REG - Ashoka India Equity - Half-year Report
10/03/2025 07:00
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RNS Number : 8860Z Ashoka India Equity Investment Tst 10 March 2025
LEI: 213800KX5ZS1NGAR2J89
ASHOKA INDIA EQUITY INVESTMENT TRUST PLC
HALF-YEARLY REPORT
Ashoka India Equity Investment Trust plc hereby submits its Half-Yearly Report
for the six months ended 31 December 2024 as required by the Financial Conduct
Authority's Disclosure Guidance and Transparency Rule 4.2.
The Half-Yearly Report is being published in hard copy format and a copy has
been submitted to the National Storage Mechanism and it will shortly be
available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) and on the Company's
web pages at www.ashokaindiaequity.com (http://www.ashokaindiaequity.com) .
Enquiries:
NSM Funds (UK) Limited
ashoka@nsm.group (mailto:ashoka@nsm.group)
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
investment in securities listed in India and listed securities of companies
with a significant presence in India.
FINANCIAL INFORMATION
As at As at
31 December 2024 30 June 2024
Net asset value ("NAV") per Ordinary Share (cum income) 295.3p 279.3p
Ordinary Share price 300.0p 284.0p
Ordinary Share price premium to NAV(1) 1.6% 1.7%
Net assets £484.2million £435.4million
PERFORMANCE SUMMARY
For the For the
six months ended six months ended
31 December 2024 31 December 2023
(unaudited) (unaudited)
% change(2,3) % change(2,3)
Share price total return per Ordinary Share(1) 5.6% 16.3%
NAV total return per Ordinary Share(1) 5.7% 15.7%
MSCI India IMI Index (sterling terms)(2,3) (2.7%) 16.4%
(1) These are Alternative Performance Measures.
(2) Total returns in sterling for the 6 months period.
(3) Source: White Oak Capital Management (UK) Ltd.
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 Half-Yearly Report.
CHAIRMAN'S STATEMENT
This is the Company's half-year financial report for the period 1 July 2024 to
31 December 2024 and, regardless of continuing worldwide tensions, the Company
has produced another positive return for its shareholders.
PERFORMANCE
In the period under review, the Company's share price and NAV have recorded
total returns in sterling terms of 5.6% and 5.7% respectively, compared to
(2.7)% for the benchmark, the MSCI India IMI index (the untaxed benchmark
index in sterling terms). Following an amendment to the Company's investment
policy, approved by shareholders during the year, this performance has been
generated from a broad universe of investments ranging from large caps to a
handful of unquoted companies with advanced plans to float on the Indian stock
exchange. This broadening of a successful strategy by the Company's investment
teams has continued to pay dividends by delivering excess returns to
shareholders whilst, at the same time, reducing the overall portfolio risk
through diversification. As ever, the Investment Manager's report that follows
goes into more detail.
The Board also approved a non-material change to the Company's investment
policy in December that now allows exposure to unquoted companies to rise to
12% of gross assets. The simple reasoning of the Investment Manager is that
this exciting area of the market is where the opportunities lie for
potentially index-beating returns. As I have said before, your Board monitors
this situation carefully and your Investment Manager reports at each quarterly
meeting in some detail on these positions and, indeed, on all portfolio
holdings. Due care and diligence is applied to all investment decisions.
The Company's shares traded at a premium to NAV (cum income) of 1.6% at the
end of the period.
PERFORMANCE FEE
A performance fee is being accrued for the current three-year period, the
measurement of which runs from 1 July 2024 to 30 June 2027, as a result of
outperformance of the Company's benchmark index. As at 31 December 2024, this
amounted to £20.4 million and is fully reflected and accrued in the Company's
daily net asset value announcements.
SHARE ISSUANCE
The Company continued to issue new shares during the period, totalling 8.1
million, raising additional gross investment proceeds of £23.1 million. This
demand came from existing shareholders and new investors and reflects a
continued and growing confidence not only in the longer-term prospects for the
Indian economy but also in the abilities of the Company's investment teams to
outperform. New shares are issued at a small premium to the prevailing net
asset value to ensure no dilution to existing shareholders. The Company's net
asset value and market capitalisation at the calendar year-end were £484.2
million and £491.9 million respectively. As at the date of this report, a
further 3.1 million shares have been issued although, reflecting recent market
declines, the Company's total assets stood at £445 million.
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, the Company may
declare an annual dividend to maintain UK investment trust status if there is
sufficient surplus. In the period under review, no interim 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 sixth Redemption Point for the Ordinary Shares was on
30 September 2024. As previously reported, all redeemed shares were quickly
placed with buyers in the market by the Company's corporate broker, Peel Hunt.
Shareholders are reminded that investment in a Company of this nature should
only be considered if it is understood that the significant growth potential
of the Indian equity market is likely to be achieved over the medium to longer
term, a minimum of five years.
OUTLOOK
Well, here I go again, reflecting that my desire for a more peaceful world
remains unfulfilled. When one considers the tension and turmoil, it is amazing
that world stock markets, mainly, have continued to rise. I suspect we might
all agree that the biggest event that took place in 2024 was the re-election
of Donald Trump as President of the USA, by a near-landslide. I believe this
is significant for events worldwide, not least his stated intention to end not
one but two wars. He is a disruptor and, regardless of personal opinions as to
his character, it is not entirely impossible that these aims may be achieved.
India may very well be a direct beneficiary of a more peaceful world. Whilst
President Trump intends to adopt a more protectionist stance and, among many
other things, impose tariffs on imports, such a situation may accelerate the
move of manufacturing from countries like China to India, as I have referred
to several times in the past, thus further benefitting its already
fast-growing economy, now the world's fifth largest. However, there is likely
to be short-term disruption as his strategy plays out.
Global stock markets have endured a rocky start to 2025 as bond yields rose
over concerns for growth prospects and persistent inflation, and what Donald
might do next, amply characterised by his recent spat with Ukraine's President
Zelensky. By the time you read this half-year report, I believe most seasoned
commentators would have expected such concerns to be overblown, especially so
with regard to India, but this has not proven to be the case. The speed of
India's growth has led some to question over-inflated valuations and this has
had a negative impact on stocks, particularly those in the mid-cap and
smaller-cap sectors where this Company has overweight positions. It is
difficult to know with any certainty how long this downturn will last but with
Prime Minister Modi's re-election firmly in the rear-view mirror and with his
plans for continued economic growth in train, there are genuine reasons to
remain optimistic for India's long-term growth prospects with attendant
index-beating investment returns likely for our shareholders.
The skill and dedication of your Investment Manager and Advisers has created a
portfolio of stocks designed to outperform the Company's benchmark index over
the longer term. The Company's share price increased from 100p at launch in
July 2018 to 300p as at 31 December 2024 with net assets rising from c.£46
million to c.£484 million in that time. Your Board is immensely proud of this
achievement and especially so in terms of what it represents for returns to
shareholders, whenever they came on board.
I never tire of thanking you for your continued support as a shareholder of
this Company. With Prashant Khemka and Ayush Abhijeet at the helm, and with a
first-class team of analysts at their side, my fellow Directors and I have
undimmed confidence in their ability to deliver outstanding returns for you
well into the future.
ANDREW WATKINS
Chairman
7 March 2025
INVESTMENT MANAGER'S REPORT
PERFORMANCE REVIEW
During the latter half of 2024, the Company's total NAV return outperformed
the index by 8.4% delivering 5.7%, compared to (2.7%) for the MSCI India IMI
(in sterling terms)*. Since 31 July 2018 (the date post IPO when the Company
was fully invested), the Company has delivered 96.7% of net cumulative
outperformance, with a 197.3% absolute return compared to the benchmark return
of 100.6%, both in sterling terms. Strong stock selection especially in mid
and small caps has been a tailwind.
KEY CONTRIBUTORS & DETRACTORS
Contributors
Inventurus Knowledge Solutions Limited ("IKS Health"), established in 2006, is
a healthcare services and enablement platform assisting healthcare enterprises
primarily in the US. The company's key value proposition is to help automate
and digitise manual tasks by physicians so that they can focus on their core
healthcare delivery. The company uses its technology expertise and global
delivery model to deliver a comprehensive, cost-effective solution to
healthcare enterprises. IKS Health has demonstrated a track record of strong
execution and delivery with large marquee clients. It is well poised to
deliver healthy free cash flow growth over the next few years, backed by
strong capabilities, cross-selling opportunities, and a favourable demand
environment.
Neuland Laboratories (Neuland) was established in 1984 and is headquartered in
Hyderabad, India. Neuland is a leading manufacturer of active pharmaceutical
ingredients and an end-to-end solution provider for the pharmaceutical
industry's needs by way of Custom Manufacturing Services ("CMS"). The company
provides solutions across the full range of chemistry requirements, from the
synthesis of compounds to the supply of advanced intermediates, as well as
their commercial launch. The stock performance can be attributed to: (a) a
sustained increase in CMS business of the company; (b) industry tailwinds
emerging from the US BIOSECURE Act; and (c) US FDA product approval for Kar XT
(xanomeline-trospium) an antipsychotic drug to Bristol Myers Squibb ("BMS"),
for which Neuland is likely to be the Contract Development and Manufacturing
Organization ("CDMO") partner.
Computer Age Management Services ("CAMS") is India's largest Mutual Fund
Registrar and Transfer Agent ("RTA"), commanding around 68% market share based
on average mutual fund Assets Under Management ("AUM"). CAMS serves most of
the largest mutual funds and has a high client retention rate. While
maintaining leadership in the mutual fund RTA business, it has been able to
diversify into Alternatives, Know Your Customer Services, Insurance
Repository, Payments and Account Aggregation and other digital business lines,
which contribute circa 13% to its topline, and going forward is likely to
reduce dependence on the RTA business. CAMS generates high returns on capital,
has strong cash flow conversion and a long growth runway. The stock price
appreciated due to continuously strong mutual fund inflows resulting in growth
of its overall AUM.
Detractors
Grindwell Norton ("GWN") pioneered the manufacturing of grinding wheels in
India in 1941 and became the first majority-owned subsidiary of French major,
Saint-Gobain in India in 1996. GWN's businesses include abrasives, ceramics
and plastics (including silicon carbide, performance ceramics and
refractories, and performance plastics), and a captive IT development centre.
The company has significantly ramped up its capex during the last two
financial years, to capture growth across various segments in India and the
export market. The share price corrected due to weaker-than-expected operating
performance in its abrasives segment, due to intense competition from imports,
and lower growth in the ceramics segment, due to a moderation in exports.
Nestle India ("Nestle") is India's largest food products company, with
household brands like Maggi, KitKat, Nescafe, Cerelac, and Nan in its
portfolio and is a market leader in most of the categories it operates in.
Nestle is amongst the best companies in India on operational excellence, in
its ability to create and grow categories, on return ratios and free cash flow
metrics. The company's brand portfolio enjoys tremendous consumer equity and
occupies a sweet spot of 'aspirational yet affordable' positioning that very
few brands enjoy. The stock's underperformance however was attributed to
continued softness in demand for Indian Consumer Packaged Goods companies,
fresh worries on raw material pressures from higher coffee and cocoa prices,
higher competitive intensity in the prepared dishes space and a report on some
of the Nestle's baby foods products having a higher sugar content in India
compared to those in Western European markets; we do note that sugar content
in these products in India is well within the regulatory (as prescribed by the
Food Safety and Standards Authority of India ("FSSAI") norms.
Ambuja Cements and its majority-owned subsidiary, ACC are together the second
largest cement manufacturer in India. In 2022, Adani Group, one of India's
largest industrial conglomerates, completed the acquisition of Ambuja Cements
from Swiss giant Holcim, and announced an additional fund infusion of INR
200bn. The company's cash balance and this additional funding provides it with
adequate financial resources to scale up organically and provide for further
acquisitions in line with the group's aspiration to double capacity in the
next five years. Ambuja Cements is also likely to benefit from synergies with
the integrated infrastructure platform of Adani Group in raw material
sourcing, power and logistics, which in turn could lead to margin expansion
along with industry-leading growth. The cement sector underperformed the
broader market as trends indicated a subdued earnings season. Further, due to
moderating demand, the pricing discipline of the industry has been weak which
may impact margins in upcoming quarters.
INVESTMENT OUTLOOK
Despite the economic and geopolitical challenges, global growth in 2024 was
more resilient than anticipated by many economists. However, like 2024, the
global macro environment at the start of 2025 is again clouded with
uncertainty, characterised by US policy related risks, divergence in growth,
inflation and rate dynamics across key economies, persistently high
geopolitical risks and higher climate policy costs. As a result, risk premiums
are expected to increase and thereby increase the cost of capital for
businesses.
Developing economies like India reaped the benefits of maintaining healthy
macro-fundamentals and garnered strong domestic inflows. Foreign investor
flows were muted in 2024 and have moved out in excess of USD10 billion, by mid
February 2025, over concerns relating to a slowdown in near-term economic
growth, a strong US dollar, higher yields and policy related risks originating
from the election of President Trump.
From a domestic standpoint, the recent slowdown in India's economic growth is
primarily caused by the government holding back on its public capex momentum
as well as prudential tightening of unsecured credit by the central bank. The
fiscal budget was announced on 1 February 2025. The government continues on
its fiscal consolidation path and may outperform on its fiscal deficit target.
On the other hand, the central bank wishes to keep the banking sector in
check, over concerns about increasing bad loans. While having a positive
intent, both these factors have weighed on near-term growth. What cannot be
denied is that India is among the very few economies in the world that possess
the full complement of appropriate market conditions backed by pro-reform
government policies that aim to deliver sustainable growth over the long term.
Given where valuations have been over recent months, we expect them to settle
lower across many sectors. Excluding pockets where projections have been
optimistic, corporate earnings growth trajectory in general remains healthy,
helping us believe that on the capex front, along with the government
picking-up pace, the private sector will also start to support recovery.
Pleasingly the residential real estate cycle has continued on an upward trend
and we see the recent slowdown as a short breather in what is a marathon.
Supply chain disruptions and protectionism have accelerated the relocation of
manufacturing from China, with India emerging as a credible alternative. India
has a marginal market share in many manufacturing industries which means even
a 1-2% incremental market share gain from China could result in a high-teens
growth rate for exports. The emergence of value-added exports, led by
upskilled labour and the government's thrust on the ease of doing business, is
adding to tailwinds. Meanwhile, the services sector, led by the IT companies,
stands to benefit from the accelerated digital transformation of global
enterprises and cloud services adoption. This favourable dynamic is helping
India boost its foreign exchange reserves, increasing the cushion against
external shocks.
The Investment Manager believes that India is at the cusp of realising its
true economic potential while benefitting from several secular tailwinds, the
most important being its favourable demographics and rising income levels,
which will allow domestic consumption to flourish, with the demand for
discretionary goods, travel and leisure, financial and healthcare services on
the rise. The country is also experiencing a rapid digitalisation of services,
supported by increasing internet penetration and formalisation on the back of
ongoing structural reform. The Investment Adviser believes all these factors
place India as one of the most promising economies over the medium term and
make for a highly compelling investment proposition.
From a risk perspective, an absence of consistent improvement in external
(global) demand and any further escalation in geo-political tensions pose
risks to near-term growth. The Indian economy also needs continuous efforts
from Government reforms to further enhance the ease-of-doing business and
improve institutional capacity. Any divergence from this path could lead to
disappointment from an investor's perspective.
The Investment Manager believes the most attractive aspect of investing in
India is the outsized alpha opportunity that the market presents compared to
any other equity market globally, particularly as the Indian market is still
relatively under-researched. Such alpha opportunities are present across the
large, mid, and small cap spectrum.
Backed by the well-resourced team of the Investment Manager, Ashoka India
Equity Investment Trust plc is well positioned to capitalise, from a bottom-up
perspective on the investment opportunities on offer within the Indian
equities space.
ACORN ASSET MANAGEMENT LTD
Investment Manager
7 March 2025
* Shareholders should note that the MSCI India IMI Index (sterling terms)
does not deduct taxes, unlike active and passive funds, such as the Company.
Top Ten Holdings
As at 31 December 2024 Sector Value % of net
£'000 asset
Inventurus Knowledge Solutions Ltd Health Care 23,378 4.4
ICICI Bank Ltd Financials 20,356 3.9
Onesource Speciality Pharma Ltd Health Care 17,371 3.3
Tata Consultancy Services Ltd Information Technology 12,795 2.4
Zomato Ltd Consumer Discretionary 12,116 2.3
HDFC Bank Ltd Financials 11,958 2.3
Bharti Airtel Ltd Communications Services 10,627 2.0
Coforge Ltd Information Technology 10,327 2.0
Info Edge India Ltd Communication Services 9,752 1.8
Bajaj Finserv Ltd Financials 8,934 1.7
Top ten holdings 26.1
Other holdings 72.3
Total holdings in companies 98.4
Cash and other net assets 1.6
Total 100.0
Interim Management Statement
The Directors are required to provide an Interim Management Statement in
accordance with the Financial Conduct Authority's ("FCA") Disclosure Guidance
and Transparency Rules ("DTR"). The Directors consider that the Chairman's
Statement and the Investment Manager's Report of this Half-Yearly Report
provide details of the important events which have occurred during the period
and their impact on the financial statements. The following statement on
related party transactions and the Directors' Statement of Responsibility, the
Chairman's Statement and Investment Manager's Report together constitute the
Interim Management Statement of the Company for the six months ended 31
December 2024. The outlook for the Company for the remaining six months of the
year ending 30 June 2025 is discussed in the Chairman's Statement and the
Investment Manager's Report.
PRINCIPAL AND EMERGING RISKS AND UNCERTAINTIES
The principal and emerging risks and uncertainties to the Company are detailed
on pages 14 to 17 of the Company's most recent Annual Report and Audited
Financial Statements for the year ended 30 June 2024 which can be found on the
Company's website at https://www.ashokaindiaequity.com. The principal and
emerging risks and uncertainties facing the Company remain unchanged from
those disclosed in the Annual Report for the year ended 30 June 2024 and the
Board are of the opinion that they will continue to remain unchanged for the
forthcoming six-month period. The principal and emerging risks and
uncertainties facing the Company are as follows:
(i) market risks (economic conditions and sectorial diversification);
(ii) corporate governance and internal control risks (including cyber
security);
(iii) regulatory risks;
(iv) financial risks; and
(v) Emerging risks (ESG, Climate Change and Impact of war/sanctions).
RELATED PARTY TRANSACTIONS
Details of the amounts paid to the Company's Investment Manager and the
Directors during the period are detailed in the notes to the Half-Yearly
Report and unaudited condensed financial statements (the "Financial
Statements").
GOING CONCERN
The Half-Yearly Report has been prepared on a going concern basis. The Board
considers this the appropriate basis as they have a reasonable expectation
that the Company has adequate resources to continue in operational existence
for at least the following twelve-month period from the date of this report.
In reaching this conclusion, the Directors have considered the liquidity of
the Company's portfolio of investments as well as its cash position, income
and expense flows. As at 31 December 2024 the Company held £490 million (30
June 2024: £448.4 million) in quoted investments and had cash of £11.3
million (30 June 2024: £5.7 million).
UNAUDITED
These Condensed Financial Statements have not been audited or reviewed by
auditors pursuant to the Financial Reporting Council guidance on the Review of
Interim Financial Information.
DIRECTORS' STATEMENT OF RESPONSIBILITY FOR THE HALF-YEARLY REPORT
The Directors confirm to the best of their knowledge that:
● these condensed set of financial statements contained within the
Half-Yearly Financial Report has been prepared in accordance with IAS 34
Interim Financial Reporting; and
● the Interim Management Report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the FCA's DTR.
Signed on behalf of the Board by
ANDREW WATKINS
Chairman
7 March 2025
FINANCIAL STATEMENTS
Condensed Unaudited Statement of Comprehensive Income
FOR THE SIX MONTHS ENDED 31 DECEMBER 2024
For the Six months ended For the Six months ended
31 December 2024 31 December 2023
(unaudited) (unaudited)
Note Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments 3 - 58,934 58,934 - 45,416 45,416
Gains on currency movements - 116 116 - (163) (163)
Net investment gains - 59,050 59,050 - 45,253 45,253
Income 5 1,627 - 1,627 959 - 959
Total income 1,627 59,050 60,677 959 45,253 46,212
Performance fees 7 (1,223) (19,164) (20,387) - (1,274) (1,274)
Operating expenses 8 (626) - (626) (553) - (553)
Operating profit before taxation (222) 39,886 39,664 406 43,979 44,385
Taxation 9 (167) (13,614) (13,781) (93) (6,160) (6,523)
Profit for the period (389) 26,272 25,883 313 37,819 38,132
Earnings per Ordinary Share (pence) 10 (0.24) 16.33 16.09 0.27 32.10 32.37
There is no other comprehensive income and therefore the 'Profit for the
period' is the total comprehensive income for the 6 months ended 31 December
2024.
The supplementary revenue and capital columns, including the earnings per
Ordinary Shares, 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 form an integral part of these financial statements.
Condensed Unaudited Statement of Financial Position
AS AT 31 DECEMBER 2024
Note As at As at
31 December 30 June
2024 2024
(unaudited) (audited)
£'000 £'000
Non-current assets
Investments held at fair value through profit or loss 3 518,073 451,026
Current assets
Cash and cash equivalents 11,276 5,677
Dividend receivable - 307
Other receivables 345 156
11,621 6,140
Total assets 529,694 457,166
Current liabilities
Purchase for future settlement - (1,534)
Other payables 6 (749) (735)
Performance fees payable - (2,301)
Non-Current liabilities
Performance fee provision (20,387) -
Capital gains tax provision (24,318) (17,157)
Total liabilities (45,454) (21,727)
Net assets 484,240 435,439
Equity
Share capital 12 1,653 1,572
Share premium account 229,631 206,794
Special distributable reserve 13 44,276 44,276
Capital reserve 208,753 182,481
Revenue reserve (73) 316
Total equity 484,240 435,439
Net asset value per Ordinary Share (pence) 14 295.3 279.3
Approved by the Board of Directors on 7 March 2025 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 form an integral part of these financial statements.
Condensed Unaudited Statement of Changes in Equity
FOR THE SIX MONTHS ENDED 31 DECEMBER 2024
Note Share Share Special Capital Revenue Total
Capital premium distributable reserve reserve
account reserve
£'000 £'000 £'000 £'000 £'000 £'000
Opening balance as at 1 July 2024 1,572 206,794 44,276 182,481 316 435,439
Profit for the period - - - 26,272 (389) 25,883
Issue of Ordinary Shares 12 81 23,062 - - - 23,143
Share issue cost - (225) - - - (225)
Closing balance as at 31 December 2024 1,653 229,631 44,276 208,753 (73) 484,240
FOR THE SIX MONTHS ENDED 31 DECEMBER 2023
Note Share Share Special Capital Revenue Total
Capital premium distributable reserve reserve
account reserve
£'000 £'000 £'000 £'000 £'000 £'000
Opening balance as at 1 July 2023 1,128 101,003 44,276 86,136 8 232,551
Profit for the period - - - 37,819 313 38,132
Issue of Ordinary Shares 12 121 27,471 - - - 27,592
Share issue costs - (221) - - - (221)
Closing balance as at 31 December 2023 1,249 128,253 44,276 123,955 321 298,054
The Company's distributable reserves consist of the special distributable
reserve, revenue reserve and capital reserve attributable to realised profit.
The notes form an integral part of these financial statements.
Condensed Unaudited Statement of Cash Flows
FOR THE SIX MONTHS ENDED 31 DECEMBER 2024
Note For the six months For the six months
ended ended
31 December 31 December
2024 2023
£'000 £'000
Cash flows from operating activities
Operating profit before taxation 39,664 44,385
Taxation paid (6,453) (4,136)
Increase in receivables (118) 240
Increase in payables 18,100 1,358
Gains on investments 3 (58,934) (45,416)
Net cash flow used in operating activities (7,741) (3,569)
Cash flows from investing activities
Purchase of investments (163,641) (117,358)
Sale of investments 154,063 109,066
Net cash flow used in investing activities (9,578) (8,292)
Cash flows from financing activities
Net proceeds from issue of shares 12 23,143 27,592
Share issue costs (225) (221)
Net cash flow generated from financing activities 22,918 27,371
Decrease in cash and cash equivalents 5,599 15,510
Cash and cash equivalents at start of period 5,677 6,489
Cash and cash equivalents at end of period 11,276 21,999
The notes 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 4th Floor 46-48 James Street, London, England, W1U 1EZ. Business
operations commenced on 6 July 2018 when the Company's Ordinary Shares were
admitted to trading on the London Stock Exchange ("LSE"). The financial
statements of the Company are presented for the period from 1 July 2024 to 31
December 2024.
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 AND STATEMENT OF COMPLIANCE
These Condensed Unaudited Financial Statements have been prepared in
accordance with International Accounting Standard ("IAS") 34 as required by
DTR 4.2.4R, the Listing Rules of the LSE and applicable legal and regulatory
requirements. They do not include all the information and disclosures required
in Annual Financial Statements and should be read in conjunction with the
Company's last Annual Audited Financial Statements for the year ended 30 June
2024.
The accounting policies applied in these Financial Statements are consistent
with those applied in the last Annual Audited Financial Statements for the
year ended 30 June 2024, which were prepared in accordance with UK-adopted
international accounting standards. Having reassessed the principal risks, the
Directors considered it appropriate to adopt the going concern basis of
accounting in preparing these Financial Statements.
Going concern
The Directors have adopted the going concern basis in preparing the financial
statements.
Details of the Directors' assessment of the going concern status of the
Company, which considered the adequacy of the Company's resources, are given
in the Interim Management Statement. The Directors have a reasonable
expectation that the Company has adequate operational resources to continue in
operational existence for at least twelve months from the date of approval of
these financial statements.
Significant judgements and estimates
There have been no changes to the significant accounting judgements, estimates
and assumptions from those applied in the Company's Audited Annual Financial
Statements for the year ended 30 June 2024.
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 when the Company disposes of investments. The current provision on
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 period end. The
short-term tax rates are 20% and the long-term tax rates are 12.5%. 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 of £24,318,000 (30 June 2024: £17,157,000) in
respect of unrealised gains on investments held.
Adoption of new IFRS standards
A number of new standards, amendments to standards and interpretations are
effective for the annual periods beginning after 1 January 2024. None of
these are expected to have a material impact on the measurement of the amounts
recognised in the financial statements of the Company.
3. INVESTMENT HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
a) Investments held at fair value through profit or loss
As at As at
31 December 30 June
2024 2024
(unaudited) (audited)
£'000 £'000
Quoted investments in India 490,480 448,412
Unquoted investments in India 27,593 2,614
Closing valuation 518,073 451,026
b) Movements in valuation
For the For the
six months ended year ended
31 December 30 June
2024 2024
(unaudited) (audited)
£'000 £'000
Opening valuation 451,026 236,764
Opening unrealised gains on investments 121,134 56,724
Opening book cost 329,892 180,040
Additions, at cost 161,822 276,533
Disposals, at cost (117,601) (126,681)
Closing book cost 374,113 329,892
Revaluation of investments 143,960 121,134
Closing valuation 518,073 451,026
Transaction costs on investment purchases for the six months ended 30 June
2024 amounted to £285,000 (31 December 2023: £170,000) and on investment
sales for the financial period to 30 June 2024 amounted to £207,000 (31
December 2023: £209,000). As at 31 December 2024 £29.1 million (30 June
2024: £27.2 million) of investments were subject to lock in periods.
c) Gains/(losses) on investments
For the For the
six months ended six months ended
31 December 31 December
2024 2023
£'000 £'000
Realised gains on disposal of investments 36,637 31,464
Transaction costs (492) (379)
Movement in unrealised gains on investments held 22,826 14,331
Movement in unrealised gains on futures held (37) -
Total gains on investments 58,934 45,416
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; and
- 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 31 December 2024
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Investments at fair value through profit and loss:
Quoted investments in India 490,480 - - 490,480
Unquoted investments in India - - 27,593 27,593
490,480 27,593 518,073
As at 30 June 2024
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Investments at fair value through profit and loss:
Quoted investments in India 448,412 - - 448,412
Unquoted investments in India - - 2,614 2,614
448,412 - 2,614 451,026
The movement on the Level 3 unquoted investments during the period is shown
below:
As at As at
31 December 30 June
2024 2024
(unaudited) (audited)
£'000 £'000
Opening balance 2,614 3,461
Additions during the year 24,979 -
Disposals during the year - (1,569)
Total losses for the year recognised in profit or loss - 722
Closing balance 27,593 2,614
As at period end, the Company had three unquoted investments: Veeda Clinical
Research Ltd (680,790 shares); Onesource Specialty Pharma Ltd (1,118,190
shares); and Simpolo Vitrified Private Ltd (156,000 shares).
Unquoted investments are valued by the Investment Manager in accordance with
the International Private Equity and Venture Capital Valuation Guidelines 2022
("IPEV") which are consistent with IFRS.
4. FINANCIAL RISK MANAGEMENT
At 31 December 2024, the Company's financial risk management objectives and
policies are consistent with those disclosed in the Company's last Annual
Report and Audited Financial Statements for the year ended 30 June 2024.
5. INCOME
For the For the
six months ended six months ended
31 December 31 December
2024 2023
(unaudited) (unaudited)
£'000 £'000
Income from investments:
Overseas dividends 1,598 959
Other income:
Deposit interest 29 -
Total income 1,627 959
6. OTHER PAYABLES
As at As at
31 December 30 June
2024 2024
(unaudited) (audited)
£'000 £'000
Accrued expenses 749 735
Total other payables 749 735
7. PERFORMANCE FEES
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 is measured over periods of three years (Performance Period). The third
Performance Period started on 1 July 2024 and will end in June 2027. 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.
The performance fee is allocated in accordance with the AIC guidance where
that part of the Performance fee directly attributable to the revenue
performance of the Company is allocated to revenue and shown in the revenue
column of the Statement of Comprehensive Income, and the part that is directly
attributable to the capital performance of the Company's investments is
allocated to capital and shown in the capital column of the Statement of
Comprehensive Income.
As at 31 December 2024, £20,387,000 was accrued in respect of the performance
fee due to the Investment Manager for the half year performance period (30
June 2024: £2,301,000 for the previous full three year period).
8. OPERATING EXPENSES
For the For the
six months ended six months ended
31 December 2024 31 December 2023
(unaudited) (unaudited)
£'000 £'000
Administration & secretarial fees 129 87
Auditor's remuneration - Statutory audit fee* 33 27
Broker fees 20 15
Custody services 48 17
Directors' fees 83 64
Other meeting expenses 10 8
Tax compliance and advice 35 38
Printing and public relations 68 61
Registrar fees 18 18
Research and marketing fees 69 66
Legal Fees 25 75
Regulatory fees 20 8
Other expenses** 68 69
Total 626 553
* Auditor's remuneration excludes VAT.
** Other expenses include LSE, KIID fees, Distribution fees, other license
fees, bank charges and other miscellaneous fees.
9. TAXATION
a) Analysis of charge in the period.
For the six months ended For the six months ended
31 December 2024 (unaudited) 31 December 2023 (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Capital gains tax provision - 7,161 7,161 - 2,117 2,117
Capital gains expense - 6,453 6,453 - 4,043 4,043
Indian withholding tax 167 - 167 93 - 93
Total tax charge for the six months 167 13,614 13,781 93 6,160 6,253
The Company is liable to Indian capital gains tax under Section 115 ADa 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 20%
and the long-term tax rates are 12.5%.
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 period.
The effective UK corporation tax rate for the year is 25%. 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.
For the For the
six months ended six months ended
31 December 2024 31 December 2023
(unaudited) (unaudited)
£'000 £'000
Operating profit before taxation 39,664 44,385
UK Corporation tax at 25% (2023: 25%) 9,916 11,096
Effects of:
Indian capital gains tax provision 13,614 6,160
Gains on investments not taxable (14,763) (11,313)
Overseas dividends not taxable (400) (240)
Other income not taxable (7) -
Unutilised management expenses 5,254 457
Indian withholding tax 167 930
Total tax charge for the six months 13,781 6,253
10. Earnings per Ordinary Share
For the six months ended For the six months ended
31 December 2023 (unaudited)
31 December 2024 (unaudited)
Revenue Capital Total Revenue Capital Total
Profit for the period (£'000) (389) 26,272 25,883 313 37,819 38,132
Return per Ordinary Share (pence) (0.24) 16.33 16.09 0.27 32.10 32.37
Earnings per Ordinary Share is based on the profit for the year of
£25,883,000 (31 December 2023: £38,132,000) attributable to the weighted
average number of Ordinary Shares in issue during the six months ended 31
December 2024 of 160,888,287 (31 December 2023: 117,824,892).
11. DIVIDEND
The Company's objective is to provide shareholder returns through capital
growth with income being a secondary consideration. Therefore, it is unlikely
that the Company will pay a dividend under normal circumstances.
12. SHARE CAPITAL
As at 31 December 2024 As at 30 June 2024
(unaudited) (audited)
No. of £'000 No. of £'000
shares
shares
Allotted, issued and fully paid:
Redeemable Ordinary Shares of 1p each ('Ordinary Shares') 163,989,643 1,640 155,892,397 1,559
Non-Redeemable Shares of £1.00 each ('Management Shares') 50,000 13 50,000 13
Total 164,039,643 1,653 155,942,397 1,572
Ordinary Shares
On incorporation, the issued share capital of the Company was 1 Ordinary Share
of £0.01.
Between 1 July 2024 and 31 December 2024, 8,097,246 Ordinary Shares (30 June
2024: 12,132,000) were issued with aggregate proceeds of £23,143,000 (30 June
2023: £27,592,000).
Since 31 December 2024, 3,102,250 Ordinary Shares have been issued, raising
aggregate gross proceeds of £8,988,000. As at the date of this report, the
total number of Ordinary Shares in issue is 167,091,893.
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.
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 or 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 31 December 2024 of 295.3p (30 June 2024:
279.3p) is calculated based on £484,240,000 (30 June 2024: £435,439,000) of
net assets of the Company attributable to the 163,989,643 (30 June 2024:
155,892,397) Ordinary Shares in issue as at 31 December 2024.
15. RELATED PARTY TRANSACTIONS
The amount accrued in respect of the Performance fee due to the Investment
Manager for the current Performance period is 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.
From 1 July 2024 Directors fees were payable at an annual rate of £48,000 to
the Chairman, £40,000 to the Chair of the Audit Committee, and £32,000 to
the other Directors.
The Directors had the following shareholdings in the Company, all of which are
beneficially owned.
As at As at
31 December 30 June
2024 2024
(unaudited) (audited)
Andrew Watkins 94,425 94,425
Jamie Skinner 100,933 100,933
Rita Dhut 81,733 81,733
Dr. Jerome Booth 85,522 85,522
16. SUBSEQUENT EVENTS
There have been no significant events since the period end which would require
revision of the figures or disclosure in the Financial Statements.
17. STATUS OF THIS REPORT
The information contained in this Half-Yearly Report does not constitute the
Company's statutory accounts for the purposes of section 434 of the Companies
Act 2006. They are unaudited. The Half-Yearly Report will be made
available to the public at the Company's registered office.
The information for the year ended 30 June 2024 has been extracted from the
last published audited financial statements, unless otherwise stated. The
audited financial statements have been delivered to the Registrar of
Companies. Ernst & Young LLP reported on those accounts and their report
was unqualified, did not draw attention to any matters by way of emphasis and
did not contain a statement under sections 498(2) or 498(3) of the Companies
Act 2006.
The Half-Yearly Report was approved by the Board on 7 March 2025.
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