Housing Finance Company in India, concentrating on the low to middle income segment by providing finance to low cost houses. In 2010, DHFL complemented its existing business by acquiring First Blue Home Finance, a company strong in the Northern region and which concentrates on the mass affluent segment. DHFL accounts for 4.1% of the portfolio as we are extremely positive on the long term prospects of housing finance in India. Based on the closing market price on 31 December 2014, the stock trades at a price to projected FY16 earnings ratio of 6.8x and 1.1x projected FY16 book value.

Jyothy Laboratories (4.1% of the portfolio)

Jyothy manufactures fabric care, mosquito repellents and dish washing soaps categories under the Ujala, Maxo and Exo brands respectively. It further enhanced its product basket with the acquisition of Henkel India in June 2011, acquiring brands in the detergents, toothpaste, soaps, dish washing and deodorants sectors. Since the acquisition, Jyothy has been able to successfully integrate the operations of Henkel and with a strong brand portfolio and management team in place, we see a period of sustained above market growth along with operating leverage driving earnings. Based on the closing market price on 31 December 2014, the stock trades at a price to projected FY16 earnings ratio of 26.1x.

Tech Mahindra (4.1% of the portfolio)

Tech Mahindra is a leading IT offshoring company with FY14 revenues of US$3.1bn and over 89,000 employees. It was set up as a Joint Venture between Mahindra & Mahindra and BT, with a focus on the telecom sector. Other than telecoms, the integrated entity has a sizeable IT services presence in banking, manufacturing verticals and enterprise applications. Based on the closing market price on 31 December 2014, the stock trades at a price to projected FY16 earnings ratio of 15.2x.

Yes Bank (3.8% of the portfolio)

Yes Bank is a new-generation private-sector bank, run by a highly competent top management team that has established a high quality, customer centric, service driven bank; now the fourth largest private sector bank in India. It has consistently delivered high shareholder returns over the last five years with RoE greater than 20% and RoA in the range of 1.3% to 1.5%. We see this trend continuing as it builds its retail franchise, whilst maintaining best-in-class asset quality through better asset acquisitions. Based on the closing market price on 31 December 2014, the stock trades at a price to projected FY16 earnings ratio of 13.9x and 2.4x projected FY16 book value.

PI Industries (3.6% of the portfolio)

PI Industries is a leading agri input and custom synthesis and manufacturing company, offering support in process research and contract manufacturing through its highly accredited R&D, laboratory and manufacturing setup. PI has exclusive rights with several global companies for distribution in India and is constantly on the lookout to expand its operations/tie-ups. On account of its R&D driven approach, PI has become a preferred partner for companies for custom synthesis coupled with a non-compete and IP driven business model. It has a strong order book of US$520m which ensures long term revenue visibility in the custom synthesis segment. Based on the closing market price on 31 December 2014, the stock trades at a price to projected FY16 earnings ratio of 24.4x.

Emami (3.4% of the portfolio)

Emami is a leading Fast Moving Consumer Goods ("FMCG") player in India, operating in segments such as skincare and hair oil. The company has been operating in health, beauty and personal care products for the past 30 years and has sustained a prominent position in therapeutic and Ayurvedic based products, ensuring strong entry barriers for competitors. Emami has innovated and built popular and recognisable brands that have helped develop a strong customer loyalty leading to high gross margins, high barriers to entry, strong brand equity, mass acceptance and superior growth opportunities. Emami's management has demonstrated a good track record in building brands as well as sustaining above market growth and profitability, a trend we see continuing into the future. Based on the closing market price on 31 December 2014, the stock trades at a price to projected FY16 earnings ratio of 33.8x.

Eicher Motors (3.4% of the portfolio)

Eicher Motors is the flagship company of the Eicher Group in India and a leading player in the Indian automobile industry. Its joint venture with the Volvo group, VE Commercial Vehicles Limited, designs, manufactures and markets reliable, fuel-efficient commercial vehicles of high quality and modern technology, engineering components and provides engineering design solutions. Eicher Motors manufactures and markets the iconic Royal Enfield motorcycles. Based on the closing market price on 31 December 2014, the stock trades at a price to projected CY15 earnings ratio of 39.6x.

Exide Industries (3.3% of the portfolio)

Exide is the largest storage battery manufacturer in India. The company derives ~64% of its revenues from the automotive sector (OEM share at 20% of total revenue) and ~36% from the industrial sector. It has a 70% market share in automotive OEMs and 50%+ market share in the auto replacement market. Exide's revenue growth has weakened over the last two years on account of the slowing economy as well as competition in the auto replacement business. With an improving economy, we expect both OEMs and industrial demand to increase; as a market leader with a strong brand, Exide is likely to be the main beneficiary. Based on the closing market price (adjusted for life insurance value) on 31 December 2014, the stock trades at a price to projected FY16 earnings ratio of 17.8x.

Ocean Dial Asset Management

March 2015

Investment policy

The Group's investment objective is to provide long-term capital appreciation by investing (directly and indirectly) in companies based in India. The investment policy permits the Group to make investments in a range of Indian equity and equity linked securities and predominantly in listed mid and small cap Indian companies with a smaller proportion in unlisted Indian companies. Investment may also be made in large-cap listed Indian companies and in companies incorporated outside India which have significant operations or markets in India. While the principal focus is on investment in listed equity securities or equity linked securities, the Group has the flexibility to invest in bonds (including non-investment grade bonds), convertibles and other types of securities. The Group may, for the purposes of hedging and investing, use derivative instruments such as financial futures, options and warrants. The Group may, from time to time, use borrowings to provide short-term liquidity and, if the Directors deem it prudent, for longer term purposes. The Directors intend to restrict borrowings on a longer term basis to a maximum amount equal to 25 per cent of the net assets of the Group at the time of the drawdown. It is the Group's declared policy not to hedge the exposure to the Indian Rupee.

PRINCIPAL GROUP INVESTMENTS

AS AT 31 DECEMBER 2014

Holding		Type			Sector					Value £000's		% of NAV of ICGF
Federal Bank		Mid Cap				Financials			3,093			5.55%
Motherson Sumi Systems		Large Cap				Consumer Discretionary			2,646			4.75%
Dewan Housing		Small Cap				Financials			2,286			4.10%
Jyothy Laboratories		Small Cap				Consumer Staples			2,268			4.07%
Tech Mahindra		Large Cap				IT			2,263			4.06%
Yes Bank		Large Cap				Financials			2,115			3.79%
PI Industries		Small Cap				Materials			2,009			3.60%
Emami		Mid Cap				Consumer Staples			1,916			3.44%
Eicher Motors		Large Cap				Industrials			1,915			3.43%
Exide		Mid Cap				Industrials			1,865			3.34%
Total top 10 equity investments									22,376			40.13%
Other Small Cap	(10 companies)							10,508				18.84%
Other Mid Cap	(10 companies)							15,143				27.15%
Other Large Cap	(4 companies)							5,351				9.59%
Total equity investments								53,378				95.71%
Cash less other net current liabilities of ICG Q Limited								2,398				4.44%
Total NAV of ICG Q Limited								55,776				100.15%
Cash less other net current liabilities of the Company								(83)				(0.15%)
Total NAV								55,693				100.00%

Note:

Large Cap comprises companies with a market capitalisation above INR250bn (£2.6bn)

Mid Cap comprises companies with a market capitalisation between INR60bn and INR250bn (£630m - £2.6bn)

Small Cap comprises companies with a market capitalisation below INR60bn (£630m

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2014

					Year to	Year to
					31.12.14	31.12.13
						Restated
			Revenue £000	Capital £000	Total £000	Total £000
Income
Net gain/(loss) on financial asset at fair value
through profit or loss			-	21,278	21,278	(3,113)
Total income/(expense)			-	21,278	21,278	(3,113)
Expenses
Management fee			(26)	-	(26)	4
Other expenses			(294)	-	(294)	(358)
Foreign exchange losses			(1)	-	(1)	-
Other professional fees			(117)	-	(117)	(72)
Total expenses			(438)	-	(438)	(426)
(Loss)/Profit for the year before taxation			(438)	21,278	20,840	(3,539)
Taxation			-	-	-	-
(Loss)/Profit for the year after taxation			(438)	21,278	20,840	(3,539)
(Loss)/Earnings per Ordinary Share - (pence)			(0.58)	28.37	27.79	(4.72)
Diluted (loss)/earnings per Ordinary Share - (pence)			(0.44)	21.40	20.96	(3.56)

The total column of this statement represents the Company's statement of comprehensive income, prepared in accordance with IFRS as adopted by the EU. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies, as disclosed in the Basis of Preparation in Note 1.

The profit after tax is the "total comprehensive income" as defined by IAS 1. There is no other comprehensive income as defined by IAS 1.

All the items in the above statement derive from continuing operations.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2014

						Other Distributable Reserve £000
			Share Capital £000	Capital	Revenue
				Reserve	Reserve		Total   £000
				£000	£000
Balance as at 1 January 2014 (restated)			750	(30,591)	(8,156)	72,850	34,853
Gain on investments			-	21,278	-	-	21,278
Revenue loss for the year after taxation			-	-	(438)	-	(438)
Balance as at 31 December 2014			750	(9,313)	(8,594)	72,850	55,693

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2013

						Other Distributable Reserve £000
			Share Capital £000	Capital	Revenue
				Reserve	Reserve		Total   £000
				£000	£000
Balance as at 1 January 2013			750	(30,281)	(4,955)	72,878	38,392
(as previously stated)
Restatement due to change in
accounting policy			-	2,803	(2,775)	(28)	-
Balance as at 1 January 2013			750	(27,478)	(7,730)	72,850	38,392
(as restated)
Loss on investments			-	(3,113)	-	-	(3,113)
Revenue loss for the year after taxation			-	-	(426)	-	(426)
Balance as at 31 December 2013			750	(30,591)	(8,156)	72,850	34,853

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2014

			Year to		Year to
			31.12.14		31.12.13
					Restated
			£000		£000
Non-current assets
Financial assets designated at fair value through profit or loss			55,776		34,973
Current assets
Cash and cash equivalents			48		61
Receivables			8		15
			56		76
Current liabilities
Payables			(139)		(196)
Net current liabilities			(83)		(120)
Total assets less current liabilities			55,693		34,853
Equity
Ordinary share capital			750		750
Reserves			54,943		34,103
Total equity			55,693		34,853
Number of Ordinary Shares in issue			75,001,463		75,001,463
Net Asset Value per Ordinary Share (pence) - Undiluted			74.26		46.47
Net Asset Value per Ordinary Share (pence) - Diluted			69.83		46.47

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2014

				Year to		Year to
				31.12.14		31.12.13
						Restated
				£000		£000
Cash flows from operating activities
Operating profit/(loss)				20,840		(3,539)
Adjustment for:
Net (gain)/loss on financial asset at fair value through profit or loss				(21,278)		3,113
Foreign exchange losses				1		-
Operating loss before working capital changes				(437)		(426)
Working capital changes
Decrease in receivables				7		5
Decrease in payables				(57)		69
Cash flow used in operating activities				(487)		(356)
Cash flows from investing activities
Sale of investments				475		380
Net cash inflow from investing activities				475		380
Net (decrease)/increase in cash and cash equivalents during the year				(12)		28
Cash and cash equivalents at the start of the year				61		33
Foreign exchange losses				(1)		-
Cash and cash equivalents at the end of the year				48		61

This announcement was approved by the Board on 18 March 2015. It is not the Company's statutory accounts, but has been prepared on the same basis as those accounts. The statutory accounts for the year ended 31 December 2014 have been approved and audited and received an audit report which was unqualified and did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report.

The full Annual Report together with the audited accounts for the year is expected to be mailed to shareholders on 25 March 2015 and a copy will be posted on the Company's website www.indiacapitalgrowth.com in accordance with AIM Rule 26.

Disclaimer: Neither the contents of the Company's website, nor the contents of any website accessible from hyperlinks on the Company's website (or any other website), is incorporated into, or forms part of, this announcement.

 

END

 

 

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