Net Asset Value(s)

RNS Number : 7241G

India Capital Growth Fund Limited

04 February 2010

India Capital Growth Fund Limited

04 February 2010

India Capital Growth Fund Limited (the "Company" or "ICGF")

31 January 2010 NAV Statement

Net Asset Values

The Company announces its net asset values per share as at 31 January 2010:

Net asset value per share - undiluted 58.36p

Net asset value per share - fully diluted 58.36p

Performance Update

The Net Asset Value per share fell 2.1% in January. While the mid cap index fell by 3.1% in Rupee terms, the BSE Sensex fell by 6.3% as foreign investors took money off the table in the broader market, although the impact was partially offset by the Rupee rising 0.3% against sterling in the month. It is encouraging that the mid cap stocks performed better albeit over a short period. The two main culprits in the portfolio contributing to the weakness were ICSA, down 10.5%, and Jain Irrigation which fell by 17.0%. Both these stocks are exposed to Andhra Pradesh where the recent death of the Chief Minister has raised fears about future direction of policy, and thus growth. Positive contribution came from heavyweight SKNL and road builder MSK Projects.

The weakness in the India markets was in response to a mixture of both domestic and global concerns. At home inflation continues to worry: December's Wholesale Price Index rose to 7.3% the highest level for 13 months, prompting fears of early (and stronger) monetary tightening. This was confirmed by the Reserve Bank who raised the Cash Reserve Ratio by 0.75%, a larger rise than the market anticipated. This is in continuation of the policy gradually to remove liquidity support from the market, and although a concern it must be seen as a sign of economic strength. Indeed, the negative inflation report was quickly followed by an upward revision to the Government's GDP forecast for 2009/10 from 6% to 7.5%.

Outlook

Recent news of China's efforts to rein lending growth in the banking sector and further uncertainties over the direction of US banking regulation took the early shine of markets pretty quickly. Although we remain positive overall, it is unlikely that these issues are going to vanish overnight. India will be affected by global worries as well as having its own problems to concern investors.

The portfolio remains in reconstruction mode and although new positions have been initiated there is still work to do. The recent weakness has given the fund an opportunity to build new positions. In early February there is a busy agenda of approximately thirty company meetings. Existing positions continue to be reviewed. It is the intention to spend time with the management of all portfolio companies before any decisions are taken.

Analysis of holdings at 31 January 2010

Sector Summary	No. of Companies	% of Portfolio
Textiles	2	15.1%
Transport	2	13.7%
Financial Services	2	10.9%
Media	2	8.5%
Pharmaceuticals	1	7.7%
Process Controls	1	6.8%
Housing & Construction	3	6.3%
Engineering / Manufacturing	1	2.8%
Agriculture	1	1.8%
IT	2	0.9%
Others	1	0.9%
Total Investment	18	75.4%
Net Cash/Cash equivalent		24.6%
Total Portfolio		100.0%

Top 10 equity holdings at 31 January 2010

Holding	Sector	% of Portfolio
S. Kumars Nationwide	Textiles	12.9%
Marwadi Shares and Finance	Financial Services	9.8%
Bilcare	Pharmaceuticals	7.7%
Spicejet	Airlines	7.4%
Prime Focus	Media	6.9%
ICSA India	Process Controls	6.8%
Varun Shipping Co	Shipping	6.3%
MSK Projects India	Housing and Construction	3.0%
Hindustan Dorr-Oliver	Engineering / Manufacturing	2.8%
Arihant Foundations & Housing	Housing and Construction	2.8%