Final Results

Ashoka India Equity Investment Tst

09 October 2023

 

ASHOKA INDIA EQUITY INVESTMENT TRUST PLC

ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2023

Investment Objective, Financial Information and Performance Summary

Investment Objective
The investment objective of the Ashoka India Equity Investment Trust plc (the "Company") is to achieve long-term capital appreciation, mainly through investments in securities listed in India and listed securities of companies with a significant presence in India.

Financial information

	As at 30 June 2023	As at 30 June 2022
Net asset value ("NAV") per Ordinary Share (cum income)	206.2p	174.2p
Ordinary Share price	209.0p	175.0p
Ordinary Share price premium to NAV1	1.4%	0.5%
Net assets	£232.6million	£187.4million
	==========	==========

Performance summary

	30 June 2023  % change	30 June 2022  % change
Share price total return per Ordinary Share1, 2	19.4%	7.7%
NAV total return per Ordinary Share1	18.3%	9.6%
MSCI India IMI Index total return (Sterling terms)2,3	11.8%	7.2%
	==========	==========

1     These are Alternative Performance Measures.

2     Total returns in sterling for the year ended 30 June 2023 and 2022.

3     Source: Bloomberg

Alternative Performance Measures ("APMs")
The disclosures as indicated in the footnote above represent the Company's APMs. Definitions of these APMs and other performance measures used by the Company, together with how these measures have been calculated, can be found in the Annual Report.

STRATEGIC REPORT

CHAIRMAN'S STATEMENT

Welcome to the fifth annual results of Ashoka India Equity Investment Trust plc for the year to 30 June 2023. When the Company was launched in 2018, no-one could have predicted the events that soon followed, particularly the Covid pandemic that so damaged the world's economy and cost too many lives but also the devastating war in Ukraine that, at the very least, threatens food supplies globally, especially to the poorest countries. Neither, I think, would we have confidently predicted that both the Company's net asset value and share price would more than double in that period as the Investment Manager and Investment Adviser used their considerable skills to invest in the companies benefiting most from India's fast-growing economy.

But here we are, with Covid behind us but, very sadly, the war still raging. What a sad indictment this is of a modern, high-tech world that man should be fighting man in the equivalent of early twentieth century trench warfare.

I make no apologies for these references, yet again, in my annual statement because although global trade has made the world a much smaller place, such "disruptions" make the life of an investment manager increasingly difficult with many new obstacles to navigate and questions to ask before making confident investment decisions. This, then, makes the continuing outperformance of the Company even more impressive.

Acorn Asset Management and White Oak Capital Management (Investment Manager and Investment Adviser respectively) maintained their focus and remained diligent, producing performance ahead of the Company's benchmark index for the year under review. The five-year numbers are particularly impressive.

PERFORMANCE

The Company's NAV returned 18.3% over the period and the share price 19.4% against its benchmark index, the India Investible Market Index ("MSCI IMI" or "MSCI India IMI Index (in sterling terms)"), which returned 11.8%. Impressively, since the Company's inception in July 2018, the NAV has increased by 110.4% and the Company's share price by 109%, both comfortably ahead of the benchmark index which grew by 60.9% (in sterling terms). The Company's share price stood at 209p at the year end, a 1.4% premium to NAV.

Since the end of the Company's 2023 financial year, both NAV and share price have been strong; as at 4 October 2023, the latest practicable date before publication of this report, the NAV was 226.26p and the share price stood at 229p.

SHARE ISSUANCE

The Company continued to respond to demand, both from existing shareholders and new investors, to issue new shares, at a small premium to the prevailing net asset value. In total, 5,240,140 new shares were issued during the year under review, raising a total of £10,735,051. As at the year end there were 112,807,812 shares in issue.

REVENUE AND DIVIDENDS

The Company's principal objective is to provide returns through long-term capital appreciation, with income being a secondary consideration. Therefore, shareholders should not expect that the Company will pay an annual dividend, under normal circumstances. Whilst the portfolio does generate a small amount of income, this is used to defray running costs. However, if a sufficient surplus is generated, the Company may declare an annual dividend to maintain UK investment trust status. In the year under review, total surplus income amounted to £128,000. No dividend has been declared.

REDEMPTION FACILITY

The Company has a redemption facility through which shareholders are entitled to request the redemption of all or part of their holding of Ordinary Shares on an annual basis. The Redemption Point for the Ordinary Shares this year is 30 September 2023.

As announced on 5 September 2023, the total number of Ordinary Shares in respect of which valid redemption requests were received for this Redemption Point was 547,339.

On 2 October 2023, the Company announced that all of the 547,339 Ordinary Shares under the 2023 Redemption Facility were successfully matched with buyers, at a price of 225.23 pence per Ordinary Share.

PERFORMANCE FEE

To remind shareholders of the Company's fee arrangements, no annual management fee is paid; the Investment Manager, Acorn Asset Management Ltd, is remunerated solely by means of a performance fee, based on the level of performance relative to the Company's benchmark index, the MSCI IMI, over a three-year period ending 30 June 2024. Details of the performance fee can be found below.

The Company's portfolio is actively managed and seeks an excess return relative to its benchmark index (known as "alpha"). This investment style may lead to occasional greater volatility than the benchmark index but has produced outstanding returns for shareholders since inception. The Board remains fully supportive of this investment approach and remuneration structure.

BOARD COMMITTEE VISIT TO SINGAPORE AND INDIA

It has been four years since the Board undertook a visit to the offices of the Company's Investment Manager and Investment Adviser. Since then, White Oak Capital Management has grown into a business that manages over $5.5 billion on behalf of clients, has increased in headcount, excluding salespeople, to over 50 investment professionals and analysts based in Mumbai, London, Madrid and in its recently-opened office in Singapore. A visit was, therefore, overdue so a Committee of the Board visited Singapore and Mumbai during March 2023. I am pleased to report that the Committee was suitably impressed with how the business had grown without compromising standards with regard to the stock selection process or pre-investment corporate governance.

Under normal circumstances and to give appropriate comfort to the Company's shareholders, the Board considers it best practice to make a due-diligence visit to the Investment Manager's office every three years. This year's trip took place in late March so the next is scheduled for 2026.

ANNUAL GENERAL MEETING

The Company will hold its Annual General Meeting on 8 December 2023 at the offices of White Oak Capital Management Ltd at 13 Hanover Square, London W1S 1HN starting at 12 noon. An online presentation will be given by the Investment Manager (given they are not based in the UK) and the Board will be delighted to see all shareholders who are able to attend in person.

OUTLOOK

The Investment Manager's report that follows goes into further detail on the portfolio's performance over the last year and the challenges they faced.

India has come a long way since Narendra Modi took over as Prime Minister in 2014, initiating a plan for India to become a developed nation within 25 years. It is certain that, come next year's election, he will make much of the progress over that 10-year period and he would be right to do so. India's population, at 1.4 billion, overtook China's this year and the differences between the world's largest autocracy and the world's largest democracy in the race for economic growth remain stark; China's leader favours a retention of power over a well-functioning economy thus reducing the potential for entrepreneurial flair that is so evident in India. It seems very likely that growth will expand for the foreseeable future with material investments in renewable energy, high-speed railways and new roads in a generational boost to India's economy. Of this expanding population, a significant number will grow up as well-educated, tech-savvy individuals who speak fluent English and, therefore, be well equipped to converse in the business markets of the world. Hosting the G20 conference in September added further to both India's and Modi's personal status.

The "global south", as this part of the world is now being referred to, is growing in importance, both geographically, politically and economically. It is not at all unreasonable to assume that India is the unelected leader of such a bloc and its relevance and importance is only likely to grow in direct proportion to its economic growth and continuing status as a democracy, perhaps eventually leading to a permanent seat on the UN Security Council, further burnishing Modi's personal credentials and India's world status.

Global inflation is easing and, war to one side, India is coping well with supply lines both in and out of the country. Growth is forecast to reach 6% this year, materially in excess of any other major economy, and is likely to continue apace into 2024-5.

Your Board is frequently informed of the innovative investment possibilities presenting themselves to the Company's management teams and, regardless of mentioned headwinds, the dynamism of Indian entrepreneurs is self-evident and undimmed. Whilst it is understandable for all parties to be excited by these investment opportunities, I will repeat my annual mantra to shareholders that strong corporate governance and research both continue to play prominent roles when selecting every investment within the Company's portfolio.

Here I go again, wishing that the following year is better than the current one. Looking at last year's wish list, only the satisfactory resolution of Russia's invasion of Ukraine has yet to come to pass. Other factors, such as inflation, interest rates and supply lines, all show signs of improvement. Stock markets anticipate events 12- 18 months ahead but even optimistic investors require signs that the world is not coming to an end any time soon. I think the wish list remains the same, to which I will add "a period of stability, peace and calm". India is exceptionally well placed to continue its growth trajectory regardless but I'm sure its people would not be averse to agreeing with me.

As ever, thank you for being a shareholder in the Company. The Investment Manager and Investment Adviser remain as dedicated as ever to their task and your Board are equally confident in their ability to produce top quality returns for shareholders over the longer term.

ANDREW WATKINS
Chairman
6 October 2023

Investment Manager's Report

Market Review
The MSCI India IMI Index (in sterling terms) was up by 11.8% during the year to 30 June 2023, outperforming the broader emerging markets but underperforming the developed markets. In the same period, the MSCI Emerging Markets Index was down by 2.6%, the S&P 500 returned 13.9%, and the MSCI World Index was up by 13.5% (all in sterling terms). Crude oil prices fell by 32.4% and the Indian rupee depreciated by 7.3%. Amongst sectors, industrials, financials and consumer staples outperformed whilst utilities, energy and information technology underperformed.

PERFORMANCE REVIEW

The Company has delivered a sterling NAV total return of 18.3% during the year, outperforming the benchmark MSCI India IMI (in sterling terms) by 6.5%. Despite a turbulent market environment, the portfolio has generally outperformed during the year given that it is very well diversified and balanced across both cyclical and counter-cyclical sectors while consciously avoiding market timing, sector rotation and other such top-down bets.

KEY CONTRIBUTORS & DETRACTORS

 

Contributors

Kaynes Technology is a fully integrated electronic manufacturing  service  company  with  end-to- end operations delivering component assemblies and box-build solutions. It provides value-added electronics manufacturing services and original design manufacturing solutions. The company holds long-term relationships with multiple customers diversified across verticals such as automotive, industrial, and railways, which limit the impact of downturn associated with a particular vertical. The stock's outperformance was led by continued strong operating results driven by new customer additions across verticals and increased wallet share within existing customers.

Cholamandalam Investment and Finance (CIFC) is a non-banking financial company (NBFC) belonging to the Murugappa Group. It primarily operates in vehicle finance, home equity, and affordable home loan categories. In terms of customer profile, it caters predominantly to single truck and small fleet owners, self-employed non-professionals, in semi-urban and rural India. CIFC's strength lies in its ability to reach such customers in rural and semi-urban markets and underwrite and collect from customers with irregular income streams. The Vehicle Finance business is in an upcycle after a period of weak demand in the last couple of years. Apart from briskly scaling up its housing finance business, which on a low base could grow upwards of 25% in the coming years, CIFC has also made progress in three new segments, namely Consumer & Small Enterprise Loan (CSEL), Secured Business & Personal Loan (SBPL) and SME Loan (SME). The stock outperformed as the company continued to deliver sector leading return ratios despite being in the investment phase for the new lines of business.

ICICI Bank is one of the leading private sector banks in India. Given the under-penetration of credit, the Indian banking sector offers a long runway for growth. Well run private sector banks, such as ICICI Bank are gaining market share from poorly run government owned banks, which account for two-thirds of the industry. The management team has been leveraging ICICI's wide distribution franchise, a new risk-based pricing approach, and digital offerings to accelerate market share and enhance the return ratios. The bank's asset quality has also remained robust. The stock outperformed on the back of continued strong business performance.

Detractors

Infosys is India's second-largest IT services company. It has a strong global presence, including the key markets of North America and Europe and a high-quality customer portfolio. Banking and Financial Services (BFSI) is the largest vertical, contributing approximately 30% of overall revenues. It operates across seven major verticals (or revenue generating segments catering toa particular industry): (a) banking, financial services and insurance; (b) retail and Consumer Packaged Goods ("CPG"); (c) communications; (d) energy and utilities; (e) manufacturing; (f) hi-tech; and (g) life sciences. The company expects strong demand in retail banking, commercial banking, payments and wealth management segments leading to robust growth demonstrated by better win rates and a healthy deal pipeline over multiple years. However, the near-term global slowdown and aggressive cuts to discretionary tech spending by some corporations have led to relatively weak quarterly results for Infosys. Muted results and a moderate 4-7% growth projection for FY24 led to the stock's underperformance.

Tatva Chintan Pharma ("Tatva") is a specialty chemical manufacturing company which is a pioneer in processes such as conventional synthesis, electrolysis and developing continuous flow chemistry and generating higher efficiencies. It is the second largest manufacturer of SDAs for Zeolites globally and the largest commercial supplier in India, the largest producer of electrolyte salts for super capacitor batteries in India, the largest producer of Glymes in India and the third largest in the world. The stock underperformed due to the global semi-conductor shortage for most of 2022, resulting in muted demand for Tatva's products from the auto industry. It has since shown signs of recovery. Tatva has also recently expanded its capacity so that it can cater for higher demand going forward.

Shaily Engineering Plastics ("Shaily") manufactures precision injection moulded plastic components, sub-assemblies, moulds, and dies for various original equipment manufacturers. It is one of India's leading exporters of plastics components. Its plastics can be found worldwide covering a diverse range of products like medical devices, homewares, and automotive components. The stock underperformed due to headwinds to growth in its Furnishing and Toys segments, as a result of the adverse macro conditions both in the US and Europe. However, it was partially offset by an improved margin profile in the healthcare segment. Shaily is structurally moving towards higher margin precision injection moulded plastic components with their own technology which should drive performance going forward.

INVESTMENT OUTLOOK

India's economy delivered solid, above expectation GDP growth of 7.2% for the fiscal year to March 2023. Its healthy macro-fundamentals, resilient corporate earnings as well as promising growth prospects - garnered strong foreign and domestic investment against a global back drop of geopolitical tensions, higher commodity prices and credit costs, as well as fears of a recession in the US and Europe.

To take inflation, India recorded an average CPI of 6.7% for the year to 30 June 2023 compared to 7.4% and 8.8% in the US and EU, respectively. The government's focus on a capital expenditure push as opposed to a loose consumption stimulus (which was relatively lower during the pandemic, leading to increased availability of labour as the pandemic subsided) has kept India's inflation at manageable levels. For the current fiscal year, India's inflation is likely to be around 5.5% as global growth slows, keeping commodity prices benign. Moderating inflation will help contain the government's fiscal deficit through lower subsidies, providing room for the Reserve Bank of India to avoid raising policy rates, and help support the margins of Indian based corporations. India's external sector position is also likely to improve in FY24. The Current Account Deficit ("CAD") as a percentage of GDP is likely to be recorded at 1.5% in FY24 (compared to 2% in FY23). This coupled with healthy capital flows should ensure that India's Balance of Payments remains positive. Additionaly, India's healthy foreign exchange reserve, which stands at US$607 billion results in one of the lowest debt-to-GDP (19%) positions globally, and provides comfort against any potential global macro volatility.

India's economy is experiencing the start of a growth phase as ingredients for a revival in the investment cycle seem to be in place. The twin balance sheet problem (overleveraged corporate balance sheets and high non-performing assets ("NPAs") of banks) which held back private investments in the last decade seem to be behind us. Corporate debt is at its lowest in many years and banks are enjoying one of the lowest bad-loans ratios in the last decade (gross and net bank NPA ratios stand at 3.9% and 1% respectively). This provides a conducive environment for private sector capex to pick up from here.

Government capex has also grown at a brisk pace recently, reflecting policy commitment to building infrastructure and facilitating private investment. The FY24 budget signalled continuity on public capex (roads, railways and housing), enhancing the ease of doing business and boosting exports and manufacturing. Given this is a pre-election year, public sector capex growth is likely to remain robust. As estimated by various global agencies, such as the IMF and the World Bank, India is likely to emerge as the fastest growing major economy over this decade.

The pandemic and geopolitical tensions over the last few years have accelerated supply chain diversification across various industries. India's favourable demographics, with 900 million people of working age, makes it an attractive destination for companies to set up their production base. The production linked incentives issued by the government since 2020, for setting up new manufacturing units producing and exporting from India, have started to show results. A number of global giants are in the process of starting production in India. Despite the strong growth in the export of electronics, India's global share in many other sectors such as chemicals and engineering goods is still small (approximately 2% to 4%). Even a 1% to 2% incremental market share gain from China, could result in high-teens growth rates for these sectors.

India's well diversified corporate sector continues to generate stable earnings growth. Earnings growth for the Nifty is projected to grow by mid-teens over the near term, marking the best phase of corporate profitability since the period 2003 to 2007. Despite periodicallyrising concerns over the impact of higher credit or raw material costs on the broader market, we believe several of our portfolio companies are market leaders and have managed inflationary scenarios fairly well. The underlying trend of market share consolidation in favour of stronger, well-run businesses continues. The unbranded (or unorganised) segment of the market has found it challenging to deal with higher input costs and frequent supply chain disruptions. Also, in the context of potentially slowing global growth, it is worth re- iterating that India's earnings have generally been more resilient than its emerging market peers during previous downcycles.

In view of these positives, the broader Indian equity market has seen a recovery rally since April 2023 and valuations are back to 23x (FY24 P/E multiple), as compared to the 10 year average of 19x for BSE Sensex. Although the market seems expensive, in the last 10 years, bar a few instances during market corrections between 2016 and 2020, India has consistently traded at a premium relative to other emerging markets. We never take a call on aggregate market valuations. What we are looking for are attractively valued businesses on a relative basis. Within the market, sectors or businesses trade at different valuations based on their respective risk-reward dynamics. It is the relative framework within which we identify investment opportunities. If a well- governed, scalable business is able to generate superior returns on incremental capital, and if after factoring in a certain projected growth we see material upside from current stock price levels, then we will invest. From the lens of our proprietary Opco-Finco framework, which evaluates businesses' economic cash flow over and above the cost of capital, Ashoka India Equity Investment Trust's FY24 P/E multiple would be 36.2x as opposed to 45.5x for the Sensex, highlighting the portfolio's reasonable valuations in our view.

India offers a diversified sector exposure relative to its international peers, with a good mix of cyclical and counter cyclical businesses. Our approach has always been to maintain a balanced portfolio, to ensure that our portfolio's performance is driven by stock selection rather than non-stock specific risk factors such as market timing, beta, sector rotation and so on.

Separately, from a potential risk perspective, general elections in India are likely to be held in April or May 2024. Although the current Prime Minister's popularity remains intact, and the risk of regime change appears low, such an event or a weak coalition government could be a negative surprise for the market. The markets would like to see policy continuity. Furthermore, any sustained weakness in global growth could weigh on market performance. On the other hand, a sharp reversal in anticipated global risk factors such as inflation, recession, or geopolitical tensions could boost investor sentiment.

In conclusion, we remain optimistic and continue to believe the structural growth drivers of the Indian economy are deep rooted which, notwithstanding the near-term challenges, presents India as an attractive long-term investment opportunity.

ACORN ASSET MANAGEMENT LTD
6 October 2023

Top Ten Holdings

As at 30 June 2023	Sector		% of net assets
ICICI Bank Limited	Financials	14,728,344	6.3
Cholamandalam Investment and Finance Company Limited	Financials	10,842,348	4.7
Kaynes Technology India	Information Technology	7,677,216	3.3
Titan Company Limited	Consumer Discretionary	7,616,073	3.3
Avalon Technologies Limited	Information Technology	7,471,660	3.2
Coforge	Information Technology	6,595,653	2.8
Nestlé India Limited	Consumer Staples	6,364,571	2.7
Maruti Suzuki India Limited	Consumer Discretionary	6,316,440	2.7
HDFC Bank Limited	Financials	5,802,955	2.5
Tega Industries Ltd	Industrials	5,361,168	2.3
Top ten holdings			33.9
Other holdings			67.9
Total holdings			101.8
Capital gains tax provisions plus cash and other assets/liabilities			-1.8
Total net assets			100.0

Investment Policy, Results and Key Performance Indicators

Investment Policy
The Company shall invest primarily in securities listed on any recognised stock exchange in India and securities of companies with a Significant Presence in India that are listed on stock exchanges outside India. The Company may also invest up to 10 per cent. of Gross Assets (calculated at the time of investment) in unquoted companies with a Significant Presence in India.

A company has a "Significant Presence in India" if, at the time of investment, it has its registered office or principal place of business in India, or exercises a material part of its economic activities in India.

The Company shall primarily invest in equities and equity-related securities (including preference shares, convertible unsecured loan stock, rights, warrants and other similar securities). The Company may also, in pursuance of the investment objective:

·        hold publicly traded and privately placed debt instruments (including bonds, notes and debentures);

·        hold cash and cash equivalents including money market liquid/debt mutual funds;

·        hold equity-linked derivative instruments (including options and futures on indices and individual securities);

·        hedge against directional risk using index futures and/or cash;

·        hold participation notes; and

·        invest in index funds, listed funds and exchange traded funds.

Notwithstanding the above, the Company does not intend to utilise derivatives or other financial instruments to take short positions, nor to increase the Company's gearing in excess of the limit set out in the borrowing policy, and any restrictions set out in this investment policy shall apply equally to exposure through derivatives.

The Company will invest no more than 15 per cent. of Gross Assets in any single holding or in the securities of any one issuer (calculated at the time of investment) and will typically invest no more than 40 per cent. of Gross Assets in any single sector (calculated at the time of investment).

The Company is not restricted to investing in the constituent companies of any benchmark. It is expected that the Company's portfolio will comprise approximately 50 to 100 investments although, in order to allow the Investment Manager and Investment Adviser flexibility to take advantage of opportunities as they arise, the portfolio may occasionally comprise holdings outside of this range.

In order to comply with the Listing Rules, the Company will not invest more than 10 per cent. of Gross Assets in other listed closed-ended investment funds, except that this restriction shall not apply to investments in listed closed-ended investment funds which themselves have stated investment policies to invest no more than 15 per cent. of their gross assets in other listed closed-ended investment funds. Additionally, in any event the Company will itself not invest more than 15 per cent. of its Gross Assets in other investment companies or investment trusts which are listed on the Official List.

The Company does not expect to take controlling interests in investee companies and will at all times invest and manage the portfolio in a manner consistent with spreading investment risk and in accordance with the FPI Regulations and applicable law.

It is expected that the Company's investments will predominantly be exposed to non-Sterling currencies (principally Rupees) in terms of their revenues and profits. The base currency of the Company is Sterling, which creates a potential currency exposure. Whilst the Company retains the flexibility to do so, it is expected in the normal course that this potential currency exposure will not be hedged using any sort of foreign currency transactions, forward transactions or derivative instruments.

Borrowing policy
The Company may deploy gearing to seek to enhance long-term capital growth and for the purposes of capital flexibility and efficient portfolio management. The Company may be geared through bank borrowings, the use of derivative instruments that have the effect of gearing the Company's portfolio, and any such other methods as the Board may determine. Gearing will not exceed 20 per cent. of Net Asset Value at the time of drawdown of the relevant borrowings or entering into the relevant transaction, as appropriate.

No material change will be made to the investment policy without the approval of Shareholders by ordinary resolution.

Asset allocation at period end
The breakdown of the top ten holdings and the industrial classification of the portfolio at the Company's year end are shown above.

Dividend policy
The Board intends to manage the Company's affairs to achieve Shareholder returns through capital growth rather than income. Therefore, it should not be expected that the Company will pay an annual dividend.

Regulation 19 of the Investment Trust (Approved Company) (Tax) Regulations 2011 provides that, subject to certain exceptions, an investment trust may not retain more than 15 per cent. of its income in respect of each accounting period. Accordingly, the Company may declare an annual dividend from time to time for the purpose of seeking to maintain its status as an investment trust.

Results and dividend
The Company's revenue surplus after tax for the year amounted to £128,000 (30 June 2022: revenue surplus of £6,000). The Company made a capital surplus after tax of £34,452,000 (30 June 2022: capital surplus of £9,218,000). Therefore, the total surplus after tax for the Company was £34,580,000 (30 June 2022: surplus of £9,224,000).

The Board is proposing that no dividend be paid in respect of the year ended 30 June 2023 in accordance with the Company's Dividend policy as outlined in above paragraph.

KEY PERFORMANCE INDICATORS

The Board measures the Company's success in attaining its investment objective by reference to the following KPIs:

(i)    Achievement of NAV and share price growth over the long term

The Board monitors both the NAV and share price performance and compares them with the MSCI India IMI Index (in sterling). A review of performance is undertaken at each quarterly Board meeting and the reasons for relative under and over performance against various comparators is discussed. The Company's NAV and share price total returns for the year to 30 June 2023 were 18.3% and 19.4% (30 June 2022: 9.6% and 7.7%)

respectively compared to a total return of 11.8% (30 June 2022: 7.2%) for the MSCI India IMI Index (sterling).

The Chairman's statement, which can be found above, incorporates a review of the highlights during the year. The Investment Manager's Report, which can be found above, highlights investments made during the year and how performance has been achieved.

(ii)   Performance of premium or discount of share price to NAV that is comparable to its peers

The Company's Broker monitors the premium or discount on an ongoing basis and keeps the Board updated as and when appropriate. At quarterly Board meetings the Board reviews the premium or discount in the period since the previous meeting in comparison with other investment trusts within the AIC India/Indian Subcontinent sector. The Company has a redemption facility through which Shareholders will be entitled to request the redemption of all or part of their holding of Ordinary Shares on an annual basis. The Company's shares traded at a premium of 1.4% on 30 June 2023 (30 June 2022: premium of 0.5%).

(iii)  Maintenance of a comparable level of ongoing charges (excluding performance fee)

The Board receives monthly management accounts which contain an analysis of expenditure, and these are formally reviewed at quarterly Board meetings. The Management Engagement Committee formally reviews the fees payable to the Company's main service providers on an annual basis. The Board reviews the ongoing charges on a quarterly basis and considers these to be reasonable in comparison to other investment trusts within the AIC India/Indian Subcontinent sector.

Based on the Company's average net assets during the year ended 30 June 2023, the Company's ongoing charges figure calculated in accordance with the AIC methodology was 0.5% (30 June 2022: 0.5%).

Risk and Risk Management

Principal and emerging risks and uncertainties

Description	Mitigation
Economic and market conditions Changes in general economic and market conditions in India including, for example, interest rates, cost increase, rates of inflation, industry conditions, competition, political events and trends, tax laws, national and international conflicts and other factors could substantially and adversely affect the Company's prospects. Weak economic and market conditions in Europe and the US may lead to foreign disinvestment in Indian equities (the "flight to quality").	The Investment Adviser has a proven and extensive track record with a focus on good corporate governance and will monitor the position and report regularly to the Board on market developments. India is to a degree protected from global economic downdrafts and increases in world inflation as it is a relatively closed economy and not as vulnerable to high and rising energy prices as in the past. Whilst not immune from disrupted global trade, India may benefit from a change of supply lines from, in particular, China. In addition, India is not saddled with the debt problems of Europe and the US and the currency should therefore remain stable or appreciate against the currencies of its main trading partners. The Investment Advisor has a proven and extensive track record and, together with the broker has an active and regular dialogue with Shareholders.
Sectoral diversification Concentration of investments in any one sector may result in greater volatility in the value of the Company's investments and consequently its NAV and may materially and adversely affect the performance of the Company and returns to Shareholders.	The Company's investment policy states that no single holding will represent more than 15% of the Company's Gross Assets and no more than 40% of Gross Assets will be invested in any single sector (calculated at the time of investment). The investment policy allows approximately 50 to 100 stocks to be held in the portfolio to assist with diversification. The Board measures the Company's performance for reference purposes against the MSCI India IMI Index (in sterling). The Board also monitors performance relative to the Company's peer group over a range of periods, taking into account the differing investment policies and objectives.
Corporate governance and internal control risks (including cyber security) The Board has contractually delegated to external agencies the management of the investment portfolio, the custodial services (which include the safeguarding of the assets), the registration services and the accounting and company secretarial services. The main risk areas arising from the above contracts relate to allocation of the Company's assets by the Investment Manager, and the performance of administrative company secretarial, registration and custodial services. These could lead to various consequences including the loss of the Company's assets, inadequate returns to Shareholders and loss of investment trust status. Cyber security risks could lead to breaches of confidentiality, loss of data records and inability to make investment decisions.	Each of these contracts were entered into after full and proper consideration of the quality and cost of services offered, including the financial control systems in operation in so far as they relate to the affairs of the Company. All of the above services are subject to ongoing oversight of the Board and the performance of the principal service providers is reviewed on a regular basis. The Board monitors key personnel risks as part of its oversight of the Investment Manager. The Company's key service providers report periodically to the Board on their control procedures including those in respect of cyber security risks.
Regulatory risks Breaches of Section 1158 of the Corporation Tax Act could result in loss of investment trust status. Loss of investment trust status would lead to the Company being subject to tax on any gains on the disposal of its investments. Breaches of the Financial Conduct Authority ("FCA")'s rules applicable to listed entities could result in financial penalties or suspension of trading of the Company's shares on the London Stock Exchange ("LSE"). Breaches of the Companies Act 2006, The Financial Services and Markets Act, The Alternative Investment Fund Managers' Directive, Accounting Standards, The General Data Protection Regulation, The Listing Rules, Disclosure Guidance and Transparency Rules and Prospectus Rules could result in financial penalties or legal proceedings against the Company or its Directors. Failure of the Investment Manager to meet its regulatory obligations could have adverse consequences on the Company.	The Company has contracted out relevant services to appropriately qualified professionals. The Investment Manager and the Company Secretary report on regulatory matters to the Board on a quarterly basis. The assessment of regulatory risks forms part of the Board's risk assessment programme.
Financial risks The Company's investment activities expose it to a variety of financial risks which include foreign currency risk and interest rate risk.	The investment policy states that while the Company retains the flexibility to do so, it is expected in the normal course of business that currency exposure will not be hedged. The Company does not currently have any borrowings, therefore is not exposed to interest rate risk. The Company's financial risks are disclosed in note 15 to the financial statements.
EMERGING RISKS ESG and Climate Change The Company could suffer as a result of increased investor demand for products which promote ESG investments. Climate change leads to additional costs and risks for portfolio companies.	In making investment decisions, the Investment Manager considers qualitative measures, such as the environmental and social impact of a company as well as financial and operational measures. The Company's ESG Policy, found in the printed accounts.  It is updated annually and is published on the Company's website. The ESG Policy includes ESG factors that are considered in the investment process where they are relevant and have a material impact on stock performance. It also includes information regarding the proprietary rating framework developed by the Investment Adviser to assess companies on ESG metrics. The framework consists of a sector-specific hierarchy of key Environmental and Social factors, against which a sector company is assessed based on its practices and disclosures. The Investment Adviser prioritises dialogue with companies that have greater scope for improvement in disclosures and/or practices.
Extreme weather events could potentially impair the operations of individual investee companies, potential investee companies, their supply chains, and their customers.	The Investment Manager takes such risks into account, along with the downside risk to any company (whether in the form of its business prospects, market valuation or sustainability of dividends) that is perceived to be making a detrimental contribution to climate change. The Company invests in a broad portfolio of businesses with operations spread across India, which should limit the impact of location specific weather events. The Investment Manager also closely monitors the businesses which have a greater exposure to climate change related risks and their progress towards a low-carbon dioxide transition. Whilst India witnessed extreme weather events during the year under review, most notably flooding across Northern India, the Company's portfolio is diversified across regions and sectors that are considered less vulnerable to the impact of such extreme weather events. The impact of extreme weather events are considered as part of the investment decision- making process by the Investment Adviser.
Potential reputational damage from non-compliance with regulations or incorrect disclosures	The Board has adopted a policy of fostering high standards of corporate governance in all its activities. This principle is the cornerstone of creating and preserving long-term shareholder value. The Company Secretary and AIFM regularly report to the Board any changes in the regulatory environment. Whilst Investment trusts are currently exempt from the Task Force on Climate-Related Financial Disclosures ("TCFD") disclosure, White Oak Capital support the recommendations of TCFD and intend to continue to promote increased transparency, encourage the development of tools and methods to manage climate-related risks and opportunities and contribute to the best practices in the industry.
Impact of War/Sanctions The impact of Russia's invasion of Ukraine on the Company's portfolio of investments and any future prolonged and deep market decline which would likely lead to falling values in the Company's investments or interruptions to cash flow. The extent and impact of military action, resulting sanctions and further market disruptions is difficult to predict which increases uncertainty and challenges confidence in financial markets. This could lead to a recession if the conflict were to move towards a broader regional or global conflict.	The Company does not have any direct or indirect exposure to investments in Ukraine or Russia. There are also no direct business relationships with counterparties from these countries.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable laws and regulations.

The Companies Act 2006 (the "company law") requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Company financial statements in accordance with UK-adopted international accounting standards.

Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company during and as at the end of the year. In preparing these financial statements, the Directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgements and estimates, which are reasonable and prudent;

·      present information including accounting policies and additional disclosures as required to ensure the report is presented in a manner that provides relevant, reliable, comparable and understandable information;

·      state whether applicable UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

·      prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the accounts comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The accounts are published on the Company's website at https://ashokaindiaequity.com, which is maintained by the Investment Manager. The work carried out by the auditors does not involve consideration of the maintenance and integrity of this website and, accordingly, the auditors accept no responsibility for any changes that have occurred to the accounts since being initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' confirmation statement
The Directors each confirm to the best of their knowledge that:

(a)     the financial statements, prepared in accordance with UK adopted international financial reporting standards in conformity with the requirements of the Companies Act 2006, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company as required by DTR 4.1.12R; and

(b)     this Annual Report comprising the Strategic Report and Governance Statements includes a fair review of the development and performance of the business and position of the Company, together with a description of the principal and emerging risks that it faces as required by DTR 4.1.8R and DTR 4.1.9R.

Having taken advice from the Audit Committee, the Directors consider that the Annual Report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company's performance, business model and strategy.

For and on behalf of the Board
ANDREW WATKINS
Chairman
6 October 2023

FINANCIAL STATEMENTS

Statement of Comprehensive Income

For the financial year ended 30 June 2023

		For the year ended			For the year ended
		30 June 2023			30 June 2022
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments	4	-	43,805	43,805	-	7,848	7,848
Gains/(losses) on currency movements		-	330	330	-	(309)	(309)
Net investment gains		-	44,135	44,135	-	7,539	7,539
Income	5	1,308	-	1,308	1,040	-	1,040
Total income		1,308	44,135	45,443	1,040	7,539	8,579
Performance fees	7	-	(2,464)	(2,464)	-	-	-
Operating expenses	8	(1,041)	-	(1,041)	(832)	-	(832)
Operating profit before taxation		267	41,671	41,938	208	7,539	7,747
Taxation	9	(139)	(7,219)	(7,358)	(202)	1,679	1,477
Profit for the year		128	34,452	34,580	6	9,218	9,224
Earnings per Ordinary Share	10	0.14p	38.51p	38.65p	0.01p	9.46p	9.47p

There is no other comprehensive income and therefore the 'Profit for the year' is the total comprehensive income for the year ended 30 June 2023.

The total column of the above statement is the profit and loss account of the Company. The supplementary revenue and capital columns, including the earnings per Ordinary Share, are prepared under guidance from the Association of Investment Companies.

All revenue and capital items in the above statement derive from continuing operations.

The notes below form an integral part of these financial statements.

STATEMENT OF FINANCIAL POSITION

As at 30 June 2023

	Note	30 June 2023 £'000	30 June 2022 £'000
Non-current assets Investments held at fair value through profit or loss	4	236,764	183,361
Current assets
Cash and cash equivalents		6,489	7,027
Dividend receivable		229	188
Other receivables		225	42
		6,943	7,257
Total assets		243,707	190,618
Current liabilities
Purchases for future settlement		(459)	-
Other payables	6	(520)	(203)
Performance fees payable	7	(2,464)	-
Non-Current liabilities
Capital gains tax provision		(7,713)	(3,029)
Total liabilities		(11,156)	(3,232)
Net assets		232,551	187,386
Equity
Share capital	12	1,128	1,076
Share premium account		101,003	90,470
Special distributable reserve	13	44,276	44,276
Capital reserve		86,136	51,684
Revenue reserve		8	(120)
Total equity		232,551	187,386
Net asset value per Ordinary Share	14	206.2p	174.2p

Approved by the Board of Directors on 6 October 2023 and signed on its behalf by:

Andrew Watkins
Director

Ashoka India Equity Investment Trust plc incorporated in England and Wales with registered number 11356069.

The notes below form an integral part of these financial statements.

Statement of Changes in Equity

For the financial year ended 30 June 2023

		Share Capital	Share premium account	Special distributable reserve	Capital reserve	Revenue reserve	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Opening balance as at		1,076	90,470	44,276	51,684	(120)	187,386
1 July 2022
Profit for the year		-	-	-	34,452	128	34,580
Issue of Ordinary Shares	12	52	10,683	-	-	-	10,735
Share issue costs		-	(150)	-	-	-	(150)
Closing balance as at 30 June 2023		1,128	101,003	44,276	86,136	8	232,551

For the financial year ended 30 June 2022

		Share Capital	Share premium account	Special distributable reserve	Capital reserve	Revenue reserve	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Opening balance as at		860	49,099	44,276	42,466	(126)	136,575
1 July 2021
Profit for the year		-	-	-	9,218	6	9,224
Issue of Ordinary Shares	12	216	41,886	-	-	-	42,102
Share issue costs		-	(515)	-	-	-	(515)
Closing balance as at 30 June 2022		1,128	1,076	90,470	44,276	51,684	(120)

The Company's distributable reserves consist of the special distributable reserve, revenue reserve and capital reserve attributable to realised profit.

The notes below form an integral part of these financial statements.

STATEMENT OF CASH FLOWS

For the financial year ended 30 June 2023

Note		For the year ended 30 June 2023	For the year ended 30 June 2022
		£'000	£'000
Cash flows from operating activities
Operating profit before taxation		41,938	7,747
Taxation paid		(3,362)	(3,123)
(Increase)/decrease in receivables		(224)	433
Increase in payables		2,781	117
Gains on investments	4	(43,805)	(7,848)
Net cash flow used in operating activities		(2,672)	(2,674)
Cash flows from investing activities
Purchase of investments		(120,344)	(118,600)
Sale of investments		111,893	87,259
Net cash flow used in investing activities		(8,451)	(31,341)
Cash flows from financing activities
Net proceeds from issue of shares	12	10,735	34,110
Share issue costs		(150)	(515)
Net cash flow from financing activities		10,585	33,595
Decrease in cash and cash equivalents		(538)	(420)
Cash and cash equivalents at start of year		7,027	7,447
Cash and cash equivalents at end of year		6,489	7,027

The notes below form an integral part of these financial statements.

Notes to the Financial Statements

1. Reporting entity
Ashoka India Equity Investment Trust plc is a closed-ended investment company, registered in England and Wales on 11 May 2018. The Company's registered office is 6th Floor 125 London Wall, London, England, EC2Y 5AS. Business operations commenced on 6 July 2018 when the Company's Ordinary Shares were admitted to trading on the LSE. The financial statements of the Company are presented for the year from 1 July 2022 to 30 June 2023.

The Company primarily invests in securities listed on any stock exchange in India and can invest in the securities of companies with a significant presence in India that are listed on stock exchanges outside India

2. Basis of preparation

Statement of compliance

These financial statements have been prepared in accordance with applicable law and the UK-adopted international accounting standards. The financial statements have been prepared on a historical cost basis, except for the measurement at fair value of investments.

When presentational guidance set out in the Statement of Recommended Practice ("SORP") for Investment Companies issued by the Association of Investment Companies ("the AIC") in July 2022 is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.

In preparing these Financial Statements the Directors have considered the impact of climate change risk as a Principal and emerging risk as set above. In line with the UK-adopted international accounting standards, investments are valued at fair value, being primarily quoted prices for investments in active markets at the balance sheet date, and therefore reflect market participant's view of climate change risk. Unlisted investments, valued by reference to appropriate valuation techniques (see note 3), similarly reflect market participants' view of climate change risk.

Going concern

The Directors have concluded that there is a reasonable expectation that the Company will have adequate liquidity and cash balances to meet its liabilities as they fall due and continue in operational existence for the foreseeable future and continue as a going concern for the period to 31 December 2024. As such the Directors have adopted the going concern basis in preparing the financial statements.

Use of estimates and judgements

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

The Indian capital gains tax provision represents an estimate of the amount of tax payable by the Company. Tax amounts payable may differ from this provision depending on when the Company disposes of investments. The current provision for Indian capital gains tax is calculated based on the long-term or short-term nature of the investments and the applicable tax rate at the year end. Currently, the short-term tax rate is 15% and the long-term tax rate is 10%. The estimated tax charge is subject to regular review including a consideration of the likely period of ownership, tax rates and market valuation movements.

As disclosed in the statement of financial position, the Company made a capital gains tax provision as at 30 June 2023 of £7,713,000 (30 June 2022: £3,029,000) in respect of unrealised gains on investments held.

The Company's investments are denominated in Indian rupees. However, the Company's shares are issued in sterling and the majority of its investors are UK based. The Company's expenses and dividends are also paid in sterling. Therefore, the financial statements are presented in sterling, which is the Company's functional currency. All financial information has been rounded to the nearest thousand pounds.

The key estimate in the financial statements is the determination of the fair value of the unlisted investments by the Investment Manager for consideration by the Directors. This estimate is key as it significantly impacts the valuation of the unlisted investments at the year end. The fair valuation process involves estimation using subjective inputs that are unobservable (for which market data is unavailable). The key inputs considered in the valuation are described below.

Fair value estimates are cross-checked to alternative estimation methods where possible to improve the robustness of the estimates. The risk of an over or under estimation of fair values is greater when methodologies are applied using more subjective inputs.

Basis of measurement

The financial statements have been prepared on the historical cost basis except for financial instruments at fair value through profit or loss, which are measured at fair value.

3. Accounting policies
(a) Investments
Listed investments
Changes in the fair value of investments held at fair value through profit or loss and gains or losses on disposal are included in the capital column of the Statement of Comprehensive Income within "gains on investments".

Investments are derecognised on the trade date of their disposal, which is the point where the Company transfers substantially all the risks and rewards of the ownership of the financial asset.

Transaction costs directly attributable to the acquisition of investments at fair value through profit or loss are recognised under gains/(losses) on investments.

Unlisted investments
The Investment Manager unlisted investment valuation policy applies techniques consistent with the IPEV Guidelines.

The techniques applied are predominantly market-based approaches or discounted cash flows where appropriate forecasts can be done. The market-based approaches available under IPEV Guidelines are set out below and are followed by an explanation of how they are applied to the Company's unlisted portfolio:

·      Multiples; and

·      Industry Valuation Benchmarks.

The nature of the unlisted portfolio currently will influence the valuation technique applied. The valuation approach recognises that, as stated in the IPEV Guidelines, the price of a recent investment, if resulting from an orderly transaction, generally represents fair value as at the transaction date and may be an appropriate starting point for estimating fair value at subsequent measurement dates. However, consideration is given to the facts and circumstances as at the subsequent measurement date, including changes in the market or performance of the investee company. Milestone analysis is used where appropriate to incorporate the operational progress of the investee company into the valuation. Additionally, the background to the transaction must be considered. As a result, various Multiples-based techniques are employed to assess the valuations particularly in those companies with established revenues. Discounted cash flows are used where appropriate. An absence of relevant industry peers may preclude the application of the industry valuation benchmarks technique. All valuations are cross-checked for reasonableness by employing relevant alternative techniques.

(b) Foreign currency
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At the date of each Statement of Financial Position, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on that date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on retranslation are included in the Statement of Comprehensive Income within the revenue or capital column depending on the nature of the underlying item. Foreign exchange movements on investments are included in the Statement of Comprehensive Income within "losses on currency" movements.

(c) Income from investments
Dividend income from shares is accounted for on the basis of ex-dividend dates. Overseas income is grossed up at the appropriate rate of tax.

Special dividends are assessed on their individual merits and may be credited to the Statement of Comprehensive Income as a capital item if considered to be closely linked to reconstructions of the investee company or other capital transactions. All other investment income is credited to the Statement of Comprehensive Income as a revenue item.

Interest on fixed income instruments is accounted on an accrual basis.

(d) Capital reserves
Profits or losses arising on the sale of investments and changes in fair value arising upon the revaluation of investments are credited or charged to the capital column of the Statement of Comprehensive Income and allocated to the capital reserve.

Company's redemption facility is subject to approval by the Board and as such the redemption facility does not represent a contractual obligation on the Company and the shares are accordingly classified as equity.

(e) Expenses
All expenses are accounted for on an accruals basis. Expenses are recognised through the Statement of Comprehensive Income as revenue items except that performance fees, if any, are payable directly by reference to the capital performance of the Company as per the Investment Management Agreement and are therefore charged to the Statement of Comprehensive Income as a capital item. No other management fees are payable.

(f) Cash and cash equivalents
Cash comprises cash at hand and demand deposits. For purposes of the statement of cash flows, cash equivalents, including bank overdrafts, are short-term, highly liquid investments that are readily convertible to known amounts of cash, are subject to insignificant risks of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

(g) Taxation
Irrecoverable taxation on dividends is recognised on an accruals basis in the Statement of Comprehensive Income. Indian tax rates for dividends with ex-dividend dates post 1 April 2020 are subject to 20% withholding tax.

The tax charges on Indian capital gains taxes are shown in the Statement of Comprehensive Income, recognised on an accrual basis. The Company is not subject to UK capital gains tax.

Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the statement of financial position liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Investment trusts which have approval as such under Section 1158 of the Corporation Tax Act 2010 are not liable for taxation on capital gains.

(h) Adoption of new IFRS standards
A number of new standards, amendments to standards and interpretations are effective for the annual periods beginning on or after 1 January 2023. None of these are expected to have a material impact on the measurement of the amounts recognised in the financial statements of the Company.

(i) New standards and amendments issued but not yet effective

The relevant new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company's financial statements are disclosed below. These standards are not expected to have a material impact on the entity in future reporting periods and on foreseeable future transactions.

Amendments to IAS 1: Classification of Liabilities as Current or Non-current

In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments are effective for annual reporting periods beginning on or after 1 January 2023.

Definition of Accounting Estimates - Amendments to IAS 8

In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of 'accounting estimates'. The amendments are effective for annual reporting periods beginning on or after 1 January 2023.

Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2

In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements. The amendments to IAS 1 are applicable for annual periods beginning on or after 1 January 2023.

4. Investments held at fair value through profit or loss
(a) Investments held at fair value through profit or loss

As at 30 June 2023 £'000		As at 30 June 2022 £'000
Quoted investments in India	233,303	177,998
Unquoted investments in India	3,461	5,363
Closing valuation	236,764	183,361

(b) Movements in valuation

As at 30 June 2023 £'000		As at 30 June 2022 £'000
Opening valuation	183,361	147,399
Opening unrealised gains on investments	29,059	46,121
Opening book cost	154,302	101,278
Additions, at cost	120,803	121,568
Disposals, at cost	(95,065)	(68,544)
Closing book cost	180,040	154,302
Revaluation of investments	56,724	29,059
Closing valuation	236,764	183,361

Transaction costs on investment purchases for the year ended 30 June 2023 amounted to £163,000 (30 June 2022:

£159,000) and on investment sales for the financial year to 30 June 2023 amounted to £181,000 (30 June 2022:

£172,000). As at year end £2.3 million (30 June 2022: £11.6 million) of investments were subject to lock in periods.

(c) Gains on investments

Year ended 30 June 2023 £'000		Year ended 30 June 2022 £'000
Realised gains on disposal of investments	16,484	25,241
Transaction costs	(344)	(331)
Movement in unrealised gains/(losses) on investments held	27,665	(17,062)
Total gains on investments	43,805	7,848

Under IFRS 13 'Fair Value Measurement', an entity is required to classify investments using a fair value hierarchy that reflects the significance of the inputs used in making the measurement decision. The following shows the analysis of financial assets recognised at fair value based on:

Level 1

Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the

measurement date.

Level 2

Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly

or indirectly.

Level 3

Unobservable inputs for the asset or liability.

The classification of the Company's investments held at fair value is detailed in the table below:

	As at 30 June 2023				As at 30 June 2022
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Investments at fair value through	233,303	-	-	233,303	177,998	-	-	177,998
profit and loss - Quoted investments
in India
Unquoted investments in India	-	-	3,461	3,461	-	-	5,363	5,363
	233,303	-	3,461	236,764	177,998	-	5,363	183,361

As at 30 June 2023 £'000		As at 30 June 2022 £'000
Opening balance	5,363	6,323
Additions during the year	1,199	5,416
Conversion from level 3 to level 1 investments	(2,916)	(6,353)
Total losses for the year recognised in profit or loss	(185)	(23)
Closing balance	3,461	5,363

As at year end, the Company had two unquoted investments. These are investment in Ideaforge Technology Ltd for a total of 178,464 shares and investment in Veeda Clinical Research Ltd for a total of 680,790 shares.

As at the end of prior year, investment in Bikaji Foods International Limited was classified as Level 3 investment as there is no available market price. During the year, the investment has entered into an Initial Public Offering and has been classified as Level 1 Investment.

Unquoted investments are valued by the Investment Manager in accordance with the International Private Equity and Venture Capital Valuation Guidelines 2022 ("IPEV") guidelines which are consistent with IFRS. On 14 December 2022, the IPEV Board published revised International Private Equity and Venture Capital Valuation Guidelines ("IPEV Guidelines" or "Valuation Guidelines" or "Guidelines"), which will replace the 2018 Valuation Guidelines. The revised Guidelines are effective for periods beginning from 1 January 2023, with early adoption encouraged. The guidelines are consistent with IFRS. The Investment Manager applies techniques consistent with the IPEV. The key inputs considered in the valuation are described below.

Financial assets and liabilities are held at fair value in the financial statements with the exception of short-term assets and liabilities where their carrying value approximates to fair value.

5. Income

As at 30 June 2023 £'000		As at 30 June 2022 £'000
Income from investments:
Overseas dividends	1,307	1,040
Other Income:
Deposit interest	1	-
Total income	1,308	1,040

6. Other payables

As at 30 June 2023 £'000		As at 30 June 2022 £'000
Accrued expenses	520	203
Total other payables	520	203

7. Performance fees expense

	Year ended 30 June 2023			Year ended 30 June 2022
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Performance fees expenses	-	2,464	2,464	-	-	-

The Investment Manager does not receive a fixed management fee in respect of its portfolio management services to the Company. The Investment Manager will become entitled to a performance fee subject to the Company delivering excess returns versus the MSCI India IMI Index in the medium term. The performance fee will be measured over periods of three years (Performance Period), with the first period ending (approximately three years from 6 July 2018) on 30 June 2021. The performance fee in any Performance Period shall be capped at 12% of the time weighted average adjusted net assets during the relevant Performance Period.

The performance fee is calculated at a rate of 30% of the excess returns between adjusted NAV per share on the last day of the performance period and the MSCI India IMI Index (sterling) over the performance period, adjusted for the weighted average number of Ordinary Shares in issue during the performance period. The Performance Fee in respect of each Performance Period will be paid at the end of the three-year period.

As at 30 June 2023, there was a £2,464,000 provision for the performance fee liability to the Investment Manager for the full two year period (30 June 2022: nil, for the one year period).

8. Expenses

Year ended 30 June 2023 £'000		Year ended 30 June 2022 £'000
Administration & secretarial fees	197	158
Auditor's remuneration - Statutory audit fee*	67	45
Broker fees	32	33
Custody services	40	30
Directors' fees and expenses	128	128
Board trip to India costs	31	17
Tax compliance and advice	30	27
Printing and public relations	202	192
Marketing fees**	84	-
Registrar fees	24	18
Legal Fees	92	90
UKLA and other regulatory fees	16	10
Other expenses***	98	84
Total	1,041	832

*      Auditor's remuneration excludes VAT.

**     The Company has incurred marketing fees during the period.

***   Other expenses include LSE, KID fees, Distribution fees, other license fees, bank charges and other miscellaneous fees.

9. TAXATION
(a) Analysis of charge in the year:

	Year ended 30 June 2023			Year ended 30 June 2022
	Revenue	Capital	Revenue	Capital	Revenue	Capital
	£'000	£'000	£'000	£'000	£'000	£'000
Capital gains tax provision	-	4,684	4,684	98	1,369	1,467
Capital gains tax expense/(credit)	-	2,535	2,535	-	(3,048)	(3,048)
Indian withholding tax	139	-	139	104	-	104
Total tax charge for the year	139	7,219	7,358	202	(1,679)	(1,477)

The Company is liable to Indian capital gains tax under Section 115 AD of the Indian Income Tax Act 1961. A tax provision on Indian capital gains is calculated based on the long-term (securities held more than one year) or short-term (securities held less than one year) nature of the investments and the applicable tax rate at the period end. The short-term tax rates are 15% and the long-term tax rates are 10%.

The Company's dividends are received net of 20% withholding tax. Of this 20% withholding tax charge, 10% is irrecoverable with the remainder being shown in the Statement of Financial Position as an asset due for reclaim.

(b)               Factors affecting the tax charge for the year:

The effective UK corporation tax rate for the year is 20.5%. The tax charge differs from the charge resulting from applying the standard rate of UK corporation tax for an investment trust company. The differences are explained below:

Year ended 30 June 2023 £'000		Year ended 30 June 2022 £'000
Operating profit before taxation	41,938	7,747
UK Corporation tax at 20.5% (2022: 19%)	8,597	1,472
Effects of:
Indian capital gains tax provision	7,219	(1,679)
Gains on investments not taxable	(9,048)	(1,432)
Overseas dividends not taxable	(268)	(198)
Unutilised management expenses	719	158
Indian withholding tax	139	202
Total tax charge for the year	7,358	(1,477)

The Company is not liable to UK Corporation tax on capital gains due to its status as an investment trust. The Company has an unrecognised deferred UK Corporation tax asset of £3,465,000 (2022: £2,589,000) based on the prospective UK corporation tax rate of 25% (2022: 25%). This asset has accumulated because deductible expenses exceeded taxable income for the year ended 30 June 2023. No asset has been recognised in the accounts because, given the composition of the Company's portfolio, it is unlikely that this asset will be utilised in the foreseeable future.

(c)  Movements on the capital gains tax provision for the year

The capital gains tax provision represents an estimate of the amount of tax provisionally payable by the Company on direct investment in Indian equities. It is calculated based on the long-term or short-term nature of the investments and the unrealised gain thereon at the applicable tax rate at the year end. As of 30 June 2023, the Company made a capital gains tax provision of £7,713,000 (30 June 2022: £3,029,000) in respect of unrealised gains on investments held.

10. Earnings per Ordinary Share

	Year ended 30 June 2023			Year ended 30 June 2022
	Revenue	Capital	Total	Revenue	Capital	Total
Profit for the year (£'000)	128	34,452	34,580	6	9,218	9,224
Earnings per Ordinary Share	0.14p	38.51p	38.65p	0.01p	9.46p	9.47p

Ea

Earnings per Ordinary Share is based on the profit for the year of £34,580,000 (30 June 2022: profit of £9,224,000) attributable to the weighted average number of Ordinary Shares in issue during the year ended 30 June 2023 of 89,469,919 (30 June 2022: 97,433,268). Revenue and capital profits are £128,000 (30 June 2022: revenue profit of £6,000) and £34,452,000 (30 June 2022: capital profit of £9,218,000) respectively.

11. Dividend
The Company's objective is to provide shareholder returns through capital growth with income being a secondary consideration. It should not be expected that the Company will pay a significant annual dividend, but the Board intends to declare such annual dividends as are necessary to maintain the Company's UK investment trust status. The Board is proposing that no dividend be paid in respect of the year ended 30 June 2023 in accordance with the Company's Dividend policy shown above.

12. Share capital

As at  30 June 2023 No. of shares		£'000	As at  30 June 2022 No. of shares	£'000
Allotted, issued and fully paid: Redeemable Ordinary Shares of 1p each ("Ordinary Shares")	112,807,812	1,128	107,567,672	1,076
Total	112,807,812	1,128	107,567,672	1,076

Ordinary Shares
On incorporation, the issued share capital of the Company was 1 Ordinary Share of £0.01.

During the year ended 30 June 2023, 5,240,140 Ordinary Shares (30 June 2022: 22,590,042) were issued with aggregate proceeds of £10,735,000 (30 June 2022: £42,102,000). Additionally, 124,374 Ordinary Shares were matched with buyers in the market in respect of the 30 September 2022 annual Redemption Point. As at the date of this Annual Report, the total number of Ordinary Shares in issue is 112,807,812 (30 June 2022: 107,567,672).

The Ordinary Shares have attached to them full voting, dividend and capital distribution rights. They confer rights of redemption. The Company's special distributable reserve may also be used for share repurchases, both into treasury or for cancellation.

Since year end and up to 4 October 2023, being the latest practical date prior to the signing of these financial statements, 5,707,135 Ordinary Shares were issued with aggregate proceeds of £12,534,144.

Management shares
In addition to the above, on incorporation the Company issued 50,000 Management Shares of nominal value of £1.00 each.

The holder of the Management Shares undertook to pay or procure payment of one quarter of the nominal value of each Management share on or before the fifth anniversary of the date of issue of the Management Shares. The Management Shares are held by an associate of the Investment Manager.

The Management Shares do not carry a right to attend or vote at general meetings of the Company unless no other shares are in issue at that time. The Management Shares have been treated as equity in accordance with IFRS.

13. Special distributable reserve

As indicated in the Company's prospectus dated 19 June 2018, following admission of the Company's Ordinary Shares to trading on the LSE, the Directors applied to the Court and obtained a judgement on 4 December 2018 to cancel the amount standing to the credit of the share premium account of the Company. The amount of the share premium account cancelled and credited to a special distributable reserve was £44,275,898. This reserve may also be used to fund dividend/distribution payments.

14. Net asset value ("NAV") per Ordinary Share
Net assets per ordinary share as at 30 June 2023 of £206.2p (30 June 2022: £174.2p) is calculated based on £232,551,000 (30 June 2022: £187,386,000) of net assets of the Company attributable to the 112,807,812 (30 June 2022: 107,567,672) Ordinary Shares in issue as at 30 June 2023.

15. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES
(i) Market risks
The Company is subject to a number of market risks in relation to economic conditions in India. Further detail on these risks and the management of these risks are included in the Strategic report.

The Company's financial assets and liabilities comprised:

	As at 30 June 2023			As at 30 June 2022
	Interest bearing	Non-interest bearing	Total	Interest bearing	Non-interest bearing	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Investments	-	236,764	236,764	-	183,361	183,361
Total investment	-	236,764	236,764	-	183,361	183,361
Cash and cash equivalent	-	6,489	6,489	-	7,027	7,027
Short-term debtors	-	454	454	-	230	230
Short-term creditors	-	(3,443)	(3,443)	-	(203)	(203)
Other assets	-	3,500	3,500	-	7,054	7,054
Total financial assets	-	240,264	240,264	-	190,415	190,415

Market price risk sensitivity
The effect on the portfolio of a 10.0% increase or decrease in market prices would have resulted in an increase or decrease of £23,676,000 (30 June 2022: £18,336,000) in the investments held at fair value through profit or loss at the year end, which is equivalent to 10.20% (30 June 2022: 9.8%) of the net assets attributable to equity holders. This analysis assumes that all other variables remain constant.

The Company's portfolio of unlisted level 3 investments is not necessarily affected by market performance, however the valuations may be affected by the performance of the underlying securities in line with the valuation criteria in note 15.

The unlisted securities sensitivity analysis recognises that the valuation methodologies employed involve different levels of subjectivity in their inputs. The valuations as at 30 June 2023 were primarily driven by the weighted average of Discounted Cash Flow (DCF) valuation, Market movement based valuation based on Index and Peer Group.

A.    Veeda Clinical Research

Valuation Technique	Fair value of investments (£'000)	Key variable input	Variable input sensitivity (%)	Positive impact (£'000)	Nagative impact (£'000)
Weighted average of the following:	2,304	Expected future cash flows and equity discount rate/WACC;	10% change in discount rates	3,285	1,878
1.   Discounted Cash Flow (DCF);		Selection of Index used; and
2.   Market movement based valuation based on Index; and		Selection of comparable companies based on peer group.
3.   Market movement based valuation based on Peer Group.

B. ideaForge Technology Limited

Valuation Technique	Fair value of investments (£'000)	Key variable input	Variable input sensitivity (%)	Positive impact (£'000)	Nagative impact (£'000)
Subscription price at 23 June 2023	1,157	N/A	N/A	N/A	N/A

Key variable inputs
The variable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of each unlisted company valuation. An explanation of each of the key variable inputs is provided below and includes an indication of the range in value for each input, where relevant.

Expected future cash flows and equity discount rate/WACC
The expected future cash flows are calculated using the aggregate future operating revenue based on growth in existing and new products resulting from the investment's ongoing capex and expansion plans. Equity discount rate/WACC is calculated at 14.2%.

Selection of Index used
The selection of index is assessed based on the market comparable index to the Company. MSCI India IMI and S&P BSE 500 were used for the market movement-based valuation based on index.

Selection of comparable companies

The selection of comparable companies is assessed individually for each investment at the point of investment, and the relevance of the comparable companies is continually evaluated at each valuation. The key criteria used in selecting appropriate comparable companies are the industry sector in which they operate and the geography of the company's operations.

Application of valuation basis

Each investment is assessed and the valuation basis applied will vary depending on the circumstances of each investment. For those investments where a trading multiples approach can be taken, the methodology will factor in revenue, earnings or net assets as appropriate for the investment. Discounted cash flows will be considered where appropriate forecasts are available. The valuation will also consider any recent transactions, where appropriate.

Estimated sustainable earnings and cash flows

The selection of sustainable revenue or earnings and cash flows will depend on whether the company is sustainably profitable or not, and where it is not then sustainable revenues will be used in the valuation. The valuation approach will typically assess companies based on the last twelve months of revenue or earnings, as they are the most recent available and therefore viewed as the most reliable. Where a company has reliably forecasted earnings previously or there is a change in circumstance at the business which will impact earnings going forward, then forward estimated revenue or earnings may be used instead.

Application of liquidity discount

A liquidity discount may be applied either through the calibration of a valuation against the most recent transaction, or by application of a specific discount.

(ii)                         Liquidity risks

Liquidity risk is that the Company will not be able to meet its obligations when due. An analysis of the Company's portfolio that could be liquidated over different time periods as at the year end is shown below:

30 June 2023 %		30 June 2022 %
Within one to seven days	83.9	88.8
Between seven days to one month	11.2	4.7
Between one and three months	1.6	1.1
Greater than three months	3.3	5.4
Total	100.0	100.0

Management of liquidity risks
The Company has a diversified portfolio which is readily realisable. The liquidity of the portfolio is reviewed regularly by the Investment Manager and the Board.

(iii) Currency risks
Although the Company's performance is measured in sterling, a high proportion of the Company's assets are denominated in Indian rupees. Change in the exchange rate between sterling and Indian rupees may lead to a depreciation of the value of the Company's assets as expressed in sterling and may reduce the returns to the Company from its investments.

Currency sensitivity
The below table shows the foreign currency profile of the Company.

Foreign currency risk profile

	As at 30 June 2023			As at 30 June 2022
	Investment exposure	Net monetary exposure	Total currency exposure	Investment exposure	Net monetary exposure	Total currency exposure
	£'000	£'000	£'000	£'000	£'000	£'000
Indian rupees	230,513	5,377	235,890	177,785	4,138	181,923
Swedish Krona	561	-	561	1,788	-	1,788
US Dollar	5,690	347	6,037	3,788	28	3,816
Total investment	236,764	5,724	242,488	183,361	4,166	187,527

Based on the financial assets and liabilities at 30 June 2023, and with all other variables remaining constant, if sterling had weakened/strengthened against the Indian rupee by 10%, the impact on the Company's net assets at 30 June 2023 would have been an increase/(decrease) in fair value as follows:

	30 June 2023		30 June 2022
	Increase in	Decrease in	Increase in	Decrease in
	Fair Value	Fair Value	Fair Value	Fair Value
	£'000	£'000	£'000	£'000
Indian rupees	23,051	(23,051)	17,778	(17,778)
Swedish Krona	56	(56)	179	(179)
US Dollar	569	(569)	379	(379)

Management of currency risks
The Company's Investment Manager monitors the currency risk of the Company's portfolio on a regular basis. Foreign currency exposure is regularly reported to the Board by the Investment Manager.

The Board does not intend to use hedge currency risk using any sort of foreign currency transactions, forward transactions or derivative instruments.

(iv) Credit risks
Credit risk is the risk that the issuer of a financial instrument will fail to fulfil an obligation or commitment that it has entered into with the Company.

Cash and other assets are held by the custodian.

Management of credit risks

The Company has appointed Kotak Mahindra Bank Limited ("Kotak") as its depositary. The credit rating of Kotak was reviewed at the time of appointment and is reviewed on a regular basis by the Investment Manager and the Board.

The Investment Manager monitors the Company's exposure to its counterparties on a regular basis and trades in equities are performed on a delivery versus payment basis. Impairment assessment based on an expected credit loss model is not considered material to the Company.

At 30 June 2023, the Depository held £233,303,000 (30 June 2022: £177,998,000) in respect of quoted investments and

£6,489,000 (30 June 2022: £7,027,000 in respect of cash on behalf of the Company.

(v) Capital management policies and procedures

The Company considers its capital to consist of its share capital of Ordinary Shares of 1p each, Management Shares of £1 each, and reserves totalling £232,551,000 (30 June 2022: £187,386,000).

The Company is not subject to any externally imposed capital requirements.

The Investment Manager and the Company's Broker monitor the demand for the Company's shares and the Directors review the position at Board meetings.

16. Related party transactions
Performance fees payable to the Investment Manager are disclosed in Note 7.

White Oak Capital Partners provides investment advisory services to the Investment Manager and no fees are paid to them from the Company.

Since commencement of operations on 6 July 2018 fees were payable at an annual rate of £35,000 to the Chairman, £27,500 to the Chair of the Audit Committee, and £25,000 to the other Directors. From 1 July 2021 fees were payable at an annual rate of £40,000 to the Chairman, £32,500 to the Chair of the Audit Committee, and £27,500 to the other Directors.

The Directors had the following shareholdings in the Company, all of which are beneficially owned.

As at date of this report		As at 30 June 2023	As at 30 June 2022
Andrew Watkins	94,425	94,425	94,425
Jamie Skinner	95,985	94,200	84,733
Rita Dhut	81,733	81,733	81,733
Dr Jerome Booth	80,213	77,623	66,202

17. Post balance sheet events
As announced on 5 September 2023, the total number of Ordinary Shares in respect of redemption requests were received for this Redemption Point was 547,339. All of which were immediately placed with buyers by the Company's corporate broker. The NAV per share of the Company has increased by 9.7% from 30 June 2023 to 4 October 2023, being the latest practical date prior to the signing of these accounts.

Financial information

This announcement does not constitute the Company's statutory accounts.  The financial information is derived from the statutory accounts, which will be delivered to the registrar of companies and will be put forward for approval at the Company's Annual General Meeting. The auditors have reported on the accounts for the year ended 30 June 2023, their report was unqualified and did not include a statement under Section 498(2) or (3) of the Companies Act 2006.

The Annual Report for the year ended 30 June 2023 was approved on 6 October 2023. The report will be available in electronic format on the Company's website, www.ashokaindiaequity.com.

The Annual Report will be submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism

This announcement contains regulated information under the Disclosure Guidance and Transparency Rules of the FCA.

Annual General Meeting

The Annual General Meeting will be held at the offices of White Oak at 13 Hanover Square, Mayfair, London W1S 1HN on 8 December 2023 at 12 noon.

Company Secretary and registered office:

Apex Listed Companies Services (UK) Limited

6th Floor, 125 London Wall, Barbican, London EC2Y 5AS, United Kingdom

 

END