ICGF Annual Results

RNS Number : 3319C

India Capital Growth Fund Limited

17 March 2014

 

17 March 2014

INDIA CAPITAL GROWTH FUND LIMITED

ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2013

Per Ordinary Share	31 Dec 2013	31 Dec 2012	% change
Market price	35.50p	41.50p	-14.5%
Net asset value (NAV)	46.47p	51.19p	-9.2%
Discount to NAV	23.6%	18.9%
BSE Midcap Index (GBP) Relative performance to the Index	65.74 +9.0%	80.36 +0.8%	-18.2%
FX rate INR Rupee /GBP Sterling	102.01	88.51	-15.3%

Key points:

·     NAV relative to the BSE Midcap Index outperformed by 9.0% (2012: outperformed by 0.8%)

·     NAV fell by 9.2% in Sterling (2012: increased by 29.3%) due primarily to a 15.3% depreciation of the Rupee (2012: depreciation of 7.8%)

·     2013 was a volatile year for Indian equities due to both domestic factors and global fund flows

·     In the first two months of 2014 the NAV outperformed the BSE Mid Cap Index by 3.4%.

·     Since December 2013 the Rupee has held up well relative to other Emerging Markets

·     With a national election in India due by May 2014, politics has now taken centre stage

·     Annual operating costs in 2014 budgeted to reduce by over £100,000

Enquiries:

APEX Fund Services (Guernsey) Limited (Administrator)

Stephen Cuddihee          07781 115459

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

CHAIRMAN'S STATEMENT

This year has been a volatile one for equity investors in India as global forces dominated sentiment and drove capital flows. The Rupee (INR) depreciated 15.3 per cent against Sterling and as a result the Net Asset Value (NAV) fell by 9.2 per cent in 2013 despite delivering positive returns of 4.6 per cent in INR. On a Sterling basis the notional benchmark BSE Mid Cap Index fell by 18.2 per cent, constituting an impressive outperformance by the Investment Manager of 9.0 per cent. This outperformance has continued in the two months to February 2014 with the NAV outperforming the BSE Mid Cap Index by 3.4% in Sterling terms for this period.

Economy

The year had started with optimism. Interest rates were believed to be on a downward path, a slew of policies announced by the Cabinet in the previous September had allowed further Foreign Direct Investment (FDI) in key sectors and the fast tracking of stalled infrastructure projects, all led to the view that one would witness the investment cycle being kick started, allowing growth to resume its recent historic levels. However the fiscal stimulus provided by the Indian Government after the Global Financial Crisis, alongside a high subsidy burden and policy paralysis on the reform front, left India with large fiscal and current account deficits. As such the economy was precariously balanced in the face of global monetary drivers. In my previous statement I wrote that "In 2012 India was a significant beneficiary of the fact that global markets were overflowing with liquidity as a result of the pledge of the Central Banks of developed markets to maintain ultra-loose monetary policy". When juxtaposed with 2013 this could not make for a starker contrast.

The major sell off in the currency that took place in May 2013 after the US Federal Reserve announced it was considering scaling down its Quantitative Easing (QE) programme was a shock to the economy. India was consistently dubbed by strategists and opinion formers as being part of the "Fragile Five" Emerging Market nations with high twin deficits and the potential to suffer Balance of Payments issues as global liquidity tightened.

It is a relief to write that since the US Federal Reserve started reducing its QE programme in December, the Rupee has held up well relative to other Emerging Markets, supported by an improvement in the current account deficit. This has resulted from improved exports driven by a weaker Rupee and reduced imports as the Government clamped down on excessively high levels of gold imports. Consequently the deficit looks set to come down from US$88bn in FY13 (4.7 per cent of GDP) to a much more manageable US$43bn in FY14 (2.3 per cent of GDP). The real source of positivity however was the appointment of Dr. Raghuram Rajan as Governor of the Reserve Bank of India (RBI) in September. An ex IMF Chief Economist, he is highly respected by the best of world economic forums and has proved to be a steady hand at the tiller since he started. By tapping into the Indian diaspora by opening a two month window for INR deposits at preferential rates, the RBI raised over US$34bn at the end of the year which has shored up Foreign Exchange reserves, putting India in a much better position to manage future moves by the US Federal Reserve to wean the markets off their QE programme.

The moves taken to stabilise the currency unfortunately represents only one step on the journey to economic strength in India. Indeed whilst India is now better placed to weather ubiquitous Emerging Market negativity, necessary structural reform that the country needs is still not forthcoming. Until there is strong and decisive leadership at the top, private sector capex and FDI will continue to hesitate, inflation will continue to stay high and growth will remain sub-par.

With a national election due by May 2014, politics has now taken centre stage. The electorate sent a loud statement that the status quo is unacceptable when the ruling Congress Party was decimated in five state elections in November. The rise of the anti-corruption Aam Aadmi Party and the continued momentum of the BJP's leader, Narendra Modi (architect of the State of Gujarat's economic miracle), provide confidence that graft will no longer be the entrenched modus operandi. Should a strong mandate be won by either main party in the election it is clear that economic reality will triumph over populism and the long term reform agenda will resume its course. The main fear is that neither the BJP nor the Congress gains enough seats to provide a strong mandate and is beholden to the self-interest of several coalition partners. The chances of this are slim however and recent polling suggests that Narendra Modi is gaining traction, especially amongst the younger portion of the electorate. It is worth noting that there are now 120 million new voters of age compared to the 2009 election and should he lead the next Government, we think the market will view this very positively.

Structural changes

Throughout 2013 the Board implemented a cost reduction programme to more align the Company's operating costs with the current size of its assets under management. A global administrator has been appointed in both Guernsey and Mauritius from 1 January 2014 and the custodian and other key service providers have been changed and or costs renegotiated. Consequently annual operating costs in 2014 are budgeted to reduce by over £100,000 to around £338,000.  

Additionally in early December, after exploratory discussions with shareholders, the Board announced it was considering an issue of subscription shares ("Share Subscription Issue"). The Board and management believe the Share Subscription Issue would have had a positive impact for shareholders by increasing the size of the Company, which in turn would improve its marketability, facilitate a broader shareholder base and reduce the total expense ratio, whilst ensuring value remained with existing shareholders. However in late December, following further feedback from shareholders, it became evident that whilst there was significant support for the Share Subscription Issue, there was not a clear consensus. Consequently and with regret, the Board announced that it was not able to proceed with the Share Subscription Issue at this current time. The cost of this aborted Share Subscription Issue of £72,500 has been shown as Other professional fees in the Consolidated Statement of Comprehensive Income. The Board and management were disappointed with this outcome but remain intent on delivering performance required to underpin the Company's continuation proposal and growth strategy.

Outlook

Regardless of political and macro-economic factors, India's dynamic, young and entrepreneurial population continues to provide attractive opportunities for patient investors. The Investment Manager's philosophy of bottom up stock selection of high quality, cash generating businesses with strong balance sheets has thus far delivered consistent outperformance against the notional benchmark. In the long run, as confidence returns to the markets, this should translate into meaningful absolute returns for shareholders.

Fred Carr

Chairman

14 March 2014

INVESTMENT MANAGER'S REPORT

Introduction

2013 was a volatile year for Indian equities due to both domestic factors and global fund flows. The market witnessed wide divergences not only in price movements in individual stocks but also amongst sectors and between larger and smaller capitalisation stocks within these sectors. This is best reflected in the two charts below which highlight the returns for the BSE Sensex and BSE Midcap Index. Even within sectors, barring some consumer companies, almost all domestic focused sectors saw negative returns. It was a year where export oriented themes found favour.

This volatility was not just in India but across Emerging Markets which were held hostage to global fund flows. Fears of QE tapering by the US Federal Reserve led to a flood of outflows with most emerging economies witnessing declining growth rates and worsening current account balances, leading to sharp movements in currencies and markets. India, with its widening current account deficit, was no exception. Hence while the focus in the first half of the year was on building growth, the focus in the second half shifted to managing the external environment.

The performance of the Indian market in light of the above is commendable and has allowed it to become one of the leading Emerging Markets in 2013. This is largely because the equity market continued to witness a disproportionate share (albeit volatile) of Foreign Institutional Investor (FII) inflows. In contrast, domestic institutional investors were sustained sellers while domestic retail investors, for the most part, continued to stay away from the market. In such an environment, the philosophy of investing in high quality businesses with strong management teams helped.

Economy

The year began with two main challenges - kick starting the investment cycle and bringing down inflation. Sadly the Government remained in fire fighting mode throughout the year and its performance on both parameters was disappointing.

On the investment side, the key issue was how the Government was going to get the project approvals process going against a background of various corruption related allegations and investigations. The previous decade had witnessed over aggressive bidding by private sector companies, many of whom found these projects unviable due to the change in the economic environment. Hence decisions were required to resolve these issues but nothing was being done for fear of appearing biased towards any single company. To solve the issue the Government created the Cabinet Committee of Investments (CCI) in January 2013, headed by the Prime Minister, to fast track large projects above INR10bn which had become stuck. Much was expected from these initiatives and it was widely believed that during the second half of the calendar year there would be a lot more ground level activity. While the CCI approved 123 projects over the course of the year worth approximately US$65bn, little of this has translated into meaningful investment. This prolonged slowdown continues to impact corporate capex, with most companies deferring investment plans until there are more visible signs of growth. A direct offshoot of this is the slowdown in discretionary spending in urban cities, primarily driven by consumer sentiment.

2013 has been the only year in the last 15 years when car sales growth was negative (down 7 per cent). This sentiment has gradually spread to other categories and most consumer companies are seeing a slowdown in growth rates.

There have however been some positive developments as well. A plentiful and widespread monsoon has ensured a good agricultural output and rising rural income. This is helping sustain rural consumption, thus ensuring that despite the urban slowdown, the consumption story remains upbeat. Moreover, an improved growth outlook for the US Economy has also revived demand for export oriented companies, particularly those in the IT and Textiles sectors. Both these factors have ensured that India may still end the year with GDP growth of 4.5 per cent to 4.8 per cent, despite growth in India's industrial production (IIP) being close to zero.

Inflation continues to remain a bugbear and for four years in a row Wholesale Price Index (WPI) inflation has remained above 6 per cent. Initially this was attributed to the Government's policy induced measures such as the rural employment guarantee scheme (NREGA) and sharp hikes in minimum support prices (MSP) of agricultural crops which acted as stimuli after the 2008 economic problems. In 2013 the increase in MSP was moderate and it was widely expected that with good monsoons, inflation would start to fall. However, after a brief respite mid-year, inflation has once again trended upwards. Part of this is due to the imported components of inflation, mainly on account of the currency depreciation, but a bigger factor was a spike in food prices, particularly of fruits and vegetables. Increasingly it is now felt that India has a structural problem, as increased rural incomes are leading to demand for more nutritional food products that are supply constrained. In fact, Consumer Price Index (CPI) inflation remained above 10 per cent throughout the year. This has forced the hand of the RBI which changed direction and increased rates by 75bps since September 2013, to close the year at 7.75 per cent. The RBI has made it abundantly clear that their primary objective is to control inflation, even if it may come at the expense of short term growth. Moreover, they are increasingly focusing on CPI rather than WPI in determining policy rates, a practice followed in most other economies. Given that today CPI is at 10 per cent levels, it implies that interest rates are unlikely to decrease in the short term.

There were however some positives when it came to monetary policy with the appointment of Dr. Raghuram Rajan as the new RBI Governor. A former Chief Economist at the IMF, he brings with him a breath of fresh air in policy making and has eloquently articulated the direction in which the RBI will take policy forward. Moreover he has questioned some of the archaic regulations of the RBI, many of which are likely to be dismantled, providing greater freedom to the banking sector.

Finally, the third major development of the year was the currency collapse. India's current account deficit has always been a concern, especially because of the large component of inelastic oil imports (accounting for over 30 per cent of imports at approximately US$150bn). However, on expectation of QE tapering by the US Federal Reserve, the impact on the currency caught everyone by surprise. During the period between June and August, India witnessed net FII outflows of US$13bn (equity - US$3.7bn, debt - US$9.2bn) and the currency collapsed 14 per cent. This was similar to other emerging economies running current account deficits such as South Africa, Brazil, Turkey, and Indonesia.

The currency is one area where the Government has got hold of the situation, implementing two initiatives that have since brought stability. The first was to virtually put a halt to the imports of gold. India imports approximately US$60bn gold a year (10 per cent of imports in FY13) and since the measure was announced gold imports, which were averaging US$5bn a month, have come down to less than US$2bn a month. Consequently from a level of US$88bn in FY13 it is expected the current account deficit will close FY14 at less than US$50bn.

The second step taken by the RBI, in an effort to shore up Foreign Currency reserves, was to open a two month window to non-resident Indians where it offered a currency swap rate of 3.5 per cent if invested in Rupee deposits for at least three years. Given the prevailing currency swap rate at that time was 6 per cent to 7 per cent, this provided a virtually risk free investment in India. The two month window resulted in inflows of US$34bn. Consequently Foreign Currency reserves, which had fallen to US$270bn in August 2013, stood at US$290bn at the end of the year. Both these factors have strengthened the currency which has recovered from lows in August 2013. More importantly, we believe the measures have given a lot more comfort that should the need arise, the Government does have more levers which it can apply to raise deposits.

Politics

2013 cannot be discussed without mentioning political developments. It was the last year for the Government to perform before national elections in May 2014 and it had a limited time period to come up with measures to revive the economy. A lot was expected of them, especially in the first half of the year. Unfortunately the ruling UPA Government delivered little, possibly because with the opposition smelling blood, it did not really allow any business to be conducted in Parliament. In fact, in the five year term of the present Government, Parliament passed only 162 bills which was the lowest since independence. This compares to 297 and 248 bills passed in the 1999 to 2004 and 2004 to 2009 eras respectively of the Lok Sabha Government.

The UPA Government, led by the Congress Party, has appeared complacent in believing the various rural schemes announced in the last few years would ensure they continued to receive rural votes. However, in the five states which underwent state elections in November 2013, the Congress Party was decimated in four. These included the two large states of Rajasthan and Madhya Pradesh, as well as Delhi. It became quite apparent that people want a change. A fallout of the above is that the BJP, which is positioning itself on a platform of growth and governance, is getting stronger, led by its charismatic leader, Narendra Modi, the current chief minister of the state of Gujarat, which is one of the most industrialized and progressive states in India. Should the BJP come to power, it would be widely welcomed by the market.

The highlight of the year has been the emergence of a new party called the Aam Admi Party, meaning `people's party'. The party was formed by individuals fed up with the current political system, with the aim of freeing the system of corruption and focussing on governance. Its agenda has taken the country by storm. Not only did the party form the Government in the State of Delhi, the only state it contested, but it has received overwhelming support from many well respected professionals from industry who have joined its ranks. Sceptics still believe the party's influence is limited to Delhi and they have no base in the rest of the country to be a real contender in the national elections. While it is still too early to see if this is a game changer in the Indian political landscape, what is already evident is that it has shaken the existing political parties and they are already distancing themselves from tainted politicians in their respective parties. It bodes well for the future.

Outlook

We believe the year ahead will be fairly challenging for the economy. With elections due in May, politics will dominate the first half of the year and little progress is expected on the economic front. The direction the market is likely to take will depend on how strong a mandate the leading party gets.

On the growth outlook, our discussions with several people in the infrastructure sector makes us believe that it will take at least a year before one could see any sustainable pick up in investment activity, even if the approval process is accelerated. At the corporate level, most companies are in a "wait and watch" mode before they look at expanding capacities as they either wait for the next Government to be formed or see visible signs of growth picking up. It is only the export oriented companies where we are getting positive feelers.

Inflation also remains a challenge. We see inflation trending downwards, largely due to the base effect and some softening in food inflation because of a good winter crop. However regular increases in fuel prices, by reducing subsidies to keep the fiscal deficit in check, and any currency depreciation will put pressure on inflation. The RBI too is giving increasing focus to CPI inflation which is still hovering around the 10 per cent level. Hence, while we do believe rates may not increase any further, it would be too optimistic to assume rates will come down in the first half of the year.

The currency too could play spoilsport. While structurally India is now better placed because of its current account and reserves, there are three factors which worry us: a) the US Federal Reserve's tapering will continue, which is bound to have an impact on Emerging Market fund flows; b) the US and European economies appear to be improving relative to the Emerging Market economies; and c) in 2013 India attracted US$20bn of net FII Equity inflows, much of which came from Emerging Market funds, increasing the risk of outflows in 2014.

However, the political environment will be the single biggest driver for the market going into 2014. We believe the best case scenario will be the BJP and its allies coming to power with a majority. They clearly have strong leadership and a clear agenda on how to bring back growth. A worst case scenario would be if there is a fractured mandate, where a number of parties cobble together to form a Government. This would once again affect decision making as there would be too many vested interests to take care of. We are however of the view that as long as there is a stable Government, headed either by the BJP or the Congress, India would still be better off and one could see significant impetus given to growth. Any of the above developments could lead to sharp swings in market movements.

Portfolio construction and performance

2013 was a comparatively strong year for the portfolio. The NAV increased by 4.6 per cent in local currency terms delivering an impressive outperformance of 10.3 per cent against the notional benchmark, the BSE Mid Cap Index, which fell 5.7 per cent. The biggest positive contribution came from stock selection in the IT, Healthcare and Materials sectors. We held an average 7.5 per cent cash balance during the year. The year-end cash balance stood at 5.7 per cent.

Within the portfolio the two investments which contributed most to the positive returns were KPIT Cummins (5.4 per cent weighting) and Eicher Motors (3.1 per cent weighting) which rose 56 per cent and 72 per cent for the year respectively.

KPIT Cummins is a mid-sized IT company in automotive engineering and ERP solutions. With the growth in US economy, the demand environment for the IT sector has improved significantly. KPIT will benefit from the increasing role of IT and electronics in automobiles. It has six of the top 10 automobile Original Equipment Manufacturers (OEMs) globally as its clients. We believe the improving global demand environment will provide good growth opportunities for the company.

Eicher Motors, a JV between Eicher and Volvo, is India's third largest commercial vehicle (CV) manufacturer. It also owns the Royal Enfield brand which sells the iconic "Bullet" motorcycle. Royal Enfield growth has more than tripled in the last three years on a new engine platform, improved brand positioning and increasing distribution reach. It has gained market share in a down turn for the CV industry owing to refreshed engines, improved supply chain and its distribution network. We believe the business is poised to compound ahead of the industry for several years to come as the micro pieces for the CV business have been put in place which should gain significantly once the CV industry revives.

Two companies which contributed most to the negative returns in the portfolio were MCX India which fell 67 per cent and Sintex Industries down 52 per cent for the year, both of which were exited during the year.

MCX India is a commodity futures exchange. It is a market leader with early mover advantage and an edge in innovation and technology, thus making it a good business to own for the long term. However, two negative events increased governance concerns of the Group; the imposition of Commodities Transaction Tax (CTT) which resulted in MCX's daily volume declining 40 per cent and the suspension of trading of most of the contracts on the National Spot Exchange (NSEL), a commodities exchange promoted by Financial Technologies (FTIL). As a result of these events the position was sold.

Sintex is a diversified industrial company having presence in custom moulding, low cost housing (monolithic construction), pre-fabricated structures and textiles. In the last two years the monolithic construction business, which has contracts under Government schemes, faced severe execution challenges because of delays in approvals and payments. In our interactions with management we were confident that with additional capital raising, the business could turn around. However, after the fund raising, management raised its capex guidance in existing businesses and announced new capex in textiles. Thus, the hope of improving cash flows and thereby valuation multiples have been quashed. We exited from Sintex with no further confidence in management.

Ocean Dial Asset Management

March 2014

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 2013

Holding	Type	Sector	Value £000's	% of Portfolio
Jyothy Laboratories Limited	Mid Cap	Consumer Staples	1,939	5.56
KPIT Cummins Infosystems Limited	Mid Cap	IT	1,899	5.45
Federal Bank Limited	Mid Cap	Financials	1,542	4.43
Kajaria Ceramics Limited	Mid Cap	Industrials	1,531	4.39
Lupin Limited	Large Cap	Healthcare	1,380	3.96
Motherson Sumi Systems Limited	Large Cap	Consumer Discretionary	1,324	3.80
The Jammu & Kashmir Bank Limited	Mid Cap	Financials	1,232	3.53
Idea Cellular Limited	Large Cap	Telecommunications	1,199	3.44
Dewan Housing Finance Corporation Limited	Mid Cap	Financials	1,192	3.42
Divi's Laboratories Limited	Large Cap	Healthcare	1,168	3.34
NIIT Technologies Limited	Mid Cap	IT	1,114	3.19
Larsen & Toubro Limited	Large Cap	Industrials	1,089	3.11
IPCA Laboratories Limited	Mid Cap	Healthcare	1,081	3.09
Eicher Motors Limited	Large Cap	Industrials	1,078	3.08
Dish TV India Limited	Mid Cap	Consumer Discretionary	1,060	3.05
Voltas Limited	Mid Cap	Industrials	1,000	2.88
Yes Bank Limited	Large Cap	Financials	980	2.82
Emami Limited	Large Cap	Consumer Staples	976	2.81
Tech Mahindra Limited	Large Cap	IT	964	2.78
Max India Limited	Mid Cap	Industrials	932	2.68
Total top 20 equity investments			24,680	70.81
Other Small Cap	(2 companies)		615	1.76
Other Mid Cap	(8 companies)		5,190	14.89
Other Large Cap	(3 companies)		2,394	6.87
Other Unlisted	(1 company)		-	-
Other Cash	(1 company)		839	2.41
Total equity investments			33,718	96.74
Cash less other net current liabilities			1,135	3.26
Total Portfolio			34,853	100.00

Note:

Large Cap comprises companies with a market capitalisation above INR 100 billion (£0.98 billion)

Mid Cap comprises companies with a market capitalisation between INR 15 billion and INR 100 billion (£147 million - £0.98 billion)

Small Cap comprises companies with a market capitalisation below INR 15 billion (£147 million)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2013

				Year to	Year to
				31.12.13	31.12.12
		Revenue £000	Capital £000	Total £000	Total £000
Income
Investment income		548	-	548	537
		548	-	548	537
Net (losses)/gains on financial assets at
fair value through profit or loss
Market movements		-	1,517	1,517	11,984
Foreign exchange movements		-	(4,204)	(4,204)	(2,684)
		-	(2,687)	(2,687)	9,300
Total (expense)/income		548	(2,687)	(2,139)	9,837
Expenses
Management fee		(522)	-	(522)	(531)
Other expenses		(444)	-	(444)	(446)
Foreign exchange losses		(332)	-	(332)	(41)
Other professional fees		(72)	-	(72)	-
Cost of acquisition and disposal of investments		-	(30)	(30)	(124)
Total expenses		(1,370)	(30)	(1,400)	(1,142)
(Loss)/Profit for the year before taxation		(822)	(2,717)	(3,539)	8,695
Taxation		-	-	-	-
(Loss)/Profit for the year after taxation		(822)	(2,717)	(3,539)	8,695
(Loss)/Earnings per Ordinary Share - (pence)		(1.10)	(3.62)	(4.72)	11.59

The total column of this statement represents the Group's statement of comprehensive income, prepared in accordance with IFRS as adopted by the EU and interpretations adopted by the International Accounting Standards Board (IASB). The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies.

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

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

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2013

					Other Distributable Reserve £000
	Share Capital £000	Capital Reserve		Revenue Reserve £000
		Realised £000	Unrealised £000			Total   £000
Balance as at 1 January 2013	750	(28,896)	(1,385)	(4,955)	72,878	38,392
(Loss)/gain on investments	-	(1,004)	2,521	-	-	1,517
Revenue loss for the year after taxation	-	-	-	(822)	-	(822)
Cost of acquisition and disposal of investments	-	(16)	(14)	-	-	(30)
Loss on foreign currency	-	(1,114)	(3,090)		-	(4,204)
Balance as at 31 December 2013	750	(31,030)	(1,968)	(5,777)	72,878	34,853

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2012

					Other Distributable Reserve £000
	Share Capital £000	Capital Reserve		Revenue Reserve £000
		Realised £000	Unrealised £000			Total   £000
Balance as at 1 January 2012	750	(24,031)	(15,426)	(4,474)	72,878	29,697
(Loss)/gain on investments	-	(2,810)	14,794	-	-	11,984
Revenue loss for the year after taxation	-	-	-	(481)	-	(481)
Cost of acquisition and disposal of investments	-	(53)	(71)	-	-	(124)
Loss on foreign currency	-	(2,002)	(682)	-	-	(2,684)
Balance as at 31 December 2012	750	(28,896)	(1,385)	(4,955)	72,878	38,392

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2013

			31.12.13		31.12.12
			£000		£000
Non-current assets
Financial assets designated at fair value through profit or loss			33,718		36,487
Current assets
Cash and cash equivalents			1,329		2,020
Receivables			16		25
			1,345		2,045
Current liabilities
Payables			(210)		(140)
Net current assets			1,135		1,905
Total assets less current liabilities			34,853		38,392
Equity
Ordinary share capital			750		750
Reserves			34,103		37,642
Total equity			34,853		38,392
Number of Ordinary Shares in issue			75,001,463		75,001,463
Net Asset Value per Ordinary Share (pence)			46.47		51.19

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2013

				Year to		Year to
				31.12.13		31.12.12
				£000		£000
Cash flows from operating activities
Investment income				548		537
Management fee				(526)		(520)
Other cash payments				(397)		(308)
Net cash outflow from operating activities				(375)		(291)
Cash flows from investing activities
Purchase of investments				(6,077)		(21,220)
Sale of investments				6,159		15,961
Transaction charges relating to the purchase and sale of investments				(30)		(124)
Net cash inflow/(outflow) from investing activities				52		(5,383)
Net decrease in cash and cash equivalents during the year				(323)		(5,674)
Cash and cash equivalents at the start of the year				2,020		7,865
Exchange losses on cash and cash equivalents				(368)		(171)
Cash and cash equivalents at the end of the year				1,329		2,020

This announcement was approved by the Board on 14 March 2014. 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 2013 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 24 March 2014 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

 

 

FR EANDLFEKLEEF