Net Asset Value(s)

India Capital Growth Fund Limited
08 June 2006



India Capital Growth Fund

31 May 2006 NAV Statement

India Capital Growth Fund Limited (the 'Company')

08 June 2006

Net Asset Values

The Company announces its net asset values per share as at 31 May 2006:

Net asset value per share - undiluted               89.96p

Net asset value per share - fully diluted           91.63p




Progress Update

The Market Environment

The Indian stock markets rose to record highs over the first 4 1/2 months of
2006 and then corrected sharply during the last two weeks in May. From its
closing high on 10th May to the close on 31st May the BSE Sensex fell 17.6%,
with net disinvestment by Foreign Portfolio Investors of just under US$ 2.5
billion in that period. During the same period the BSE Small-Cap Index fell by
18.5%. This trend has continued into June, with the BSE Sensex falling a further
10.6% and the BSE Small-Cap falling a further 24.0% between 31st May and 8th
June.

Valuations in the larger caps had risen from an average trailing twelve month
Price Earnings multiple (PE) for the BSE Sensex stocks of 16 in October 2005 to
over 22 on 10th May. The PE of the BSE Sensex closed at just over 18 on 31st
May. While in 2005 share prices rose on the back of increasing earnings, the
rise during 2006 was due more to the weight of money flowing into India, causing
relative valuations to rise considerably.

The Company's stated policy of not hedging the exposure to the Rupee has had a
negative effect on the NAV as the other major trend has been the Indian Rupee's
depreciation by over 12% against the Sterling in the period from 31st December
2005 to 31st May 2006.

The Indian economy, however, has showed no signs of slowing down, with official
figures released on 31st May showing that GDP rose by over 9.3% during the three
months to 31st March 2006. GDP for the full financial year to 31st March 2006
grew at 8.4%.

The Small Cap Portfolio

Positions have been built in 11 small cap companies (less than £150 Million
market cap.). The target positions are between 2% to 3% of portfolio (at the
time of investment) for each of these small cap holdings.

Stakes are gradually being built in 10 more listed small cap companies, and a
commitment has been made to subscribe to a placing in one further listed
company.

Where possible, new money is invested in the target companies through negotiated
deals. In other cases positions have been built up either through block deals
negotiated on the exchange or through careful market purchases. A key challenge
has been to build up the small cap positions within determined price limits
without adversely affecting the share price as purchases are being made. When
buying shares in small or illiquid companies the price will tend to move against
the buyer quickly; when buying ceases the price will often fall back to its
original level.

Mid Cap Positions

The building of positions has been completed in three mid cap companies (between
£150 Million and £700 Million market cap.). The focus has been on target
companies where it is believed that there is an opportunity for substantial
long-term capital appreciation through earnings growth.

Large Cap

At the time of Admission a view was taken that banking stocks offered a
relatively attractive means of gaining exposure to domestic economic growth and
three banks represent 10.5% of the Company's portfolio. However,
underperformance has continued through 2006 and substantial falls have been seen
in the prices of those banks selected for investment. Investments have also been
made in two other large cap stocks. These positions have been built to provide
exposure to the market while the small and mid cap opportunities are being
developed, and these holdings are expected to reduce as the small and mid cap
elements of the portfolio grow.

Unlisted Investments

A commitment has been made to one unlisted investment that is expected to be
completed in June 2006. Discussions are continuing with two further unlisted
opportunities, either alone or as co-investments with other funds.

A number of other investment opportunities in unlisted companies have been
rejected, usually because of a mismatch in valuation expectations with the
existing owners.

Summary of Holdings at 31 May 2006 by Size

Category                                   No. of Companies    % of Portfolio
Small Cap (positions completed)                        11             25.1%
Mid Cap (positions completed)                           3              6.9%
Small / Mid Cap (positions being built)                11              6.5%
Large Cap Banks                                         3             10.5%
Large Cap Other                                         2              8.1%
Cash (not taking into account committed
investments not yet made)                                              42.9%
                                                                      100.0%

Unlisted (Committed, investment in June)                 1              0.9%
Small Cap (Committed, investment in June)                1              1.6%

Small and Mid Cap Holdings at 31 May 2006 by Sector

Sector Summary                                                  % of Portfolio
Housing & Construction                                                     5.4%
Auto Comp                                                                  4.8%
Engineering / Other Manufacturing                                          4.4%
Steel / Iron Ore                                                           4.1%
Shipping                                                                   3.7%
Sugar                                                                      3.0%
Airlines                                                                   2.4%
Agro Chemicals                                                             2.3%
Hotels                                                                     2.2%
Electricals / Lighting Systems                                             2.2%
Other                                                                      3.8%

Principal Completed Small and Mid Cap Holdings at 31 May 2006

Holding                  Sector                                  % of Portfolio
Varun Shipping           Shipping                                          3.7%
Mawana Sugar             Sugar                                             3.0%
JSW                      Steel                                             2.9%
Mahindra Ugine           Auto Components                                   2.4%
Kirloskar Ferrous        Auto Components                                   2.4%

08 June 2006




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