REG - India CapitalGrwthFd - Annual Results for the year ended 31 December 2024
27/03/2025 07:15
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250327:nRSa3951Ca&default-theme=true
RNS Number : 3951C India Capital Growth Fund Limited 27 March 2025
LEI: 213800TPOS9AM7INH846
INDIA CAPITAL GROWTH FUND LIMITED
Annual Results for the year ended 31 December 2024
27 March 2025, London - India Capital Growth Fund ("ICGF" or "the Company"),
the LSE premium listed investment company established to take advantage of
long-term investment opportunities in companies based in India, today reports
results for the year ended 31 December 2024.
Financial Highlights
2024 2023
Net Asset Value (NAV) per share total return 16.0% 28.6%
Share price total return 11.3% 34.1%
Share price discount to NAV (Discount) 7.9% 3.9%
Average Discount for the year 7.7% 7.5%
Per Ordinary Share
Net Asset Value (NAV) 209.01p 180.11p
Share price 192.50p 173.00p
FX impact
Indian Rupee / Sterling 107.46 106.11
· The NAV rose 16.0% whilst the share price improved 11.3% during
the year
· The share price month end discount averaged 7.7% over the year,
with a range of 1.0% to 12.6%. The Board intends to continue to issue shares
from Treasury when the shares trade at a premium to NAV of at least 0.5% and
repurchase shares when the discount to NAV is inappropriately wide, unless
volatile market conditions exist.
· The Company issued over 5.8m shares from Treasury at a premium of
at least 0.5% raising over £10.7m and repurchased over 1.6m shares (exc.
Redemption Shares) at a discount ranging from 14.8% to 7.7% at a total cost of
over £2.8m during the year.
· The third Redemption Point is scheduled for the last working day
in November 2025, subject to shareholder approval at the forthcoming AGM, for
eligible shareholders on the register at 29 August 2025.
· India's economic growth in 2024 has been reflected in its vibrant
and fast-growing corporate sector, which continued to expand and diversify
over the year. This, in turn, has supported stock markets, which delivered
another strong year of returns.
· The Indian market continues to be expensive, relative to its peers
and relative to its history, largely attributable to Indian companies' high
return on equity and faster growth. It is at the higher end of valuations so
against this backdrop, it is a market that merits some careful navigation,
particularly among the popular small and mid-cap companies.
Elisabeth Scott, Chair of India Capital Growth Fund, said:
"The first few months of 2025 have seen considerable turbulence in India's
equity markets, with small and mid cap stocks taking the greatest hit. All
eyes, of course, are on the United States and on the prospect of trade
tariffs, which are likely to affect Indian exporters.
The Board is confident that the Investment Manager's strategy of investing in
high quality companies with reputable management teams continues to be
relevant and will provide good returns to shareholders over time."
ENQUIRIES
River Global & Ocean Dial Asset Management, Investment Mgr. Lucy Draper +44 20 3327 5107
& Robin Sellers
Shore Capital, Financial Adviser and Broker +44 20 7408 4090
Gillian Martin (Corporate Advisory)
Henry Willcocks, Fiona Conroy (Corporate Broking)
Apex Fund and Corporate Services (Guernsey), Company Secretary +44 20 3530 3687
Matt Lihou indiacapitalbox@apexgroup.com
About India Capital Growth Fund
India Capital Growth Fund Limited the LSE premium listed investment company
registered and incorporated in Guernsey, was established to take advantage of
long-term investment opportunities in companies based in India. ICGF
predominantly invests in listed mid and small cap companies, although
investments may also be made in large cap and private Indian companies where
the Fund Manager believes long-term capital appreciation will be achieved.
www.indiacapitalgrowth.com
HIGHLIGHTS
Financial highlights for the year ended 31 December 2024
16.0% Net Asset Value per share total return of 16.0% (2023: 28.6%)
The Net Asset Value (NAV) per share total return for the year was 16.0% (2023:
28.6%). This is in comparison to the Notional Benchmark BSE Midcap Total
Return Index which returned 25.6% (2023: 38.4%).
The NAV per share total return is the theoretical return to shareholders
calculated on a per share basis based upon the increase or decrease in the NAV
over the relevant year.
The BSE Midcap Total Return Index (Index) return is based upon the increase or
decrease in the published Index converted to GBP over the relevant year.
11.3% Shareholder total return of 11.3% (2023: 34.1%)
The shareholder total return for the year was 11.3% (2023: 34.1%). The share
price as at 31 December 2024 was 192.5p (2023: 173.0p).
The shareholder total return is the theoretical return to shareholders
calculated on a per share basis based upon the increase or decrease in the
share price over the relevant year.
7.9% Shares ended the year at a discount of 7.9% (2023: 3.9%)
The shares traded at an average discount to NAV of 7.7% (2023: 7.5%) over the
year.
The discount is shown as a percentage to NAV and is calculated based upon the
difference between the Company's NAV and share price. The average discount is
based upon the published month end discount for the twelve months of the year.
CHAIR'S STATEMENT
I am delighted to report that 2024 was a strong year for your Company. The
Company's share price rose by 11.3%, while the underlying Net Asset Value
(NAV) per share increased by 16.0%. During the year, the key event was the
General Election, which took place between April and June 2024, and was won by
Prime Minister Modi's BJP Party, albeit without the overwhelming majority that
had been predicted. Nonetheless, the BJP's reform agenda remains in place,
with an emphasis on infrastructure spending, increased government efficiency,
and the "Make in India" focus on boosting domestic manufacturing. As a
consequence, economic growth has remained strong, particularly compared to
other major economies around the globe.
Performance
While overall performance was positive, your Company did underperform its
notional benchmark index, the BSE Midcap Total Return Index, with the first
half of the year being a particularly challenging period. Shareholders will
be familiar with the focus of the Company's portfolio on high quality
companies, which are intended to be held for multiple years. With this in
mind, it should be noted that we do not expect the Manager to always
outperform the BSE Midcap index, particularly in periods when a focus on
quality is not rewarded, however the Board remains confident that the
Manager's approach will continue to win out over the long term. Gaurav
Narain's commentary in the Investment Review highlights some of the
contributors to, and detractors from, performance along with the key themes
supporting the Company's holdings and explains why the Company did not own
some of the best performing stocks in the market.
Discount and Redemption Facility
As shareholders will no doubt be aware, the Company's second Redemption
Facility took place on 31 December 2023. In total 15.16 million shares were
redeemed representing 15.1% of the Company's market capitalisation at that
time. As I noted in my statement last year, the redemption led to a
transformation of the shareholder register which is now predominantly made up
of retail shareholders who own shares either directly or via platforms.
For a period after redemption this allowed your Company's shares to trade more
closely to their NAV and, in January, February and March 2024, the Company
issued 5.83m shares from Treasury at a premium to NAV of at least 0.5%.
However, after negative comments from the Chair of SEBI, the Indian financial
regulator, hit the mid and small cap sectors, confidence suffered and your
Company's shares moved from a premium to NAV to a discount. Consequently,
the Company repurchased some 1.6 million shares from March through to the end
of the year at discounts between 4.1% and 14.8%.
Since the year end, your Company has continued to repurchase shares when
appropriate. In the year to date, 345,000 shares have been repurchased at a
discount to NAV of between 9.7% and 11.1%.
Shareholders should bear in the mind that the third Redemption Facility takes
place on the last working day of November 2025, subject to shareholder
approval at the Company's AGM on 5 June 2025. Previous Redemption Facilities
have taken place every two years on the last working day of December. Further
details will be given in July 2025.
Investor Relations
The Board of your Company is very keen to ensure that existing and prospective
shareholders have access to the information that they need about the
Company. Throughout 2024, Gaurav and the investor relations team from Ocean
Dial/River Global PLC have visited a wide range of professional and retail
investors across the UK to update investors on the Indian economy, general
election results, and the performance of the investment portfolio.
Gaurav was on the platform at the well-attended AIC Investor Showcase event,
where he and other India fund managers debated the prospects for the Indian
stock market.
The Company has participated in webinars, accessible to all shareholders,
either hosted internally or via external providers. I encourage shareholders
who have not yet taken advantage of these webinars to sign up for updates on
the India Capital Growth Fund website www.indiacapitalgrowth.com
(http://www.indiacapitalgrowth.com) .
We understand that individual shareholders would like the opportunity to see
Gaurav in person. I am pleased to announce that our Annual General Meeting
will take place in London on 5 June this year. Further details will be
announced in the AGM Circular and Notice of Meeting as well as on the India
Capital Growth Fund website in due course.
Environment, Social and Governance (ESG)
Along with colleagues at River Global PLC, the investment team has continued
to refine its ESG methodology. This forms an integral part of the Investment
Manager's investment process, which, as shareholders will be aware, is
focussed on the long term, with low turnover, and with sound corporate
governance and extensive engagement with company management at the heart of
investment decisions.
We hope that the section of this annual financial report covering the
Investment Manager's approach to ESG gives shareholders a good insight into
how the Company's portfolio benefits from this emphasis, and how India has
taken significant steps to improve its ESG reporting.
Corporate Governance
The Company is a member of the Association of Investment Companies (AIC) and
seeks to follow best practice regarding appropriate disclosures and
governance. The governance principles that the Board has adopted are
designed to ensure that the Company delivers long term value to its
shareholders and that it treats all shareholders equally. All shareholders
are encouraged to have an open dialogue with the Board throughout the year,
and the Board can be contacted via the Company's website or the Company
Secretary.
There have been no changes to the composition of the Board during the year.
Outlook
The first few months of 2025 have seen considerable turbulence in India's
equity markets, with small and mid cap stocks taking the greatest hit. All
eyes, of course, are on the United States and on the prospect of trade
tariffs, which are likely to affect Indian exporters. However, we have
already seen Prime Minister Modi make the trek to Washington with a
pre-emptive lowering of tariffs on US goods and a promise to boost bilateral
trade, investment and security relationships.
While we may see this turbulence continue for a while, the underlying story of
strong GDP growth, bolstered by the effects of Modi's infrastructure spending
and the continued diversification of global manufacturing away from China, and
consumer demand from a growing middle class should mean that Indian companies
can grow both revenues and profitability over time. While Indian equities
have looked expensive relative to other emerging markets, earnings growth
should provide further impetus in the medium term. The Looking Forward section
of the Investment Manager's review provides further details of our outlook for
the Indian economy and its impact on the investment portfolio.
Thank you for your support for the Company. The Board is confident that the
Investment Manager's strategy of investing in high quality companies with
reputable management teams continues to be relevant and will provide good
returns to shareholders over time.
STRATEGIC REPORT
INTRODUCTORY SECTION
Introduction and Cautionary Statement
This strategic report sets out the Company's long-term performance, business
model, strategy, and risk management information. The report includes the
following subsections:
· Investment Manager's review
· Key Performance Indicators
· Portfolio Statement
· Environmental, Social and Governance Statement
· Risk Management report
This strategic report has been prepared solely to provide information to
shareholders to assess how the Directors have performed their duty to promote
the success of the company. The strategic report contains certain
forward-looking statements. These statements are made by the directors in good
faith based on the information available to them up to the time of their
approval of this report and such statements should be treated with caution due
to the inherent uncertainties, including both economic and business risk
factors, underlying any such forward-looking information.
This strategic report, which incorporates the information required in the
non-financial and sustainability information statement and the section 172(1)
statement, has been prepared for the Group as a whole and therefore gives
greater emphasis to those matters which are significant to the Company and its
subsidiary undertaking when viewed as a whole.
Long-term sustainable success
The long-term performance of the Company and its reputation for transparency
and good governance are paramount to its long-term success for the benefit of
all its stakeholders.
In order to ensure good governance of the Company, the Board has set various
limits on the investments in the portfolio, whether in the maximum size of
individual holdings, the total aggregate percentage of unlisted investments in
the portfolio, the use of derivatives, the level of gearing and others. These
limits and guidelines are regularly monitored.
The integration of ESG factors in investment decision making will also help to
improve the Company's long-term risk adjusted returns and thus its long-term
sustainable success. ESG measurement and risk impact scoring have become an
integral part of the investment manager's investment process facilitated by
the ongoing development of their bespoke internal ESG scoring model which
compares and rates each company within the investment portfolio. An
illustration of this scoring model is provided in the ESG report which
highlights the focus on the long-term direction of travel in reducing the
climate impact factors of companies in the portfolio.
The Company's mandate is to invest in India, predominantly in listed mid cap
and small cap companies where the Investment Manager believes significant
long-term investment performance can be achieved. The Board considers this is
best achieved via the investment trust structure constructing a portfolio of
individually chosen shares in underlying companies. Consequently, our
Investment Manager, advisers and analysts do considerable research in house to
identify suitable investments. The Board works with the Investment Manager to
ensure it has the necessary resources available and that those resources are
of the desired quality.
It is one of the Board's long-term objectives that the share price should
trade at a level close to the underlying NAV of the shares. Share price
discounts and premiums are determined by supply and demand.
The Directors have focused the marketing of the Company particularly on
explaining, through the press, the characteristics of investing in India,
largely to dispel sentiment-based negative misperceptions and to inform the
investing community of its long-term potential for significant sustainable
growth in India. As detailed more fully in the Sustainability and ESG report
the Company and its Investment Manager believe that companies with strong
management focus on ESG have the potential to reduce risks facing their
business, thereby delivering sustainable performance and enhanced returns over
the longer term.
Longer-term viability statement
The Directors have assessed the prospects of the Company for a period of three
years. The Board believes this time period is appropriate having consideration
for the Company's:
· long-term capital appreciation investment strategy;
· portfolio of liquid listed equity investments and cash balances;
· level of operating expenses, both fixed and variable;
· principal risks and uncertainties; and
· the Redemption Facility available to shareholders every two
years.
In making this assessment, the Directors have considered the possible impact
of the Redemption Facility which will take place on the last working day of
November 2025, subject to shareholder approval at the Company's AGM on 5 June
2025. Whilst redemption requests at the next Redemption Facility could impact
the Company's longer-term viability the Board has considered the performance
of the Company to date, that over 80% of the current shareholder register
comprises of individual retail investors, and that at the Second Redemption
Point in 2023, almost all of the 15.7% of shares redeemed at that time were
owned by institutional shareholders and that the Directors believe the Company
has substantial headroom over the aggregate NAV level at which the Company may
no longer be financially viable.
In making this assessment as to the Company's longer-term viability, the
Directors have considered detailed information provided at Board meetings that
include the Company's balance sheet, investment portfolio liquidity, operating
expenses, market capitalisation, share price discount, shareholder register
analysis and investment performance to date, both actual and against the BSE
Mid Cap Total Return Index (the "Index") and the Company's peers.
Section 172 of the Companies Act 2006
Section 172 of the Companies Act 2006 applies directly to UK domiciled
companies. Nonetheless, the intention of the AIC Code is that the matters set
out in section 172 are reported on by all companies, irrespective of domicile,
provided this does not conflict with local company law. Under section 172,
directors have a duty to promote the success of their company for the benefit
of its members as a whole, whilst having regard to (amongst others) the likely
consequences of their decisions in the long-term and the interests of the
company's wider stakeholders.
Details of how the Board engages with all shareholders and stakeholders and
why they are important can be found under "Shareholder communication" in the
Directors' report.
In making decisions, the objective of the Board is always to ensure the
long-term sustainable success of the Company and, therefore, the likely
long-term consequences of any decision are a key consideration. In relation to
the decisions taken by the Board during the year under review, the Board acted
in good faith, and in a way that would most likely promote the Company's
long-term sustainable success and achieve its wider objectives for the benefit
of the shareholders as a whole, having had regard to the wider stakeholders
and the other matters set out in section 172.
INVESTMENT MANAGER'S REVIEW
ECONOMY
India's multi-decade growth trajectory was undimmed in 2024, supported by
government spending, growing consumption, and burgeoning manufacturing.
Economic growth has been reflected in India's vibrant and fast-growing
corporate sector, which continued to expand and diversify over the year. This,
in turn, has supported stock markets, which delivered another strong year of
returns.
India's recent run of strength has its origins in the reforms enacted by Prime
Minister Narendra Modi's first government in 2014-19. The government took a
slew of tough decisions, including currency reform and tax harmonisation. This
put in place the foundations for the rapid growth that India has experienced
in recent years. It has helped shore up government finances, which has allowed
for significant growth in capital spending, particularly on infrastructure.
The government has also sought to boost domestic manufacturing through the
Production Linked Incentives (PLI) scheme, which provide tax breaks and
financial support for companies who want to set up manufacturing in India.
This has helped India challenge China's manufacturing dominance and brought
new companies to the country in areas such as consumer electronics and mobile
phones.
This has led to near-uninterrupted growth for the Indian economy over the past
decade. India remains in the middle of a virtuous cycle of growth, with a
potentially lengthy pathway ahead. Nominal GDP per capita for India is just
$2,375, compared to $12,604 for China. Modi continues to pursue an ambitious
reform agenda, incorporating infrastructure building and financial market
liberalisation.
That said, there have been bumps along the way. The general election, held
between April and June, did not deliver the resounding victory for Modi that
had been expected. Although Modi secured a third term, his Bharatiya Janata
Party (BJP) was forced into a coalition having failed to achieve the 272 seats
necessary for a parliamentary majority.
The government's reliance on coalition partners, including the southern Telugu
Desam Party (TDP) and the eastern Janata Dal (United) (JD (U)), is unlikely to
result in substantial changes to the government's domestic political
programme. The states represented by these two parties may want more in terms
of capital commitments, but the government's broader economic agenda should
remain intact.
More troubling was the recent GDP growth figure, which showed expansion of
just 5.4% year on year for the July to September period. This was notably
weaker than expected and some way below the Reserve Bank of India's projection
of 6.8%. It has subsequently adjusted its forecast from 7% to 6.6% in 2025.
The weakness is at least partially attributable to the election. The Electoral
Commission does not allow any announcements in the run-up to an election, and
government decision-making slows as the administrative machinery is
re-directed towards election preparation. Capital spending slowed as a result,
but is likely to return to more normal patterns in the quarter ahead.
A bigger concern has been weakening consumption. Plenty of explanations have
been offered, but the causes remain opaque. Higher food inflation is likely to
have played a part. More recently, rural consumption has revived, but urban
consumption remains weak. It is possible that the spending mix has changed and
spending data is not picking up a shift to higher end goods and services.
Certainly, demand for premium products remains strong. Ultimately, we believe
the caution is likely to be short-lived. Consumers still have the capacity to
spend, with savings levels robust.
It is important not to over-state this recent slowdown. India's growth path is
not about to be derailed - it is simply a question of degree. The government's
balance sheet remains healthy, with the fiscal deficit declining and
significant Foreign Exchange reserves. This gives it the firepower to support
the economy and sustain spending on infrastructure development. The currency
has been stable despite a volatile global environment, while tax revenues have
held up. It has been another strong year for the Indian economy.
Growth themes in India
Domestic capex - India is in the midst of an infrastructure revolution. In the
recent budget, the government allocated US$133.86 billion to infrastructure
spending, equivalent to 3.4 % of GDP. This spending is multi-faceted and
includes airports, roads and railways, alongside digital infrastructure. The
country is adding another 15 airports by 2028. Over 20 cities are building
metro systems. There are also significant plans for renewable energy, with an
expansion of electricity capacity across transmission and distribution
networks.
Digitalisation - India has been a poster child for digital transformation. Its
digital identification scheme, Aadhaar, assigns a 12-digit biometric number to
each citizen, has helped improve access to public services and financial
inclusion. India's internet penetration is now 52.4%, up from 14% in 2014. Its
700m active internet user base is the second largest cohort in the world.
Consumption - As India becomes wealthier, consumption continues to boom.
Household spending has doubled in a decade and India may account for 16% of
worldwide consumption by 2050. This would rival the US's 17% share. The
country's demographic dividend, with 65% of its population below the age of 35
is likely to be an important factor. This strength may be accelerated by a
robust real estate sector. 2024 saw the highest ever real estate sales and the
peak may still be two or three years ahead. This is likely to have a wealth
effect and sustain consumption levels.
China plus one - There have been a range of beneficiaries from the global
trend to move and diversify supply chains away from China, but India is one of
the few countries with the size and scale to capitalise in full. The
government has put Production Linked Incentives (PLIs) in place to encourage
international companies to manufacture in India across sectors such as
pharmaceuticals, IT hardware, solar PV modules, drones and food processing,
plus semiconductors and batteries. This is already bearing fruit in areas such
as electronics. From a net importer, India has emerged as a net exporter of
mobile handsets, for example. Smartphones are now the fourth largest export
from India.
STOCK MARKETS
The strength of the economy has translated into strength for the corporate
sector. Aggregate earnings growth for the India corporate sector has exceeded
20% per annum for the last four years. This has supported a buoyant period for
Indian stock markets. The MSCI India index rose 15.7% over the year, having
delivered an annualised return of 17.3% over the past five years. That puts it
significantly ahead of the MSCI World of 11.7% over the same period.
In 2024, the small and mid cap sectors outpaced the broader market. This was
justified by strong earnings growth among this part of the market and saw the
MSCI India Small Cap index rise 23.2% over the year. There was particular
strength among consumer discretionary, digital and real estate companies, with
healthcare and industrial companies also delivering strong returns. The
notable weak spots were in consumer staples, the cement companies, and some of
the regional banks.
PERFORMANCE
India Capital Growth Fund is a mid and small cap Indian equities fund. We are
long-term investors, and hold most of our investments for at least three to
five years. Our portfolio turnover is low and we are quality focused. The Fund
typically has a concentrated portfolio of around 30-35 stocks. Nevertheless,
we have responded to higher valuation in our part of the market broadening the
portfolio and held 36 stocks at the end of the year.
The Fund did well in absolute terms for its financial year, delivering a GBP
NAV return of 16.0%. However, this was behind its benchmark, the BSE Midcap
Total Return Index (GBP), which rose 25.6%. This relative weakness has had two
main causes: the first was strong performance from companies that we didn't
hold. The quality and valuation focus of the Fund steers us away from
expensive or speculative businesses, and also from some public-sector focused
companies, where shareholder interests may not be fully aligned with those of
the Company's other stakeholders.
In 2024, a number of those public sector companies performed very well, and we
missed out on those gains. Many of these were in the energy and utilities
sector where we had no exposure. Constant interference from the government
through imposition of duties or fixing pricing makes it difficult to take a
long-term investment decision on companies in these sectors. We also did not
hold any company in the real estate sector, which also performed well over the
year, denting our relative returns. This was because we found the valuations
expensive, especially since accounting standards do not reflect a true picture
of the profit and loss account and one needs to rely on management estimates
on cash flows and sales. There were also a number of industrial companies that
performed well, but they were single sector focused and expensive, and
therefore we did not hold them in the portfolio. Staying away from these areas
hit relative performance hard, particularly in the first half of the year.
This started to correct in the second half of the year and we remain convinced
with an approach that excludes areas where we do not have conviction on
management quality or financial metrics, in accordance with our ESG focus.
Banks were the primary detractors over the year, contributing to a 6.77% loss
in the portfolio. This was distributed across holdings in RBL Bank, IndusInd
Bank, and IDFC FIRST Bank. The Banking sector experienced underperformance due
to tight liquidity and rising cost of liabilities, which adversely impacted
net interest margins, Some of our bank holdings were particularly affected due
to their higher lending exposure to microfinance and unsecured lending,
leading to pockets of stress.
The banks are well capitalized and have adequately provisioned for this
economic environment. We believe the banking sector is best positioned to
capitalize on the India growth story. Asset quality is strong, return ratios
are improving and valuations are compelling. Additionally, Uniparts, an auto
ancillary company, contributed to the losses with a 38% decline in 2024,
driven by weaker demand in its core markets of the US and Europe.
The primary sectors contributing to positive performance over the year
included our 13.3% allocation in Consumer Discretionary, 9.1% in Industrials,
6.1% in Healthcare, and 3% in Financial Services, which includes companies
related to capital markets like stock exchanges, asset management companies
etc. Stock selection was the key driver of performance across all these
sectors, further supported by our lack of holdings in the Media sector, which
had a benchmark weighting of 0.7%.
Our top-performing stock, Dixon Technology, achieved a gain of 170%.
Furthermore, our off-benchmark positions proved particularly profitable.
Skipper, a manufacturer of transmission and telecom towers, delivered a return
of 167%, while Neuland Laboratories, a provider of Active Pharmaceutical
Ingredients (API) and custom research and manufacturing solutions to
pharmaceutical companies, achieved a return of 156%. Additionally, Multi
Commodity Exchange of India Ltd. saw an increase of 93%, and our recent
purchase of Cartrade Tech Ltd resulted in a 104% gain, driven by increased
advertising revenues from its platform, by automobile manufacturers and
dealers.
THEMES REFLECTED IN PORTFOLIO HOLDINGS
Digitalisation - Affle India Ltd
Digitalisation is in full flow in India. EY says the country's "deep
penetration of telecom and internet, combined with government's focus to
develop digital infrastructure, have laid the foundation for a digital
economy." It believes the Digital India Stack is now the global benchmark for
most countries and provides a competitive advantage for growing businesses.
The government launched Digital India in 2015, recognising that the country's
large and disparate population - with over 60% living in rural areas - makes
digitalisation particularly important. Since then, internet penetration has
more than tripled. The adoption of advanced technologies has helped Indian
businesses to become globally competitive and efficient. These technologies
include AI, blockchain and cloud computing.
Digital advertising group Affle has been a direct beneficiary, with spending
on digital advertising increasing. It has built a powerful intelligence based
system, and become the leader in targeted advertising. The group only gets
paid if someone completes an action in response to the advertisement - clicks
a button, or buys a product for example. It has mastered the art of consumer
engagement, which has seen the group grow very quickly and become highly
profitable.
The group's consumer platform delivers personalised consumer recommendations
and then drives conversion through relevant mobile ads. The model gets more
powerful as more and more data flows through it, meaning conversion rates
improve all the time. The group's user base is strong, with a focus on certain
key sectors, including entertainment, food delivery and gaming.
At the moment, Affle derives around three-quarters of its revenues from
emerging markets, but it is expanding its reach into developed markets. To
speed this process, the company acquired Jampp and YouAppi in 2021 and 2023
respectively, which have now been fully integrated. Revenues from developed
markets have grown by more than 30% in the last six months. The group is also
focusing on increasing premium content and incorporating generative AI in its
offerings, which will drive further efficiency, leading to higher margins.
"Make in India" - Dixon Technologies
The Indian government's PLI scheme is aimed at revitalising domestic
manufacturing and mopping up international companies keen to diversify their
supply chains away from China. Unlike past incentive schemes, which spread
resources thinly across multiple companies, the PLI scheme focuses on
identifying and supporting a smaller group of high-potential firms, fostering
champions that can achieve scale and efficiency.
Initially styled as the "Make in India" initiative, the PLI scheme targets 14
sectors considered to be important sectors for the future of India's growth.
These include electronics, pharmaceuticals, automotive components, and
renewable energy. Companies are incentivised based on incremental production,
and payouts may be as high as 6% of revenue over a five-to-seven-year period.
Qualifying companies may be domestic or international.
Dixon Technologies has been one of the key beneficiaries of the scheme. It is
India's largest Electronics Manufacturing Services (EMS) provider, based in
Noida. It makes a range of consumer goods, such as televisions, washing
machines, LED bulbs and CCTV security systems for large global companies
including Samsung, Panasonic and Philips.
One of its most exciting areas of growth is in mobile manufacturing. It has
harnessed the PLI scheme focused on mobile manufacturing and become the market
leader. It manufactures for almost all the Android based mobile phone group,
and it also has four out of five of the top IT hardware companies as its
clients under the respective PLI schemes.
This has seen it grow rapidly. In its recent results presentation, the CFO
suggested the Company could deliver a 50% CAGR in the next financial year,
saying they could make almost 30 million Smart Phones. It has also announced
plans to expand into the semiconductor manufacturing markets. It has also
recently announced a joint venture with HKC (China) for glass & display
manufacturing for use in mobile phones and IT hardware. The Company now has 17
manufacturing units in India with over 15,000 employees. Its share price
growth has been strong - up 163% over the past year. We have taken some
profits, but it is still a holding in the Company.
Infrastructure - Skipper
An important part of India's infrastructure revolution has been the growth in
renewable energy. India's installed non-fossil fuel capacity has increased
396% in the last 8.5 years and the Government has ambitions to go further and
faster, targeting 500 GW of non-fossil fuel-based energy by 2030. Indian
electricity demand is expected to grow by over 6% in 2025.
The rapid growth of renewable energy sources, particularly solar PV and wind,
requires significant grid expansion and modernisation to integrate these
variable resources effectively. The Government is increasingly focused on
upgrading ageing infrastructure, implementing smart grid technologies and
digitalising grid operations to improve efficiency, reliability and
flexibility.
Skipper is among the largest manufacturers of power transmission towers in the
world and is a key beneficiary of this long-term trend. Skipper also has the
advantage of being the only company with backward integration of rolling
mills, tower pole fasteners' production and EPC capabilities.
The domestic Indian market remains the most exciting area. There is a
significant pipeline building up locally, and demand is high. The company has
full order books for the next three years and considerable pricing power.
However, the company is also gaining market share internationally,
particularly in the US and Australia. Around half of Skipper's power
transmission segment order book now comes from exports and the company has
been a beneficiary of the trend to diversify supply chains out of China.
Consumer - Emami
Consumer spending has always been at the heart of the India Capital Growth
fund. As an economy grows and incomes increase, much of that wealth will find
its way into the consumer economy. India not only has growth on its side, but
a significant demographic dividend, with a median age of just 28. Household
incomes have increased rapidly - from $1,400 in 2013, to $2,300 in 2024.
Household spending has doubled in a decade.
A range of consumer groups are benefiting from this trend. One of our
longer-term holdings is Emami, a leading Fast Moving Consumer Goods (FMCG)
player in India with a presence in the health, beauty, and personal care
space. It has established strong barriers to entry by creating niche product
categories and dominating them.
For example, it has a strong presence in ayurvedic products. Ayurveda is a
holistic system of medicine that began in India more than 3,000 years ago,
focusing on natural ingredients. Emami makes a range of beauty products, with
brands such as Kesh King, and Fair and Handsome.
More recently, Emami has taken several measures to accelerate growth. It has
strengthened its core management team, expanded its distribution reach and
made strategic investments in direct-to-consumer brands, including 'The Man
Company' from its acquisition of Helios Lifestyle in September last year. It
has also launched a range of new products in the fast-growing health and
wellness segment.
The company is the market leader in its field, generating high gross margins
and operating margins. It used a period of weakness during Covid to build out
a strong digital platform, which allows it to engage directly with its
consumer base. It has worked hard to maintain its efficiency and high returns
on capital. Emami's shares have had a difficult run since August 2024, but we
continue to hold them.
LOOKING FORWARD
India is likely to remain one of the fastest growing economies in the world
over the next decade. GDP growth forecasts range from 6-7% p.a., stretching
out over a decade. The government has a clear roadmap for continued growth,
and with GDP per capita still low relative to global peers, there is a lengthy
runway for expansion.
This creates a benign backdrop for continued earnings growth in corporate
India. There are a range of companies in India with large addressable markets
and long-term pipelines for growth, across sectors as diverse as technology,
renewable energy, consumer spending and manufacturing.
The stock market also has structural factors in its favour. It has a large,
captive domestic investor base, with Indians swapping their preference for
physical assets such as real estate and gold, for financial assets and the
stock market in particular. The widespread use of Systematic Investment Plans
has directed capital into mutual funds. Under these plans, people might invest
$25-35 a month. In just five years, flows into Indian equities from this
source have increased from $1bn to $2.5bn per month. These flows have proved
more stable than foreign flows and have lowered volatility. It also means the
Indian market is less connected to the ebb and flow of international risk
sentiment.
India has become a vibrant and diverse market. A buoyant IPO market has given
investors in India a rich opportunity set. Recent IPOs have included car
companies, Fintech groups, and digital technology leaders.
Equally, there are some elements that could create volatility in the year
ahead. Donald Trump continues to prove an unpredictable force and his tariff
regime could hurt Indian exporters. That said, India tends to enjoy good
relations with the US and could be a beneficiary of any trade war with China.
However, while this may influence whether GDP growth is 6% or 7% p.a., it is
not a threat to the long-term sustainability of India's growth, where there is
plenty of visibility. These have been three very strong years in Indian
financial markets. This might suggest a year of consolidation. However, the
growth story for India remains undiminished. Any pullback in the market
represents an opportunity to participate in India's astonishing long-term
growth story.
KEY PERFORMANCE INDICATORS (KPIs)
Total return performance
1 Year % 3 Year % 5 Year % Since 31 Dec 2011* %
NAV per Share 16.0 55.1 136.2 513.4 NAV per share is used to measure the performance of the Manager, after
accounting for Indian CGT provisions and INR/GBP FX rates.
Notional Benchmark: BSE Midcap Total Return Index 25.6 79.5 185.5 710.2 The notional benchmark is used as an indicator of market performance of
mid-cap companies listed in India.
Share Price 11.3 60.8 171.1 470.4 This is used to measure the total return to shareholders.
Source: Ocean Dial Asset Management Limited
Foreign exchange rates: Indian Rupee vs Great British Pound
2024 2023 2022
INR vs GBP FX rate 107.5 106.1 99.7 This is the rate at which the Company converts its INR Indian net assets into
GBP in calculating the NAV. It is an indicator of the impact on the NAV
resulting from the INR/GBP foreign exchange rate.
Average INR vs GBP FX rate during the year 107.1 103.0 97.1
Source: Ocean Dial Asset Management Limited
Share price premium/(discount) to NAV per share as at 31 December
2024 2023 2022
% % %
Premium/(discount) (7.9) (3.9) (7.9) This is the difference between the share price and the NAV per share. It is an
indicator of demand for the Company's shares.
Average premium/(discount) to NAV during the year (7.7) (7.5) (12.9)
Source: Ocean Dial Asset Management Limited
Ongoing charges as at 31 December
2024 % 2023 % 2022
%
Ongoing charges 1.58 1.57 1.59 This shows the cost of running the Company. It measures the ongoing operating
costs as a percentage of average net assets for the year.
Source: Ocean Dial Asset Management Limited
Redemption Facility Date No of shares Value £'000
December 2021 15,608,872 19,708 The Company operates a shareholder approved Redemption Facility whereby
shareholders can redeem their shares every two years based upon a minimum
discount to NAV
December 2023 15,159,876 26,197
Shareholder Capital Returns
Source: Ocean Dial Asset Management Limited
PORTFOLIO STATEMENT
As at 31 December 2024
HOLDING Market cap Nominal Value % of
size
£000
company
NAV
LISTED SECURITIES
Auto & Auto Ancillary
Balkrishna Industries M 148,000 4,008 2.1%
Ramkrishna Forgings S 844,794 7,027 3.7%
Sona BLW Precision Forgings M 972,714 5,384 2.8%
Uniparts India S 562,237 2,167 1.1%
18,586 9.7%
Cement
JK Lakshmi Cement S 623,000 4,847 2.6%
Sagar Cements S 1,611,000 3,342 1.8%
8,189 4.4%
Chemicals
Aether Industries S 417,124 3,443 1.8%
PI Industries M 165,000 5,659 3.0%
9,102 4.8%
Consumer Discretionary
Bajaj Electricals S 348,734 2,491 1.3%
Dixon Technologies L 58,600 9,781 5.1%
Kajaria Ceramics M 347,698 3,750 2.0%
Vedant Fashions M 241,638 2,900 1.5%
VIP Industries S 1,138,853 5,088 2.7%
24,010 12.6%
Consumer Staples
CCL Products India S 727,883 5,027 2.6%
Emami M 1,194,764 6,679 3.5%
Essel Propack S 1,310,099 3,164 1.7%
Jyothy Laboratories S 742,000 2,742 1.5%
17,612 9.3%
Digital
Affle India M 390,000 6,472 3.4%
Cartrade Technologies S 268,671 3,714 1.9%
10,186 5.3%
Financial Banks
City Union Bank S 2,845,000 4,562 2.4%
IDFC Bank M 9,167,000 5,386 2.8%
Indusind Bank L 416,000 3,717 1.9%
RBL Bank S 3,300,000 4,852 2.5%
Federal Bank M 5,662,000 10,538 5.5%
29,055 15.1%
Financial NBFC
Cholamandalam Investment and Finance Company L 175,000 1,931 1.0%
1,931 1.0%
Financial Services
Multi Commodity Exchange M 128,000 7,425 3.9%
Persistent Systems L 139,536 8,385 4.4%
15,810 8.3%
Healthcare
GPT Healthcare S 2,200,000 3,765 2.0%
Neuland Laboratories M 71,175 9,089 4.8%
12,854 6.8%
Industrials
Container Corporation of India M 370,000 2,713 1.4%
Elecon Engineering S 460,000 2,716 1.4%
PSP Projects S 703,574 4,250 2.2%
Skipper S 2,087,013 10,545 5.5%
Triveni Turbine M 576,113 3,974 2.1%
24,198 12.6%
Textiles
Gokaldas Exports S 465,826 4,908 2.6%
Welspun India S 3,050,000 4,450 2.3%
9,358 4.9%
Total equity investments (including those held by ICG Q Limited) 180,891 94.8%
Cash less other net current liabilities 9,836 5.2%
Total Net Assets (before deferred taxation for Indian CGT) 190,727 100.0%
Deferred tax provision for Indian CGT (11,370)
Total Net Assets (after deferred tax provision for India CGT) 179,357
Notes:
L: Large cap - companies with a market capitalisation above US$8bn 12.4%
M: Mid cap - companies with a market capitalisation between US$2bn and US$8bn 38.8%
S: Small cap - companies with a market capitalisation below US$2bn 43.6%
94.8%
Equity investments may be held by the Company and its Mauritian subsidiary,
ICG Q Limited.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE STATEMENT
The Board recognises its responsibilities for reporting on ESG and regularly
engages with the Investment Manager, upon whom the Board is reliant to deliver
this ESG reporting of the Company and to implement its ESG strategy. In this
regard the Board attended a presentation by the Investment Manager on the
implementation of its ESG policy and how it has developed a bespoke ESG
scoring model to monitor and report upon ESG factors of the investment
portfolio. The Board is informed of the progress of this reporting at least
annually when it prepares the ESG Report for the Annual Report. The Board also
visits India with the Investment Manager during which they attend meetings
with investee companies to hear first-hand on how these companies are
implementing ESG factors into their business processes and reporting in
India.
The Company reports in line with the Listing Rules and is a Guernsey structure
and therefore is not required to comply with the Task Force on Climate-related
Financial Disclosures (TCFD). However, the Board is mindful of TCFD disclosure
guidance and in particular the core content of Governance, Strategy, Risk
Management and Metrics & Targets when reporting on ESG matters. The
Company entity itself is an investment company with no employees so has
limited climate related risk, nonetheless the Board is mindful of the climate
related impact of air travel to Board Meetings and therefore only travels in
accordance with required regulations.
In setting and reporting on our ESG policies, we have considered the impacts
of our activities and followed the relevant regulatory guidance including the
requirements of section 172(1) of the Companies Act 2006 and, in so far as
they apply, the non-financial reporting requirements in sections 414CA and
414CB of the Companies Act 2006. Although India Capital Growth Fund does not
fall within the scope of these two sections, we believe that these disclosures
will provide shareholders and stakeholders with a greater level of insight and
transparency. We have also reported under the UK Corporate Governance Code
("UK Code").
The Board believes in engagement and long-term ownership both in respect of
our own shareholders and the investment approach adopted by our Investment
Manager, to drive investment performance and to contribute to positive change
to build a sustainable future. We and our Investment Manager believe that
companies with strong management and a focus on ESG have the potential to
reduce risks facing their business, thereby delivering sustainable performance
and enhanced returns over the longer-term.
Investment management approach to sustainability & ESG
The management of sustainability risks forms an important part of the
investment portfolio due diligence process implemented by the Investment
Manager. When assessing the sustainability risks associated with underlying
investments, the Investment Manager is assessing the risk that the value of
such underlying investments could be materially negatively impacted by an
environmental, social or governance event or condition. Sustainability risks
are incorporated into the Investment Manager's evaluation of an issuer's
investment risk or return, across all the Company's investments.
The Investment Manager has made ESG matters an integral part of its due
diligence process over the last three years. The Board and the Investment
Manager believe that sound governance is an essential element of a company's
long-term sustainability and growth, and that detailed analysis beyond
financial data is required to understand the true characteristics of a
potential underlying investment. This includes, but is not limited to,
conviction in the alignment of interest between the owners, managers and
minority shareholders of a business, the nature and extent of the true
independence of the Board and its specialist sub-committees, capital
allocation and dividend policies, tax treatment, key man risk and succession
planning. Governance plays a central role in the investment philosophy of the
Investment Manager, and it naturally veers away from certain companies where
practical issues of "getting business done" within India can undermine good
governance. These companies tend to be capital intensive, rely on multiple
bureaucratic approvals for authorisation and are often cash flow negative. The
Investment Manager also will not consider investments in industries that are
considered harmful to the wellbeing of society not least because they may not
demonstrate adequate compliance with regulations and tax considerations which
may create unforeseen financial uncertainty. These include tobacco, alcohol,
gambling and defence equipment manufacturers of all descriptions.
The Investment Manager values non-financial factors, such as environmental and
social issues, when evaluating a company for investment. These factors include
gender diversity, environmental impact, carbon footprint, workplace health and
community engagement. If the sustainability risks exceed the risk appetite of
the Company, the Investment Manager may sell or reduce exposure to protect
shareholders' interests.
ESG Scoring
The Investment Manager does not use third party ESG ranking tools but has
integrated the systematic and explicit inclusion of material ESG factors into
its investment analysis process from which it has developed its own bespoke
ESG scoring model for all the portfolio companies. The scoring is based
primarily upon publicly available data and output from company meetings
resulting in scores for three key areas;
· Disclosure
· Direction of Travel
· Absolute comparison against companies in the sector
ESG factors considered in the assessment and scoring include:
Environment
· GHG emissions
· Planned carbon neutrality goals
· Energy management
· Water and wastewater management
· Waste and hazardous materials management
· Biodiversity & land use
Social
· Fulfilment of responsibilities under Corporate Social
Responsibility requirements
· Human capital: employee turnover, health & safety, training
& diversity, treatment of blue collar workers
· Human rights and community relations
· Customer privacy and data security
· Access and affordability
· Product quality and safety
· Supply chain management
· Customer welfare
· Selling practices and product labelling
Governance
· Related party transactions
· Promoter's behaviour: % holding, % shares pledged, exposure to
other business, unlisted entities in similar business, remuneration, family
run vs. independently & professionally run
· Board structure: diversity, independence and size
· Board Committees and their independence: Audit, Nomination and
Remuneration
· Capital allocation decisions
· Management of legal & regulatory environment
· Business ethics
· Competitive behaviour
The aggregate score is then weighted based upon its sector. An example of
scoring is given below for a both a cement and a consumer goods company in the
portfolio. The Investment Manager is not focused on absolute and target scores
but improvements year on year. Consequently, it will require several more
years of data collection before deciding that improvements are not being made.
ESG Scoring Model
The Investment Manager's overall ESG score for the portfolio in FY 2024 is 5.4
out of 9, an improvement on both FY 2023 (5.1) and FY 2022 (4.7) across all
three scoring criteria of Disclosure, Direction of Travel, and Absolute
Comparison Against Companies in the Sector. The Top 5 and Bottom 5 ESG scored
portfolio companies were all from different sectors so there appears to be no
sector trend in the ESG performance improvements in the portfolio.
Additionally, the Investment Manager reports that disclosures have
substantially improved in FY 2024 as the Security Exchange Board of India
(SEBI) mandated the top 1,000 listed companies to provide detailed
sustainability disclosures. ESG Scoring is providing the Investment Manager
with key insight into how portfolio companies are faring on ESG and ongoing
engagement enables the Investment Manager to also obtain incremental data
which is not publicly disclosed. Below is a summary of the ESG scoring for FY
2024.
Engagement
To gain a comprehensive understanding of the ESG and sustainability practices
of portfolio companies, the Investment Manager prioritises constructive
dialogue with management. The investment advisers in India regularly engage
with both current and potential portfolio companies, conducting onsite visits
to manufacturing facilities and corporate headquarters to gather insights and
build a clear picture. Additionally, they strive to meet employees beyond the
senior management team to ensure that the ESG, and sustainability values
promoted by senior management are reflected throughout the organisation.
The Investment Manager has noted over the past two years that there has been a
substantial improvement in ESG practices and disclosure standards being
followed by Indian companies. There is a recognition within corporates that
poor disclosure and practices on ESG could be a significant business risk,
while good ESG practices act as a competitive advantage and lead to improved
market valuations. This is reflected in improved level of disclosures in
corporate presentations on ESG goals and progress made.
The regulatory environment is also getting tighter. SEBI has introduced the
Business Responsibility and Sustainability Reporting (BRSR) regulation which
is a comprehensive disclosure framework that helps companies disclose their
ESG-related information in India. BRSR came into effect in 2021 and since FY
2023, it is mandatory for the top 1,000 listed entities in India to report
under this framework. This is enabling a better relative comparison within
companies in a sector and has resulted in engagement meeting presentations
from both investee companies and potential portfolio holdings giving
substantial coverage to ESG matters such that direct engagement to drive ESG
reporting improvements has, in general, not been necessary in FY 2024. The
Investment manager believes the quality of data being reported is improving
each year which is reflected in the improved ESG scoring of the portfolio
referred to above.
Voting on portfolio investments
The Investment Manager has been empowered to exercise discretion in the use of
its voting rights in respect of portfolio investments. Where practicable, all
shareholdings were voted at all investment company meetings which backs up and
reinforces engagement and integrates sustainability issues into the voting
process.
Holdings in individual companies are not large and our votes are not likely to
carry weight. However as responsible investors, and due to our remit to invest
in small and mid-cap Indian equities supported by a long-term investment
approach, management teams do look to us for guidance on aspects of best
practice. In turn we look to influence their thinking positively in respect of
ESG matters.
An example is VIP Industries - we voted against four resolutions at their AGM
in July 2024. All pertained to remuneration of Senior Management and
Directors. We opposed the resolution which sought to compensate them despite
poor operating performance. The special resolution was sought due to poor
profits and the remuneration sought violated the limits prescribed in the
Companies Act. Hence a special resolution, which we voted against.
Modern Slavery Statement
The Modern Slavery Statement is included under 'Employees, human rights and
corporate social responsibility'.
United Nations-backed Principles of Responsible Investment Initiative (PRI)
As part of its commitment to responsible investing, the Investment Manager is
a signatory to The United Nations-backed PRI.
Risk Summary
ESG governance and related risk management is a key focus of the Board.
Significant steps have been taken by the Investment Manager on behalf of the
Company to develop a bespoke ESG scoring model which monitors investee
companies' ESG risk management and the reporting thereof. This applies to
existing portfolio companies and is also taken into account before investing
in prospective investee companies. Noticeable improvements have been made in
this regard since the Investment Manager began developing its bespoke ESG
scoring model over three years ago. The Company has no specific targets for
the portfolio scores on ESG factors, but is focused on the journey and how
Indian companies and their management are improving their scores.
Additionally, it is notable how the regulators in India have focused on
improving ESG risk management and reporting of listed companies in India over
the last two years. The Board expects these improvements to continue in the
future.
There are ESG risks for the Company associated with non-adherence to the
principles highlighted above and inherent in the principal and emerging risks
described in more detail in the Principal Risks section.
RISK MANAGEMENT
Risk management and internal control
The Board is responsible for establishing and maintaining the Company's system
of internal controls and for maintaining and reviewing its effectiveness. The
system of internal controls is designed to manage rather than to eliminate the
risk of failure to achieve business objectives and as such can only provide
reasonable, but not absolute, assurance against material misstatement or loss.
The Board also considers the process for identifying, evaluating and managing
any significant risks faced by the Company. At each quarterly meeting of the
Board a report on the risk assessment and control environment is presented by
the Investment Manager and considered. Changes in the risk environment are
highlighted as are changes in the controls in force to manage or mitigate
those risks. The Board is satisfied that appropriate controls are in place in
relation to the key risks faced by the business.
Following the acquisition of the Company's Investment Manager by River Global
PLC in 2023, all of the Directors separately visited the offices of River
Global PLC to review the systems in place, which were principally unchanged
although enhanced from those under previous ownership, meet with personnel and
establish that the controls were effective. A report was subsequently
circulated to the whole Board and discussed. The Board concluded that the
systems and controls were effective and risks addressed with no significant
weaknesses identified. The Board visited the Manager in October 2024 to
receive an update on the risk analytics systems provided by River Global PLC.
The Board was impressed with the value this system adds in support of the
existing investment process and resources. The Board will conduct future
visits as required and particularly if there are changes to systems. Also, the
Board receives regular reports from the Investment Manager for consideration.
The other significant third party provider where significant reliance is
placed upon effective controls is the Administrator. The Audit & Risk
Committee Chair reviewed the most recent type 2 ISAE 3402 report and Bridge
letter on the Administrator's control environment for the period ended 31
December 2024 and was satisfied that those controls which were tested were
deemed to be effective with no significant weaknesses identified. The results
of this review were shared with the Board and it was agreed that this provided
comfort that certain key risks connected with those tasks for which the
Administrator is accountable are significantly mitigated. The Administrator
also provides a report at each quarterly Board meeting identifying any
breaches which have occurred during the period and any significant changes.
There were no breaches during the year.
Principal risks and uncertainties
The Board confirms that they have carried out a robust assessment of the
principal risks facing the Company, including those that would threaten its
business model, future performance, solvency or liquidity. The Board has drawn
up a Control Environment and Risk Assessment Matrix (the "Matrix"), which
identifies the key risks to the Company and considers the impact and
likelihood of each significant risk identified. The Board reviews the Matrix
at least quarterly to ensure, in particular, that any emerging risks are
identified, assessed and documented at an early stage.
The Principal Risks fall into broad categories, summarised in the table below.
Principal Risks Mitigation
Investment performance and financial risk: These risks and their mitigation controls are reviewed at each quarterly Board
meeting.
Significant market, foreign currency, credit and liquidity risks faced by the
Company are set out in note 10 to the financial statements. Investment is governed by the Investment Policy which ensures a diverse
portfolio is maintained.
The Company could be severely affected by a change in market conditions
leading to a fall in share price and potentially a widening of the discount to The portfolio is actively managed by an experienced Investment Team and is
NAV. regularly reviewed using tools established by the regulated Investment
Manager.
The likelihood of the Company being impacted by this risk is judged to be
high. The Board reviews and questions the Investment Manager's report at each
quarterly Board Meeting.
The estimated NAV is released each day and a monthly NAV published at month
end.
Investment performance is monitored against other companies and reports
received from the Company's broker.
Cash balances are reviewed on a regular basis to ensure adherence to the
limits agreed by the Board.
The residual risk following the risk mitigation is deemed to be medium.
(Risk - No change)
Redemption Facility and associated risk: Based upon the investment performance of the Company to date, the diversity of
the shareholder base and that shares have previously been issued from treasury
The third Redemption Facility where shareholders will be able to request the at a premium to NAV to satisfy increased demand, the Board believes
redemption of some or all of the shares will be the last working day of shareholder redemptions at the next scheduled Redemption Facility on the last
November 2025, subject to shareholder approval at the Company's AGM on 5 June working day of November 2025, subject to shareholder approval at the Company's
2025. There is therefore a possibility that redemptions requests may impair AGM on 5 June 2025, are likely to be at such a level not to impact the going
the future long-term viability of the Company. concern of the Company.
The pre-mitigation likelihood of the Company being impacted by this risk is The residual risk following the risk mitigation is deemed to be medium.
judged to be high.
(Risk - No change)
Emerging risks: The Board assesses and monitors these risks as and when they develop so, if
necessary, controls and procedures can be implemented to mitigate against
Risks that emerge unexpectedly, and in some cases quite quickly, can have an their economic impact upon the Company. During the year, there were no changes
economic impact upon the Company. In particular significant geopolitical to the emerging risks identified, and no new procedures were implemented.
conflicts such as the Russia/Ukraine conflict, Israel/Palestine conflict and
the introduction of Trade Tariffs can disrupt global supply chains and the The residual risk following the risk mitigation is deemed to be medium.
Indian economy and listed companies.
(Risk - Increase)
The pre-mitigation likelihood of the Company being impacted by this risk is
judged to be high.
Cybersecurity, data security breach and related criminal activity risk: Cybersecurity controls at all service providers are reviewed on a regular
basis.
The Company is exposed to the risk of criminal attacks on its data and systems
held and managed by its service providers. Controls at the administrator are subject to an annual controls audit which is
reviewed by the Audit & Risk Committee and any anomalies or breaches
The pre-mitigation likelihood of the Company being impacted by this risk is followed up.
judged to be high.
The residual risk following the risk mitigation is deemed to be medium.
(Risk - No change)
Operations and systems risk: The Investment Manager and Administrator are both regulated entities.
The Company is exposed to the risks arising from any failure of systems and The Board receives quarterly compliance reports which are reviewed and
controls in the operations of the Investment Manager, the Administrator, or challenged where necessary.
the Company's other service providers.
Any breaches are addressed as soon as they are highlighted to the Board and
The likelihood of the Company being impacted by this risk is judged to be appropriate action taken to rectify.
medium.
Under normal circumstances members of the Audit & Risk Committee visit the
Investment Manager annually to perform a due diligence review of its controls
and the Board receives reports annually from the Administrator on their
internal controls.
The residual risk following the risk mitigation is deemed to be low.
(Risk - No change)
Environmental and Social ("E&S") impact risk: The Investment Manager has an advisory team on the ground in India who keep
abreast of the latest political developments and economic forecasts and
The potential loss or harm directly or indirectly resulting from environmental regularly advise the Board thereof.
and social factors that impact the Company, its investors and its service
providers, and the consequential impact on the environment and society. The Board considers the reports from the Investment Manager and determines
E&S impact risk is a transverse risk that impacts our other risks: whether the Company is detrimentally affected. Further details are included in
investment performance risk, currency and emerging market risk, operational the Company's report on Sustainability and ESG.
non-financial risk, legal and regulatory risk and reputation risk. Our
investment manager has developed a qualitative scoring model which measures The residual risk following the risk mitigation is deemed to be low.
climate and other environmental impacts and the reporting thereof by the
Company's investment portfolio companies. (Risk - No change)
The likelihood of the Company being impacted by this risk is judged to be
medium.
Accounting, legal and regulatory risk: The Investment Manager and Administrator are both regulated entities.
The Company is at risk if it fails to comply with the laws and regulations The Board receives quarterly compliance reports which are reviewed and
applicable to a company with a premium listing on the Main Market of the challenged where necessary.
London Stock Exchange and the Guernsey, Mauritian and Indian laws and
regulations or if it fails to maintain accurate accounting records. The Investment Manager and Administrator provide the Board with regular
reports on changes in regulations and accounting requirements. Legal advice is
The likelihood of the Company being impacted by this risk is judged to be taken where appropriate.
medium.
Any breaches are addressed as soon as they are highlighted to the Board and
appropriate action taken to rectify.
The residual risk following the risk mitigation is deemed to be low.
(Risk - No change)
The Company's risks are documented in a Risk Register which is reviewed and
updated by the Board at least quarterly. The Principal Risks listed above have
not materially increased or decreased during the course of the year.
Multi-jurisdictional taxation risk is no longer considered a principal risk.
Risk appetite
The Board recognises that prudent risk-taking is essential to achieving the
Company's strategic objectives and maximising shareholder value. They embrace
a moderate risk appetite, seeking opportunities for growth while prioritising
the long-term appreciation of capital and the protection of Company
reputation. The Board is committed to maintaining robust risk management
practices to identify, assess and mitigate risks effectively, ensuring
alignment with given tolerance levels and regulatory requirements. By striking
a balance between investment returns and risk mitigation, the Board aims to
deliver sustainable long-term value to the shareholders of the Company.
DIRECTORS' INFORMATION
The Directors as at 31 December 2024, all of whom are non-executive, are as
follows:
Elisabeth Scott (Chair)
Elisabeth was appointed to the Board as Chair on 18 December 2017. She has 40
years' experience in the asset management industry, having started her career
in Edinburgh in the 1980s, then moving to Hong Kong in 1992 where she remained
until 2008, latterly in the role of Managing Director and Country Head of
Schroder Investment Management (Hong Kong) Limited. She is a Non-Executive
Director of Allianz Technology Trust PLC and BlackRock World Mining Trust plc,
and Chair of JPMorgan Global Emerging Markets Income Trust plc and a former
Chair of the Association of Investment Companies (AIC). She is resident in the
UK.
Patrick Firth
Patrick was appointed to the Board in September 2020. He qualified as a
Chartered Accountant with KPMG Guernsey in 1991 and is also a member of the
Chartered Institute for Securities and Investment. He worked in the fund
industry in Guernsey since joining Rothschild Asset Management C.I. Limited in
1992 before moving to become managing director at Butterfield Fund Services
(Guernsey) Limited (subsequently Butterfield Fulcrum Group (Guernsey)
Limited), a company providing third party fund administration services, where
he worked from April 2002 until June 2009. Patrick is a former Chairman of the
Guernsey International Business Association and of the Guernsey Investment
Fund Association. He is a Non-Executive Director of CT UK Capital and Income
Investment Trust plc. In February 2025 he was appointed as a Non-Executive
Director of VH Global Energy Infrastructure plc. He is resident in the UK.
Lynne Duquemin
Lynne was appointed to the board in May 2021. She has over thirty-five
years' experience in financial markets, initially in London in the late 1980's
before being seconded by Credit Suisse to Guernsey, Channel Islands in 1995.
Since 2020 she has led the investment arm of a Single Family Office in
Guernsey, as their Chief Investment Officer. Prior to which she worked for
twelve years as an Investment Consultant for an Independent Investment
Consultancy. She is a Fellow of the Chartered Institute for Securities and
Investment and a Chartered Wealth Manager. She is also an ASIP qualified
member of the CFA UK member of the CFA, 953214, as well as a Chartered
Director and Fellow of the Institute of Directors. Lynne is a Director of
several private companies, including a global operating company and has prior
experience as a Non-Executive Director of a listed Frontier Equities
Investment Company. She is based in Guernsey, Channel Islands.
Nick Timberlake
Nick was appointed to the Board in July 2022. He has over 30 years' experience
in the asset management industry as a Portfolio Manager, he was with HSBC
Global Asset Management between 2005 and 2020, initially as Global Head of
Emerging Markets Equities and then Head of Equities. Previously he was a
Director of F&C Investment Management and has spent the last 20 years
investing in global emerging markets equities. He is a non-executive director
of abrdn Equity Income Trust, CT Automotive plc and a partner in Panorama
Property Investments LLP. Nick is a member of the CFA Institute and CFA
Society of the UK. He is resident in the UK.
The following summarises the Directors' directorships in public companies and
other relevant entities:
Company Name Stock Exchange
Elisabeth Scott Allianz Technology Trust PLC London
BlackRock World Mining Trust plc London
JP Morgan Global Emerging Markets Income Trust plc London
Patrick Firth CT UK Capital and Income Investment Trust plc London
VH Global Energy Infrastructure plc London
Lynne Duquemin - -
Nick Timberlake abrdn Equity Income Trust plc London
CT Automotive plc London
DIRECTORS' REPORT
The Directors present their annual report and the audited financial statements
of the Company for the year ended 31 December 2024 which have been properly
prepared in accordance with The Companies (Guernsey) Law, 2008, as amended.
The Company
India Capital Growth Fund Limited (the "Company") was registered in Guernsey
on 11 November 2005 and is a closed-ended investment company with its shares
admitted to trading on the main market of the London Stock Exchange. The
Company's objective is to provide long-term capital appreciation by investing
in companies based in India. The Company's registration number is 1030287. At
31 December 2024, the Company has one wholly owned Mauritian subsidiary, ICG Q
Limited (ICG Q). The Company has an unlimited life, although a Redemption
Facility has been put in place following the passing of a shareholders'
resolution at a General Meeting on 12 June 2020. The first date at which
shareholders were able to request the redemption of some or all of their
shares was 31 December 2021 when 15,408,872 net shares were redeemed under the
Redemption Facility. The second date was 31 December 2023 when 15,159,876 net
shares were redeemed under the Redemption Facility. Under this facility the
next date at which shareholders will be able to request the redemption of some
or all of the shares is scheduled to be 31 December 2025 for shareholders on
the register at 30 September 2025.
Group structure
The Board of Directors continues to take steps to close down and to liquidate
its Mauritian subsidiary, ICG Q, given it no longer serves a beneficial
purpose for the Company's shareholders. However, this process may take some
considerable time given the restrictions imposed by the Indian regulators on
transferring listed Indian equities from one entity to another without
incurring considerable costs and risk. The Board does not believe this is in
the interest of the shareholders. The Group's custodian is actively engaging
with the Indian regulator to help facilitate this. In the meantime, the
Investment Manager has moved Indian Rupee ("INR") cash balances held by the
Group's custodian from ICG Q to the Company and has committed that all future
purchases for the investment portfolio will be made by the Company directly,
unless it is in shareholders' interests to do otherwise.
Details of the authorised and issued share capital, together with details of
the movements in the Company's issued share capital during the year are shown
in note 8. The Company has one class of ordinary shares which carry no right
to fixed income. Each share carries the right to one vote at general meetings
of the Company.
There are no specific restrictions on the size of a holding nor on the
transfer of shares, which are both governed by the general provisions of the
Articles of Association and prevailing legislation. The directors are not
aware of any agreements between holders of the Company's shares that may
result in restrictions on the transfer of securities or on voting rights.
Investment policy
The Company's investment objective is to provide long-term capital
appreciation by investing in companies based in India. The investment policy
permits the Company 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 Company has the flexibility to invest in
bonds (including non-investment grade bonds), convertibles and other types of
securities. The Company may, for the purposes of hedging and investing, use
derivative instruments such as financial futures, options and warrants. The
Company 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% of the net assets of the Company at the time of the drawdown. It is the
Company's current policy not to hedge the exposure to the Indian Rupee.
The portfolio concentration ranges between 30 and 40 stocks; however, to the
extent the Company grows, the number of stocks held may increase over time.
The Company is subject to the following investment limitations:
· No more than 10 per cent. of total assets of ICG Q and the
Company (measured at the time of investment) may be invested in the securities
of any one Issuer; and
· No more than 10 per cent. of total assets of ICG Q and the
Company (measured at the time of investment) may be invested in listed
closed-ended funds.
The Board of Directors of the Company does not intend to use derivatives for
investment purposes. The Directors confirm the investment policy of the
Company has been complied with throughout the year ended 31 December 2024.
Results and dividends
The Company's performance during the year is discussed in the Investment
Manager's review.
The results for the year are set out in the audited statement of comprehensive
income.
No. of Shares % Holding*
Hargreaves Lansdown 16,628,220 19.46%
Interactive Investor 14,841,756 17.37%
AJ Bell 5,398,366 6.32%
West Yorkshire Pension Fund 4,677,028 5.47%
JM Finn 3,949,892 4.62%
Charles Stanley 2,847,957 3.33%
Consistent with the Company's investment policy of providing long term capital
appreciation, the Directors do not recommend the payment of a dividend for the
year ended 31 December 2024 (2023: £nil).
Substantial interests
Shareholders who held an interest of 3% or more of the Ordinary Share Capital
of the Company at 28 February 2025, being the latest date such data is
available, are stated in the table below:
*Note - % Holding is the percentage of voting rights and issued share capital.
All substantial interests disclosed are held in nominee accounts, and in the
opinion of the Directors, the Company has no ultimate controlling party.
Directors
Elisabeth Scott, Patrick Firth, Lynne Duquemin and Nick Timberlake served
throughout the year and to date.
Share repurchases by the Company
Further to the shareholders' resolutions of 26 June 2024 and 27 June 2023, the
Company purchased 1,613,512 ordinary shares in 2024 with a nominal value of
£16,135, and representing 1.88 per cent of the Company's called up ordinary
share capital, for a consideration of £2,840,588. These figures do not
include the Share redemption which occurred on 16 January 2024. The reason for
the purchase was to reduce surplus cash balances and enhance earnings per
share.
At the end of the year, the directors had authority, under the shareholders'
resolutions of 26 June 2024 and 27 June 2023, to purchase through the market
14.99 per cent of the Company's ordinary shares. This authority expires on the
date of the 2025 AGM.
Directors' interests
At 31 December 2024, Directors and their immediate families held the following
declarable interests in the Company:
Ordinary shares
2024 2023
Elisabeth Scott 50,000 50,000
Patrick Firth 25,000 25,000
Lynne Duquemin 19,125 19,125
Nick Timberlake 50,000 50,000
Independent Auditor
The Independent Auditor, Deloitte LLP, has indicated their willingness to
continue in office. Accordingly, a resolution for their reappointment will be
proposed at the next Annual General Meeting.
Directors' Statement of Disclosure of Information to the Auditor
All of the Directors who were members of the Board at the date of approval of
the Annual Report confirm that to the best of their knowledge and belief,
there is no information relevant to the preparation of the Annual Report which
the Auditor of the Company is unaware of, and they have taken all steps a
Director might reasonably be expected to take to be aware of relevant audit
information and to establish that the Auditor of the Company is aware of that
information.
Ongoing charges
In accordance with the recommended methodology set out by the Association of
Investment Companies (AIC), the ongoing charges of the Company and its
subsidiary for the year ended 31 December 2024 were 1.58% based on an average
AUM of £168,646,935 (2023: 1.57% based on an average AUM of £148,384,000).
Composition and independence of the Board
The Board currently consists of four Non-Executive Directors, all of whom are
independent. The Chair of the Board is Elisabeth Scott. In considering the
independence of the Chair, the Board has taken note of the provisions of the
AIC Code relating to independence and has determined that Elisabeth Scott is
an Independent Director. The Chair does not have, and has not had, any
relationships or circumstances that may create a conflict of interest between
her interests and those of shareholders. As the Chair is an Independent
Director, no appointment of a Senior Independent Director has been made. The
Company has no employees and therefore there is no requirement for a Chief
Executive.
Board meetings, Committee meetings and Directors' attendance
During the year, the Directors in attendance at meetings were as listed in the
table below:
Board Meetings Audit & Risk Committee Meetings
Regular Board Meetings Attended Number of meetings Attended
Elisabeth Scott 4 4 3 3
Patrick Firth 4 4 3 3
Lynne Duquemin 4 4 3 3
Nick Timberlake 4 4 3 3
In addition, there was one Management Engagement Committee meeting during the
year, which all Directors attended. There were also 5 ad-hoc board meetings
during the year.
Performance evaluation
On an annual basis the Board formally considers the independence of its
members, its effectiveness as a Board, the balance of skills represented and
the composition and performance of its committees. The size of the Board and
independence of its members are such that the Board does not consider the need
for external evaluations. The Board considers that it has an appropriate
balance of skills and experience in relation to the activities of the Company
and offers relevant training where necessary. The Chair evaluates the
performance of each of the Directors on an annual basis by means of detailed
questionnaires and discussion, taking into account the effectiveness of their
contributions and their commitment to the role. The Directors have all
confirmed that they have sufficient time to discharge their duties. The
performance and contribution of the Chair is reviewed by the other Directors
under the leadership of the Chair of the Audit & Risk Committee. The
conclusion of the 2024 review was that the skill sets of the members of the
Board were complementary, and that the Board functioned effectively.
Even though the performance evaluation is deemed effective, the Board may
consider having an external evaluation of the performance in the future.
Board Committees
The Company does not have a Nomination or Remuneration Committee as explained
in the Corporate Governance Report which also includes details of the
Management Engagement Committee and Audit & Risk Committee.
Sustainability and environmental, social and governance ("ESG")
The Company's report on Sustainability and ESG is provided earlier above.
Employees, human rights and corporate social responsibility
The Company has no employees, all of its Directors are non-executive and third
party service providers carry out its day-to-day activities. Therefore, there
are no disclosures to be made in respect of employees and the Company has not
adopted a policy on human rights as it has no employees and its operational
processes are delegated. As an investment company, the Company does not
provide goods and services in the normal course of business and has no
customers. Accordingly, the Board considers that the Company is not within the
scope of the Modern Slavery Act 2015. whilst the Company is not obliged to
comply with the Act, the Board is in agreement with its aims and receives
confirmation from those third-party service providers which are in scope that
they are in compliance.
The Investment Manager's primary objective is to produce superior financial
returns for the Company's shareholders. It believes that high standards of
corporate social responsibility ("CSR") make good business sense and have the
potential to protect and enhance investment returns. Consequently, its
investment process considers social, environmental and ethical issues when, in
the Manager's view, these have a material impact on either investment risk or
return.
Board leadership, effectiveness, diversity & succession planning
The Board recognises that the Company will take investment and other risks in
order to achieve its objectives but these risks are monitored and managed and
the Company seeks to avoid excessive risk-taking in pursuit of returns. A
large part of the Board's activities are centred upon what is necessarily an
open and respectful dialogue with the Investment Manager. The Board believes
that it has a very constructive relationship with the Investment Manager
whilst holding them to account and questioning the choices and recommendations
made by them.
The Board supports the principle of diversity and confirms that there will be
no discrimination on the grounds of gender, social and ethnic background,
cognitive and personal strengths. The Board's overriding intention is to
ensure that it has the best combination of people in order to achieve
long-term capital growth for the Company's shareholders from an actively
managed portfolio of investments. To this effect, the Board, as part of its
succession plan, will continue to appoint individuals who, together as a
Board, will aim to ensure the continued optimal promotion of the Company. The
Board has met its target on gender diversity and will consider the target for
ethnic diversity when appointing new directors. There have been no changes to
the Board this year.
Number of Board Members Percentage of Number of senior positions on the board (SID and Chair)
the Board
Men 2 50%
Women 2 50% 1 (Chair)
Number of Board Members Percentage of Number of senior positions on the board (SID and Chair)
the Board
White British or other white 4 100% 1 (Chair)
All directors are non-executive and the Company does not have a Senior
Independent Director.
Supply of information to the Board
Board meetings are the principal source of regular information for the Board
enabling it to determine policy and to monitor performance and compliance. A
representative of the Investment Manager attends each Board meeting thus
enabling the Board to discuss fully and review the Company's operation and
performance. Each Director has direct access to the Company Secretary, and
may, at the expense of the Company, seek independent professional advice on
any matter that concerns them in the furtherance of their duties.
Delegation of functions
The Board has contractually delegated various functions as listed below to
external parties. Each of these contracts have been entered into after full
and proper consideration by the Board, mindful of the quality and cost of
services offered, including the control systems in operation as far as they
relate to the affairs of the Company. The duties of investment management,
accounting and custody are segregated.
· Investment Management is provided by Ocean Dial Asset Management
Limited, a company authorised and regulated in the United Kingdom by the
Financial Conduct Authority (FCA) which is owned by River Global PLC and its
subsidiary River Global Holdings Limited.
· Administration and Company Secretarial duties for the Company during
the year were performed by Apex Fund and Corporate Services (Guernsey)
Limited, a company licensed and regulated by the Guernsey Financial Services
Commission. Those for the subsidiary were performed by Apex Fund Services
(Mauritius) Limited, a company registered in Mauritius and licensed by the
Financial Services Commission in Mauritius. In advance of Board meetings, the
Administrator provides regular reports, which include financial and other
operational information, details of any breaches or complaints and relevant
legal, regulatory, corporate governance and other technical updates. There is
also regular contact between the Directors and the Administrator between Board
and Committee meetings.
· Custody of assets is undertaken by Kotak Mahindra Bank Ltd, which
is registered as a custodian with the Securities and Exchange Board of India
(SEBI).
The Board has established a Management Engagement Committee to review the
performance of all material external service providers and the related
contractual terms. The Management Engagement Committee is constituted of the
current four Directors of the Company, with Elisabeth Scott acting as the
Chair. The last meeting of the Management Engagement Committee was held on
4(th) December 2024, and it meets at least annually. Performances of all
material external service providers are considered satisfactory.
Investment management
The investment management agreement will continue unless and until terminated
by either party giving to the other not less than twelve months' notice in
writing or six months' notice by the Company if at any Redemption Point,
redemption requests exceed 50% of the issued share capital of the Company at
the date of the Redemption Point. The management agreement may also be
terminated forthwith as a result of a material breach of the agreement or on
the insolvency of the Investment Manager or the Company and by the Investment
Manager by notice within 30 days of being notified by the Company of any
material change to the investment policy.
The Investment Manager is entitled to receive a management fee payable jointly
by the Company and the Mauritian subsidiary, ICG Q Limited. From March 2024,
the method of calculation for these fees has been updated. Investment
management fees receivable from ICG Q are calculated based on the NAV of ICG
Q. Investment management fees payable to Ocean Dial Asset Management Limited
are based on the assets of ICGF. The overall burden of investment management
fees to ICGF remains unchanged at 1.25% of the lower of the company's market
capitalisation or NAV calculated on a daily basis and payable monthly. The
Company's Total Assets consist of the aggregate value of the assets of the
Company less its current liabilities before the deduction of management fees.
For purposes of the calculation of these fees current liabilities exclude any
proportion of principal amounts borrowed for investment. To date, the Company
has not borrowed for investment or any other purpose.
The Board as a whole reviews the performance of the Investment Manager at each
quarterly Board Meeting and considers whether the investment strategy utilised
is likely to achieve the Company's investment objective. Having considered the
portfolio performance and investment strategy, the Board has agreed that the
interests of the shareholders as a whole are best served by the continuing
appointment of the Investment Manager on the terms agreed.
From time to time the extent of powers delegated to the Investment Manager and
matters upon which decision making is reserved to the Board are reviewed and
considered. In particular, the approval of the Board (or a designated
committee) is required in relation to:
· Borrowings (other than on a temporary basis);
· Investment in unlisted securities (other than those arising on a
temporary basis from demergers from existing listed holdings);
· Exercise of the Company's share buy-back powers; and
· Policy on currency hedging.
The Investment Manager reports to the Board on brokers used for executing
trades and the commission paid to brokers. The Investment Manager does not use
commissions paid by the Company to pay for services used by the Investment
Manager other than directly related research services provided by the broker.
There is a procedure in place whereby any prospective conflict of interest is
reported by the Investment Manager to the Chair and a procedure to manage the
prospective conflict agreed. The Investment Manager's policy on conflicts is
reviewed by the Board annually.
The provisions of the UK Stewardship Code do not apply to the Company as all
investments are outside the United Kingdom. The Board has delegated to the
Investment Manager the power to vote in relation to the Company's holdings in
Indian listed companies, whether held directly or via ICG Q, the Company's
wholly owned subsidiary.
Alternative Investment Fund Managers Directive (AIFMD)
The Board has appointed the Investment Manager to act as its AIF Manager.
The Investment Manager, Ocean Dial Asset Management Limited, is registered
with the Financial Conduct Authority in the UK as an Alternative Investment
Manager (AIFM) and is authorised as a small Authorised UK AIFM. Consequently,
AIFM remuneration disclosures are not required.
Foreign Account Tax Compliance Act (FATCA)
For purposes of the US Foreign Account Tax Compliance Act, the Company
registered with the US Internal Revenue Services (IRS) as a Guernsey reporting
Foreign Financial Institution (FFI), received a Global Intermediary
Identification Number and can be found on the IRS FFI list. The responsible
officer is Robin Sellers.
The Company is subject to Guernsey regulations and guidance based on
reciprocal information sharing inter-governmental agreements which Guernsey
has entered into with the United Kingdom and the United States of America. The
Board will take the necessary actions to ensure that the Company is compliant
with Guernsey regulations and guidance in this regard.
Shareholder communication
The Board considers a report on shareholder communications at each quarterly
Board Meeting and a monthly Fact Sheet is published on the Company's website
reporting the month-end NAV with a commentary on performance. The Investment
Manager also reports via the Regulatory News Service (RNS) an estimated,
unaudited daily NAV. The Investment Manager and the Corporate Broker maintain
regular dialogue with institutional shareholders, feedback from which is
reported to the Board. Additionally during the year the Investment Manager
conducted three well-attended webinars for shareholders which received
positive feedback from shareholders who attended. Board members are available
to answer shareholders' questions at any time, and specifically at the Annual
General Meeting. The Company Secretary is also available to answer general
shareholder queries at any time during the year. Throughout 2024, Gaurav and
the investor relations team from Ocean Dial/River Global PLC have visited a
wide range of professional and retail investors across the UK to update
investors on the Indian economy, general election results, and the performance
of the investment portfolio.
In order to ensure the Board members have an understanding of the views of all
shareholders about their Company, the Investment Manager and the Corporate
Broker, who regularly engage with those shareholders, both report those views
to the Board Members at each board meeting. The Board monitors activity in the
Company's shares and the discount or premium to NAV at which the shares trade
both in
absolute terms and relative to the Company's peers. Shareholders and
stakeholders are engaged with via regular webinars and monthly factsheets.
The Company has the authority, subject to various terms as set out in its
Articles and in accordance with The Companies (Guernsey) Law, 2008, as amended
to buy-back in the market, up to 14.99% of the shares in issue. The Company
intends to request renewal of this power from shareholders on an annual basis.
As of 31 December 2024, the Company had bought back a total of 1,613,512
(2023: 762,645) shares in the market.
Going concern
The Board made an assessment of the Company's ability to continue as a going
concern for the twelve months from the date of approval of these financial
statements taking into account all available information about the future
including the liquidity of the investment portfolio held both by the Company
and its subsidiary, ICG Q Limited (77.8% of the portfolio can be liquidated
within 5 days); the performance of the investment portfolio; the overall size
of the Company and its impact on the Ongoing Charges of the Company (the NAV
of the Company exceeded £100m throughout the year); the level of operating
expenses covered by highly liquid investments held in the portfolio (operating
expenses are 50 times covered by highly liquid investments); and the length of
time to remit funds from India to Mauritius and Guernsey to settle ongoing
expenses (no more than 10 working days to have investments liquidated and
sterling funds in Guernsey).
Given the Company's previous performance, the Directors proposed a
continuation ordinary resolution at the Extraordinary General Meeting held on
12 June 2020, at which the Shareholders approved that the Company continue as
currently constituted and introduce a Redemption Facility which gives the
ordinary shareholders the ability to redeem part or all of their shareholding
at a Redemption Point every two years. The first Redemption Point was on 31
December 2021 when valid redemption requests were received in respect of
ordinary shares which were subsequently redeemed under the Redemption Facility
in accordance with the announced timetable.
The second Redemption Point was on 31 December 2023 when valid redemption
requests were received in respect of 15,159,876 ordinary shares (15.7% of the
then issued share capital) which were subsequently redeemed under the
Redemption Facility at a total cost of £26.2m in accordance with the
announced redemption price on 8 January 2024. During 2024, to satisfy demand
in the market, the Company issued over 5.8m shares from Treasury at a premium
to NAV raising over £10.7m in new capital, and bought back 1.6m shares at a
significant discount to NAV. Further buybacks were made subsequent to the year
end. As at 28 February 2025 the Company's NAV was £144.8m.
The next date at which shareholders will be able to request the redemption of
some or all of the shares is scheduled to take place on the last working day
of November 2025, subject to shareholder approval at the Company's AGM on 5
June 2025, for shareholders on the register at 29 August 2025. Based upon the
performance of the Company to date, the results of the previous two
redemptions, and the increase of the proportion retail shareholders seeking
long term value growth on the share register since the last Redemption
Facility on 31 December 2023, the Board believes shareholder redemptions at
the forthcoming Redemption Facility on 31 December 2025 are likely to be at
such a level not to impact the going concern of the Company.
The Directors are satisfied that the Company has sufficient liquid resources
to continue in business for the next twelve months from the date of approval
of these financial statements, therefore the financial statements have been
prepared on a going concern basis.
Approved by the Board of Directors and signed on behalf of the Board on 26
March 2025.
Lynne
Duquemin
Patrick Firth
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors' Report, Directors'
Remuneration Report, Portfolio Statement and the financial statements in
accordance with applicable laws.
The Companies (Guernsey) Law, 2008 requires the Directors to prepare financial
statements for each financial year. Under that law they have elected to
prepare the financial statements in conformity with IFRS Accounting Standards,
as adopted by the United Kingdom ("UK") and applicable law.
The financial statements are required by law to give a true and fair view of
the state of affairs of the Company and of the profit or loss of the Company
for that period.
In preparing these financial statements the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether applicable 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 proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and to enable them to ensure that the financial statements comply with
the Companies (Guernsey) Law, 2008, as amended. They have general
responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Company and to prevent and detect fraud and other
irregularities.
The Directors are also responsible for ensuring the Company complies with the
Listing Rules and Disclosure Guidance and Transparency Rules (DTR) of the UK
Listing Authority which, with regard to corporate governance, requires the
Company to disclose how it has applied the principles, and complied with the
provisions, of the AIC Code and the UK Corporate Governance Code to the
Company. Except as disclosed within this Annual Report, the Board is of the
view that throughout the year ended 31 December 2024, the Company complied
with the recommendations and provisions of the AIC Code and the UK Corporate
Governance Code, with the exceptions noted in the Corporate Governance report.
The Company continues to comply with the requirements of UKLR 6.2.3R.
We confirm to the best of our knowledge that:
· the financial statements, prepared in accordance with the relevant
financial reporting framework, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company;
· the annual report includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that they face; and
· the annual report and financial statements, taken as a whole, are
fair, balanced and understandable and provide the information necessary for
shareholders to assess the Company's position, performance, business model and
strategy.
Signed on behalf of the Board by:
Lynne
Duquemin
Patrick Firth
DIRECTORS' REMUNERATION POLICY
An ordinary resolution for the approval of the Directors' remuneration report
will be put to the Shareholders at the next Annual General Meeting.
Due to the size of the Board, the Directors have not established a separate
Remuneration Committee. The Company's Articles of Incorporation state that
unless otherwise determined by ordinary resolution, the number of the
Directors shall not be less than two and the aggregate remuneration of all
Directors in any 12-month period or pro rata for any lesser period shall not
exceed £200,000 or such higher amount as may be approved by ordinary
resolution. The level of Directors' fees is determined by the whole Board on
an annual basis, but no Director is involved in setting his own remuneration.
When considering the level of Directors' remuneration, the Board considers the
industry standard and the level of work undertaken.
The Directors' fees are the only remuneration for the Directors. There are no
performance incentives or other forms of remuneration or bonus schemes. The
Shareholders of the Company do not provide input on the Directors'
remuneration, however the Company seeks the approval of Shareholders as part
of the Annual Report at the AGM.
The Directors shall also be entitled to be repaid all reasonable out of pocket
expenses properly incurred by them in or with a view to the performance of
their duties or in attending meetings of the Board or of committees or general
meetings.
The Board shall have the power at any time to appoint any person to be a
Director either to fill a casual vacancy or as an addition to the existing
Directors. Any Director so appointed shall hold office only until the next
following annual general meeting and shall then be eligible for re-election.
Remuneration
Annual Directors' fees for the years listed are as follows:
Annual fee effective Annual fees paid Annual fees paid
01 Sept 2024 to 31 Dec 2024 to 31 Dec 2023
£ £ £
Elisabeth Scott (Chair) 42,000 39,375 38,500
Patrick Firth 34,000 31,750 31,000
Lynne Duquemin 28,000 26,875 26,500
Nick Timberlake 28,000 26,875 26,500
No additional sums were paid in the year to Directors for work on behalf of
the Company outside their normal duties. None of the Directors had a service
contract with the Company during the year and accordingly a Director is not
entitled to any minimum period of notice or to compensation in the event of
their removal as a Director.
CORPORATE GOVERNANCE
The Company is a member of the AIC and has elected to follow the AIC Code, as
revised in February 2019. The AIC Code has been endorsed by the FRC as an
alternative means for their members to meet their obligations in relation to
the UK Corporate Governance Code, as published in July 2018. The AIC Code
addresses all the principles and recommendations on issues that are of
specific relevance to investment companies.
The UK Corporate Governance Code includes provisions relating to: (i) the role
of the chief executive; (ii) executive directors' remuneration; (iii) a
nomination committee; and (iv) an internal audit function. For the reasons set
out in the AIC Corporate Governance Guide, the Board of Directors considers
these provisions are not relevant to the position of the Company, due to the
size of the Board and as an externally managed investment company with no
employees.
The Finance Sector Code of Corporate Governance issued by the Guernsey
Financial Services Commission (the "GFSC Code") applies to the Company,
Companies which report against the UK Corporate Governance Code (the "UK
Code") or the AIC Code are deemed to meet the requirements of the GFSC Code.
As stated above, the Board considers that it has complied with the AIC Code,
GFSC Code and UK Code during the year ended 31 December 2024, with the below
noted exceptions to the provisions of the UK Code:
· The Company has no Chief Executive Officer, as the Company does
not have any employees. Details of the composition of the Board can be found
in the Directors' Report (provision A.1.2. of the UK Corporate Governance
Code).
· The Company has no internal audit function, there is an external
audit performed annually (provision C.3.6 of the UK Corporate Governance
Code).
· The Company does not have a separate Remuneration Committee
(provision D.2.1 of the UK Corporate Governance Code).
Composition and independence of the Board
The Board currently consists of four Non-Executive Directors, all of whom are
independent. The Chair of the Board is Elisabeth Scott.
Board meetings
The Board generally meets on at least four occasions each year, at which time
the Directors review the management of the Company's assets and all other
significant matters so as to ensure that the Directors maintain overall
control and supervision of the Company's affairs. The Board is responsible for
the appointment and monitoring of all service providers to the Company. The
Board believes all the Directors have sufficient time to meet their Board
responsibilities.
Performance evaluation
On an annual basis the Board formally considers the independence of its
members, its effectiveness as a Board, the balance of skills represented, the
culture and the composition and performance of its committees. The performance
and contribution of the Chair is reviewed by the other Directors under the
leadership of the Chair of the Audit & Risk Committee. Even though the
performance evaluation is deemed effective, the Board may consider having an
external evaluation of the performance in the future.
Management Engagement Committee
The Management Engagement Committee is chaired by Elisabeth Scott and formally
meets on an annual basis to review service providers and ensure that these are
performing satisfactorily and suited to the Company's needs.
Nomination Committee
The size of the Board and independence of its members are such that the Board
does not consider there is need for a separate Nomination Committee. Any
proposal for a new director is discussed and approved by the Board, having
considered the current skills, experience and diversity of the Board.
Each Director stands for annual re-election at the Company's Annual General
Meeting.
Remuneration Committee
The size of the Board and independence of its members are such that the Board
does not consider the need for a separate Remuneration Committee. Remuneration
is reviewed annually and discussed by the Board as a whole with reference to
the Trust Associates Investment Company Non-Executive Directors' Fee Review.
Audit & Risk Committee
All members of the Board are also members of the Audit & Risk Committee.
The Chair of the Audit & Risk Committee is Patrick Firth. The Chair of the
Board is also a member of the Audit & Risk Committee given her extensive
experience and knowledge, in particular given her appointment to the Board of
the Company for more than 5 years. The Audit & Risk Committee conducts
formal meetings throughout the year for the purpose, amongst others, of
considering the appointment, independence, effectiveness of the audit and
remuneration of the auditors and to review and recommend the annual statutory
accounts and interim report to the Board for approval. Full details of its
functions and activities are set out in the Report of the Audit & Risk
Committee.
Shareholder voting on the resolution to Issue and allot new ordinary shares
On 26 June 2024, at the Company's AGM, 29.77 per cent. of votes cast were
against Resolution 8 which sought authority for the Company to issue and allot
new ordinary shares. Consequently, at the Company's request, the Manager and
Broker consulted with shareholders who voted against Resolution 8, who
confirmed that they had followed the recommendation in a report from a Proxy
Voting Agency and that, in future, it would be helpful for the wording to be
clearer in the resolution. As a result, the Company intends to include
explicit wording stating that new ordinary shares would only be issued at a
premium to NAV per share in the relevant resolution at its AGM and that the
Board will ensure the amount for which the relevant authority is sought does
not exceed 33 per cent. of the Company's issued share capital.
AUDIT & RISK COMMITTEE REPORT
Introduction
The Audit & Risk Committee (the "Committee") report for 2024 is presented
below. As in previous years, the Committee has reviewed the Company's
financial reporting, the independence and effectiveness of the Independent
Auditor and the internal control and risk management systems of the Company
and its service providers.
Structure and Composition
The Chair of the Committee is Patrick Firth. The Chair of the Committee is
appointed by the Board and the members are appointed by the Board, in
consultation with the Chair of the Committee. The Committee shall have a
minimum of two members. All members of the Committee shall be independent
non-executive directors, at least one of whom has recent and relevant
financial experience. The Chair of the Committee is a qualified accountant and
is responsible for ensuring that the Committee carries out its Principal
Duties. All members of the Committee have recent and relevant financial
experience.
The Committee conducts formal meetings at least twice a year, normally
immediately preceding the Board meetings at which the financial statements for
the half-year and year end are reviewed. Only members of the Committee have
the right to attend meetings although, with the consent of the Chair of the
Committee, other Directors may be in attendance. The meetings attendance table
in the Directors' Report sets out the number of Committee meetings held during
the year ended 31 December 2024 and the number of such meetings attended by
each committee member. The Independent Auditor is invited to attend those
meetings at which the annual and interim reports are considered. The
Independent Auditor and the Committee may meet together without
representatives of either the Administrator or Investment Manager being
present if either considers this to be necessary.
Principal Duties of the Committee
The role of the Committee includes:
· monitoring the integrity of the financial statements and any formal
announcements regarding financial performance of the Company;
· reviewing and reporting to the Board on the significant issues
and judgements made in the preparation of the Company's published financial
statements, (having regard to matters communicated by the Independent
Auditors) preliminary announcement and other financial information;
· reviewing the effectiveness of the external audit process and the
auditors' independence;
· considering and making recommendations to the Board on the
appointment, reappointment, replacement and remuneration of the Company's
Independent Auditor;
· reviewing arrangements by which persons associated with the key
service providers are able to, in confidence, raise concerns about possible
improprieties in matters of financial reporting or other matters and to ensure
that appropriate proportionate independent investigation of such matters is
undertaken;
· assessing whether the Annual Report and financial statements taken
as a whole, are fair, balanced and understandable and provide the information
necessary for the shareholders to assess the Company's performance, business
model and strategy; and
· informing the administrative or supervisory body of the issuer of
the outcome of the statutory audit and explaining how the statutory audit
contributed to the integrity of financial reporting and what the role of the
relevant body was in that process.
The complete details of the Committee's formal duties and responsibilities are
set out in the Committee's terms of reference, which can be obtained from the
Company's website (https://www.indiacapitalgrowth.com).
Independent Auditor
Deloitte LLP acted as the Independent Auditor of the Company in respect of the
year ended 31 December 2024.
The recent revisions to the UK Corporate Governance Code introduced a
recommendation that the independent audit of FTSE 350 companies be put out to
tender every 10 years. Similarly, the EU and the Competition Markets Authority
have also issued requirements to tender every 10 years and extend for a
maximum of further 10 years before mandatory rotation. Notwithstanding the
Company does not fall within the FTSE350, the Committee will follow the
developments around the FRC, EU and Competition Markets Authority guidance on
tendering and consider the impact for offshore incorporated entities. At this
time, it is not the intention of the Board to conduct a tender.
Following the recommendation of the Committee, Deloitte were appointed by the
Board of Directors on 10 June 2015 to audit the financial statements for the
year ending 31 December 2015 and subsequent financial periods. The period of
total uninterrupted engagement including previous renewals and reappointments
of the firm is 9 years, covering the years ending 31 December 2015 to 31
December 2024.
The independence and objectivity of the Independent Auditor is reviewed by the
Committee which also reviews the terms under which the Independent Auditor is
appointed to perform non-audit services. Any non-audit service provided by the
Independent Auditor, other than reviewing interim financial information, those
services which are closely linked to the audit itself or those services which
are required by law or regulation to be completed by the Auditor, requires
prior Committee approval where fees for the service are in excess of £10,000
cumulative over the financial year.
In accordance with the non-audit services policy, Deloitte LLP will not be
appointed to provide additional services including the provision of accounting
advice. The exception is where Deloitte LLP is best placed to provide a
service as a result of its audit, including the interim review which is
permissible under the FRC independence rules.
Given the fees for non-audit services paid by the Company are currently below
the specified threshold, the Independent Auditor can be deemed to be
independent and objective.
The committee also received assurance from Deloitte LLP that no matters of
concern were raised in external evaluations of their performance that would
impact upon their audit of the Company.
Evaluations during the year
The following assessments have been made by the Committee during the year:
Significant Financial Statement Issues
Liquidity and Valuation - The ongoing liquidity of the Company's investment
portfolio was evaluated, which included a review of both financial and
relative non-financial information. Due to the liquid nature of the Company's
and ICG Q's holdings and the Company's ability to effect a disposal of any
investment in ICG Q's portfolio and any of its direct investments at the
prevailing market price and the distribution of proceeds back to the Company
should it so wish, it was determined that no illiquidity discount would be
applied in determining the fair value of the Company's investment in ICG Q and
the Company's direct investments.
Going Concern and Longer-Term Viability - The Committee assessed both the
going concern of the Company for a period of twelve months and its longer-term
viability for a period of three years, particularly in the light of the
previous Redemption Facility in December 2023. Given recent investment
performance, feedback from shareholders and the adequacy of the Company's
liquid resources it was determined the Company can continue in business for
the foreseeable future.
Financial Statements presentation - Following discussion with the external
auditor the comparatives within the audited statement of comprehensive income
statement have been shown as revenue and capital in line with industry
practice.
The foregoing matters were discussed during the planning and final stage of
the audit and there were no disagreements between the Committee and the
Independent Auditor.
Effectiveness of the External Audit Process
The Committee had formal meetings with Deloitte LLP in attendance during the
course of the year: 1) at the review and approval of the year end accounts,
and 2) for the planning discussions for the year-end audit. The Committee
performed the following in relation to its review of the effectiveness and
independence of the Independent Auditor:
· Reviewed the audit plan presented to the Committee before the
start of the audit;
· Challenged the post audit report;
· Challenged the Auditor's own internal procedures to identify threats
to independence, which included obtaining confirmation from the Independent
Auditor of their independence;
· Discussed with both the Manager and the Administrator any
feedback on the external audit process; and
· Challenged and approved terms of the engagement of audit services
during the year, which included an evaluation of the related fees.
In addition, the Committee performed specific evaluation of the performance of
the Independent Auditor which is supported by the results of questionnaires
completed by the Committee. This questionnaire covered areas such as quality
of audit team, business understanding, audit approach and management.
There were no significant findings from the evaluation this year and the
Committee is satisfied that the external audit process is effective.
Audit fees and Non-audit Services
The table below summarises the remuneration paid by the Company to the
Independent Auditor:
2024 2023
£ £
Annual Audit 62,500 52,000
Internal Control
The Committee has considered the need for an internal audit function. The
Committee agreed that the systems, controls and procedures employed by the
Investment Manager and the Administrator provided sufficient assurance that a
sound system of internal control, which safeguards the Company's assets, has
been maintained. An internal audit function specific to the Company is
therefore considered unnecessary.
The Committee examined and challenged externally prepared assessments of the
control environment in place at the Administrator who provided an independent
service auditor's report in accordance with ISAE 3402 for the year ended 30
September 2024, and a Bridge letter covering the period from 1 October 2024 to
31 December 2024. The Committee was satisfied that controls relevant to the
Company were operating satisfactorily.
Conclusion and Recommendation
After consultations with the Independent Auditor as necessary and reviewing
various reports from the Investment Manager such as the quarterly performance
reports and portfolio attribution and portfolio turnover reporting and
assessing the significant financial statement issues, the Committee is
satisfied that the financial statements appropriately address the critical
judgements and key estimates (both in respect to the amounts reported and the
disclosures). The Committee is also satisfied that the significant assumptions
used for determining the value of assets and liabilities have been
appropriately scrutinised, challenged and are sufficiently robust. The
Committee further concludes that the financial statements, taken as a whole,
are fair, balanced and understandable and provide the information necessary
for the shareholder to assess the Company's performance, business model and
strategy.
At the conclusion of the external audit process, the Independent Auditor
reported to the Committee that any misstatements found in the course of its
work had been corrected. Furthermore, both the Manager and the Administrator
confirmed to the Committee that they were not aware of any material
misstatements including matters relating to presentation. The Committee
confirms that it is satisfied that the Independent Auditor has fulfilled its
responsibilities with diligence and professional scepticism.
Following the detailed review and evaluation processes identified in this
report, the Committee has concluded that the auditors have acted independently
in the work undertaken on behalf of the Company and has recommended to the
Board that Deloitte LLP be reappointed as Independent Auditor of the Company
for the coming financial year.
For any questions on the activities of the Committee not addressed in the
foregoing, a member of the Committee remains available to attend each Annual
General Meeting to respond to such questions.
Patrick Firth
Audit & Risk Committee Chair
26 March 2025
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF INDIA CAPITAL GROWTH FUND
LIMITED
Report on the audit of the financial statements
1. Opinion
In our opinion the financial statements of India Capital Growth Fund Limited
(the 'Company'):
· give a true and fair view of the state of the Company's affairs as
at 31 December 2024 and of its profit for the year then ended;
· have been properly prepared in accordance with United Kingdom adopted
international accounting standards; and
· have been prepared in accordance with the requirements of the
Companies (Guernsey) Law, 2008.
We have audited the financial statements which comprise:
· the statement of comprehensive income;
· the statement of financial position;
· the statement of changes in equity;
· the statement of cash flows; and
· the related notes 1 to 16.
The financial reporting framework that has been applied in their preparation
is applicable law and United Kingdom adopted international accounting
standards.
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the auditor's responsibilities for the
audit of the financial statements section of our report.
We are independent of the Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK,
including the Financial Reporting Council's (the 'FRC's') Ethical Standard as
applied to listed public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We confirm
that we have not provided any non-audit services prohibited by the FRC's
Ethical Standard to the Company.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matter The key audit matter that we identified in the current year was
the valuation of the Company's investment in its subsidiary and valuation of
directly held investments.
This key audit matter is consistent with the prior year.
Materiality The materiality that we used in the current year was £1,793,500 which was
determined on the basis of 1% of Net Assets.
Scoping The Company was audited as a single component. Balances were scoped in for
testing based on our assessment of risk of material misstatement. As part of
our risk assessment process, we considered the impact of controls implemented
at service organisations of the Company. Audit work to respond to the risk of
material misstatement was performed directly by the audit engagement team.
Significant changes in our approach There have been no significant changes in our approach.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
Our evaluation of the directors' assessment of the Company's ability to
continue to adopt the going concern basis of accounting included:
· assessing the Redemption Facility mechanism and the ability for
shareholders to request redemptions at 31 December 2025 and the potential
impact of this on the going concern of the Company;
· assessing the likelihood of the level of redemptions at the
forthcoming Redemption Facility by evaluating the latest shareholder analysis
prepared by the investment manager as at 31 January 2025 for changes to
shareholder types, comparing to actual redemptions levels for the redemption
events on 31 December 2021 and 2023, and assessing the maximum amount of
redemption that would have to occur to reduce the net asset value (NAV) to
below an acceptable level;
· evaluating the liquidity analysis prepared by the investment
manager and the investments held at year and performing a review of trading
volumes for all investments held by the Company and ICG Q Limited and for any
investments that were not traded daily, performed a free float analysis;
· assessing the ability of the Company to meet its short-term
obligations based on its ongoing charges ratio; and
· assessing the relevant going concern disclosures in the financial
statements.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the company's ability to continue
as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
In relation to the reporting on how the Company has applied the UK Corporate
Governance Code, we have nothing material to add or draw attention to in
relation to the directors' statement in the financial statements about whether
the directors considered it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
5. Key audit matter
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters
included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the
engagement team.
This matter was addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
5.1. Valuation of the Company's investment in its subsidiary and valuation
of directly held investments
Key audit matter description The Company holds investments in securities listed on Indian Stock Exchanges
with fair value of £65,924,000 as at 31 December 2024 (2023: £34,947,000),
as well as investment in its subsidiary, ICG Q Limited (ICG Q.) with fair
value of £105,376,000 as at 31 December 2024 (2023: £134,701,000).
Investments are the most significant balance on the Statement of Financial
Position. Errors or deliberate manipulation of valuations to report favourable
key performance indicators could result in a material misstatement to the
financial statements.
The fair value of investment the Company holds in its subsidiary, is
determined by its Net Asset Value (NAV) at year end. The majority of ICG Q's
NAV comprises its listed investments and as a result there is risk that if
these are materially misstated, the investment balance recorded in the
Company's financial statements will be misstated.
Details of the investments are disclosed in notes 5 and 9 and the accounting
policies relating to them are disclosed in note 1.
How the scope of our audit responded to the key audit matter In order to test the valuation of the Company's investments in its subsidiary
and valuation of directly held investments as at 31 December 2024 we performed
the following procedures:
· Obtained an understanding of and tested the relevant controls
relating to the valuation of investments, including controls adopted by the
Company's administrator;
· Agreed the unit prices of all investments in the Company's
subsidiary and directly held investments to independent pricing sources;
· Examined trading volumes for all investments held by the Company
and ICG Q and for any investments that were not traded daily and performed
further analysis to assess whether these investments were sufficiently liquid
to be classified as a Level 1 investment; and
· Recalculated the NAV of ICG Q through reconciling the investment
holdings, the cash holdings and liabilities as at 31 December 2024 to the
closing balance of ICG Q recorded in the Company's financial statements.
Key observations We concluded that the valuation of investments in the subsidiary and valuation
of directly held investments was appropriate.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial
statements that makes it probable that the economic decisions of a reasonably
knowledgeable person would be changed or influenced. We use materiality both
in planning the scope of our audit work and in evaluating the results of our
work.
Based on our professional judgement, we determined materiality for the
financial statements as a whole as follows:
Materiality £1,793,500 (2023: £1,735,000)
Basis for determining materiality 1% of Net Assets, which is consistent with the prior year.
Rationale for the benchmark applied Net Assets is the key balance considered by the users of the financial
statements which is consistent with the market approach for such entities.
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the
probability that, in aggregate, uncorrected and undetected misstatements
exceed the materiality for the financial statements as a whole. Performance
materiality was set at 70% of materiality for the 2024 audit (2023: 70%). In
determining performance materiality, we considered the following factors:
· our risk assessment, including our assessment of the Company's
overall control environment;
· our past experience of the audit, which has indicated a low
number of corrected and uncorrected misstatements identified in prior periods;
and
· potential impact as a result of the Redemption Facility that is
due within the next 12 months.
6.3. Error reporting threshold
We agreed with the Audit & Risk Committee that we would report to the
Committee all audit differences in excess of £89,600 (2023: £86,700), as
well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds. We also report to the Audit & Risk
Committee on disclosure matters that we identified when assessing the overall
presentation of the financial statements.
7. An overview of the scope of our audit
7.1. Scoping
Our audit was scoped by obtaining an understanding of the Company and its
environment, including internal controls, and assessing the risks of material
misstatement.
Audit work to respond to the risks of material misstatement was performed
directly by the audit engagement team.
7.2. Our consideration of the control environment
The Company is administered by a third party Guernsey regulated service
provider. As part of our audit, we obtained an understanding of and tested the
relevant controls around the valuation of investments and NAV preparation
process established at the service provider. We inspected monthly NAV
checklists and accompanying reports on a sample basis.
7.3 Our consideration of climate-related risks
The Company, through the investment manager has considered climate related
risks from their operations. The Company's climate related risks arise from
companies they invest in. As explained in the Strategic Report, the investment
advisor has developed a scoring model in which companies they invest in are
tracked for their climate risk processes and disclosures. This process is
consistent with our understanding of the Company's operations. With the
involvement of our ESG specialists, we used our knowledge of the Company to
evaluate management's assessment. We also read the annual report to consider
whether the disclosures in relation to climate change made in the other
information within the annual report are materially consistent with the
financial statements and our knowledge obtained in our audit.
8. Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report.
Our opinion on the financial statements does not cover the other information
and, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Company's ability to continue as a going concern, disclosing as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Company or
to cease operations, or have no realistic alternative but to do so.
10. Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
A further description of our responsibilities for the audit of the financial
statements is located on the FRC's website at:
www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to
irregularities
In identifying and assessing risks of material misstatement in respect of
irregularities, including fraud and non-compliance with laws and regulations,
we considered the following:
· the nature of the industry and sector, control environment and
business performance including the design of the Company's remuneration
policies, key drivers for directors' remuneration, bonus levels and
performance targets;
· results of our enquiries of management, the directors and the
Audit & Risk Committee about their own identification and assessment of
the risks of irregularities, including those that are specific to the
Company's sector;
· any matters we identified having obtained and reviewed the
Company's documentation of their policies and procedures relating to:
o identifying, evaluating and complying with laws and regulations and
whether they were aware of any instances of non-compliance;
o detecting and responding to the risks of fraud and whether they have
knowledge of any actual, suspected or alleged fraud;
o the internal controls established to mitigate risks of fraud or
non-compliance with laws and regulations;
· the matters discussed among the audit engagement team and
relevant internal specialists, including IT specialists regarding how and
where fraud might occur in the financial statements and any potential
indicators of fraud.
As a result of these procedures, we considered the opportunities and
incentives that may exist within the organisation for fraud and identified the
greatest potential for fraud in the following area:
· Valuation of the Company's investment in its subsidiary and
valuation of directly held investments.
In common with all audits under ISAs (UK), we are also required to perform
specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that
the Company operates in, focusing on provisions of those laws and regulations
that had a direct effect on the determination of material amounts and
disclosures in the financial statements. The key laws and regulations we
considered in this context included the Companies (Guernsey) Law, 2008 the UK
Listing Rules and relevant tax legislation.
In addition, we considered provisions of other laws and regulations that do
not have a direct effect on the financial statements but compliance with which
may be fundamental to the Company's ability to operate or to avoid a material
penalty.
11.2. Audit response to risks identified
As a result of performing the above, we identified valuation of the Company's
investments in its subsidiary and valuation of directly held investments as a
key audit matter related to the potential risk of fraud. The key audit matter
section of our report explains the matter in more detail and also describes
the specific procedures we performed in response to the key audit matter.
In addition to the above, our procedures to respond to risks identified
included the following:
· reviewing the financial statement disclosures and testing to
supporting documentation to assess compliance with provisions of relevant laws
and regulations described as having a direct effect on the financial
statements;
· enquiring of management and the Audit & Risk Committee
concerning actual and potential litigation and claims;
· performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material misstatement due
to fraud;
· reading minutes of meetings of the board and the Audit & Risk
Committee and reviewing correspondence with the Guernsey Financial Services
Commission; and
· in addressing the risk of fraud through management override of
controls, testing the appropriateness of journal entries and other
adjustments; assessing whether the judgements made in making accounting
estimates are indicative of a potential bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the
normal course of business.
We also communicated relevant identified laws and regulations and potential
fraud risks to all engagement team members and remained alert to any
indications of fraud or non-compliance with laws and regulations throughout
the audit.
Report on other legal and regulatory requirements
12. Corporate Governance Statement
The Listing Rules require us to review the directors' statement in relation to
going concern, longer-term viability and that part of the Corporate Governance
Statement relating to the Company's compliance with the provisions of the UK
Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each
of the following elements of the Corporate Governance Statement is materially
consistent with the financial statements and our knowledge obtained during the
audit:
· the directors' statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material uncertainties
identified set out;
· the directors' explanation as to its assessment of the Company's
prospects, the period this assessment covers and why the period is appropriate
set out;
· the directors' statement on fair, balanced and understandable
set out;
· the board's confirmation that it has carried out a robust
assessment of the emerging and principal risks set out;
· the section of the annual report that describes the review of
effectiveness of risk management and internal control systems set out; and
· the section describing the work of the Audit & Risk
Committee set out.
13. Matters on which we are required to report by exception
13.1. Adequacy of explanations received and accounting
records
Under the Companies (Guernsey) Law, 2008 we are required to report to you if,
in our opinion:
· we have not received all the information and explanations we
require for our audit; or
· proper accounting records have not been kept by the Company; or
· the financial statements are not in agreement with the accounting
records.
We have nothing to report in respect of these matters.
14. Use of our report
This report is made solely to the Company's members, as a body, in accordance
with Section 262 of the Companies (Guernsey) Law, 2008. Our audit work has
been undertaken so that we might state to the Company's members those matters
we are required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Stuart Crowley FCA
For and on behalf of Deloitte LLP
Recognised Auditor
St Peter Port, Guernsey
26 March 2025
AUDITED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2024
2024 2023
Notes Revenue £000 Capital £000 Total Total
£000
£000
Revenue £000 Capital £000
Income
Dividend income 471 - 471 144 - 144
Foreign exchange loss (531) - (531) (386) - (386)
Net gain on financial assets at fair value through profit or loss 5 - 26,400 26,400 - 40,169 40,169
Management fees 11 1,464 1,464 - - -
Total income 1,404 26,400 27,804 (242) 40,169 39,927
Expenses
Management fees 11 (1,944) - (1,944) - - -
Operating expenses 3 (706) - (706) (538) - (538)
Transaction costs (84) - (84) (55) - (55)
Total expenses (2,734) - (2,734) (593) - (593)
Profit for the year before taxation (1,330) 26,400 25,070 (835) 40,169 39,334
Taxation 6 (93) (1,537) (1,630) (30) (696) (726)
Total comprehensive income for the year (1,423) 24,863 23,440 (865) 39,473 38,608
Earnings per Ordinary 4 27.04 40.01
Share (pence)
Diluted earnings per Ordinary Share (pence) 4 27.04 40.01
The Total column of this statement represents the Company's statement of
comprehensive income, prepared in accordance with IFRS as adopted by the UK.
The supplementary revenue and capital columns are both prepared under guidance
published by the Association of Investment Companies, as disclosed in the
Basis of Preparation in Note 1.
The profit after tax is the "total comprehensive income" as defined by IAS 1.
There is no other comprehensive income as defined by IFRS Accounting Standards
and all the items in the above statement derive from continuing operations.
AUDITED STATEMENT OF FINANCIAL POSITION
As at 31 December 2024
2024 2023
Notes £000 £000
Non-current asset
Financial assets designated at fair value through profit or loss 5 171,300 169,649
Current assets
Cash and cash equivalents 12 9,507 5,009
Other receivables and prepayments 1,337 191
10,844 5,200
Current liability
Payables and accruals (277) (254)
Net current assets 10,567 4,946
Non-current liability
Deferred taxation 6 (2,510) (1,093)
Net assets 179,357 173,502
Equity
Share capital 8 858 963
Reserves 178,499 172,539
Total equity 179,357 173,502
Number of Ordinary Shares in issue 8 85,810,644 96,330,656
NAV per Ordinary Share (pence) 209.01 180.11
- Undiluted and diluted
The financial statements were approved and authorised for issue by the Board
of Directors on 26 March 2025 and signed on its behalf by: -
Lynne Duquemin
Patrick Firth
AUDITED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2024
Share Capital £000 Capital Reserve £000 Revenue Reserve £000 Other Distributable Reserve £000 Total £000
Note
Balance as at 1 January 2024 963 111,056 (10,524) 72,007 173,502
Gain on investments - 24,863 - - 24,863
Share issue 8 63 - - 11,390 11,453
Share repurchase 8 (168) - - (28,870) (29,038)
Total comprehensive income for the year - - - (1,423) (1,423)
Balance as at 31 December 2024 858 135,919 (10,524) 53,104 179,357
For the year ended 31 December 2023
Share Capital £000 Capital Reserve £000 Revenue Reserve £000 Other Distributable Reserve £000 Total £000
Note
Balance as at 1 January 2023 965 71,583 (10,524) 73,155 135,179
Gain on investments - 39,473 - - 39,473
Share issue 8 - - - - -
Share repurchase 8 (2) - - (283) (285)
Total comprehensive income for the year - - - (865) (865)
Balance as at 31 December 2023 963 111,056 (10,524) 72,007 173,502
AUDITED STATEMENT OF CASH FLOWS
For the year ended 31 December 2024
2024 2023
Note £000 £000
Cash flows from operating activities
Operating profit 25,070 39,334
Adjustments for:
Net gain on financial assets at fair value through profit or loss (26,400) (40,169)
Foreign exchange loss 531 386
Dividend income (471) (144)
Increase in other receivables and prepayments (1,146) (33)
Increase in payables and accruals 23 40
Cash used in operations (2,393) (586)
Taxes paid (213) (30)
Net cash flows used in operating activities (2,606) (616)
Cash flows from investing activities
Dividend income 471 144
Acquisition of investments 5 (30,381) (19,471)
Disposal of investments 5 55,130 24,977
Net cash flows generated from investing activities 25,220 5,650
Cash flows from financing activities
Issue of shares 11,453 -
Redemption of shares (29,038) (285)
Net cash flows used in financing activities (17,585) (285)
Net increase in cash and cash equivalents during the year 5,029 4,749
Cash and cash equivalents at the start of the year 5,009 646
Foreign exchange loss (531) (386)
Cash and cash equivalents at the end of the year 9,507 5,009
NOTES TO THE AUDITED FINANCIAL STATEMENTS
1. Material accounting Policies
Basis of accounting
The financial statements have been prepared in accordance with IFRS Accounting
Standards as adopted by the UK and interpretations adopted by the
International Accounting Standards Board ("IASB"), and the Companies
(Guernsey) Law, 2008 (Amendment) Ordinance, 2023. The Company's Guernsey
registration number is 1030287.
Basis of preparation
The financial statements for the year ended 31 December 2024 have been
prepared under the historical cost convention adjusted to take account of the
revaluation of the Company's investments to fair value.
Where presentational guidance set out in the Statement of Recommended Practice
(SORP) for Investment Trust Companies and Venture Capital Trusts issued by the
Association of Investment Companies (AIC) in November 2014, and subsequently
revised in November 2019, is consistent with the requirements of IFRS
Accounting Standards, the Directors have sought to prepare the financial
statements on a basis compliant with the recommendations of the SORP, as
applicable for a Guernsey incorporated company. In particular, supplementary
information which analyses the statement of comprehensive income between items
of a revenue and capital nature has been presented alongside the statement of
comprehensive income, including the split between revenue and capital for the
comparative period for the first time, in line with industry practice.
Going concern
The Board made an assessment of the Company's ability to continue as a going
concern for the twelve months from the date of approval of these financial
statements taking into account all available information about the future
including the liquidity of the investment portfolio held both by the Company
and its subsidiary, ICG Q Limited (77.8% of the portfolio can be liquidated
within 5 days); the performance of the investment portfolio; the overall size
of the Company and its impact on the Ongoing Charges of the Company (the NAV
of the Company exceeded £100m throughout the year); the level of operating
expenses covered by highly liquid investments held in the portfolio (operating
expenses are 50 times covered by highly liquid investments); and the length of
time to remit funds from India to Mauritius and Guernsey to settle ongoing
expenses (no more than 10 working days to have investments liquidated and
sterling funds in Guernsey).
Given the Company's previous performance, the Directors proposed a
continuation ordinary resolution at the Extraordinary General Meeting held on
12 June 2020, at which the Shareholders approved that the Company continue as
currently constituted and introduce a Redemption Facility which gives the
ordinary shareholders the ability to redeem part or all of their shareholding
at a Redemption Point every two years. The first Redemption Point was on 31
December 2021 when valid redemption requests were received in respect of
ordinary shares which were subsequently redeemed under the Redemption Facility
in accordance with the announced timetable.
The second Redemption Point was on 31 December 2023 when valid redemption
requests were received in respect of 15,159,876 ordinary shares (15.7% of the
then issued share capital) which were subsequently redeemed under the
Redemption Facility at a total cost of £26.2m in accordance with the
announced redemption price on 8 January 2024. During 2024, to satisfy demand
in the market, the Company issued over 5.8m shares from Treasury at a premium
to NAV raising over £10.7m in new capital, and bought back 1.6m shares at a
significant discount to NAV. Further buybacks were made subsequent to the year
end. As at 28 February 2025 the Company's NAV was £144.8m.
The next date at which shareholders will be able to request the redemption of
some or all of the shares is scheduled to take place on the last working day
of November 2025, subject to shareholder approval at the Company's AGM on 5
June 2025, for shareholders on the register at 29 August 2025. Based upon the
performance of the Company to date, the results of the previous two
redemptions, and the increase in the proportion of retail shareholders seeking
long term value growth on the share register since the last Redemption
Facility on 31 December 2023, the Board believes shareholder redemptions at
the forthcoming Redemption Facility on 31 December 2025 are likely to be at
such a level not to impact the going concern of the Company.
The Directors are satisfied that the Company has sufficient liquid resources
to continue in business for the next twelve months from the date of approval
of these financial statements, therefore the financial statements have been
prepared on a going concern basis.
Impact of IFRS 10 'Consolidated Financial Statements'
As set out under IFRS 10, a parent entity that qualifies as an investment
entity should not consolidate its subsidiaries. The Company meets all the
following criteria to qualify as an investment entity: -
(i) Obtaining funds from one or more investors for the purpose of
providing those investors with investment management services - the Board of
Directors of the Company has delegated this function to its investment
manager, Ocean Dial Asset Management Limited;
(ii) Commits to its investors that its business purpose is to invest
funds solely for returns from capital appreciation, investment income or both
- funds are invested in ICG Q Limited for the sole purpose of achieving
capital appreciation via further placements in Indian listed securities; and
(iii) Measures and evaluates the performance of substantially all of its
investments on a fair value basis - on a monthly basis, the Company's
investment in ICG Q Limited is revalued at the prevailing NAV at the
corresponding valuation date.
The IFRS 10 Investment Entity Exemption requires investment entities to fair
value all subsidiaries that are themselves investment entities. As the
subsidiary meets the criteria of an investment entity, it has not been
consolidated. On the basis of the above, these financial statements represent
the standalone figures of the Company.
Dividend income
Dividend income is recognised when the right to receive payment is
established.
Expenses
Expenses are accounted for on an accrual basis. Other expenses, including
management fees, are allocated to the revenue column of the statement of
profit or loss and other comprehensive income.
Taxation
Full provision is made in the statement of profit or loss and other
comprehensive income at the relevant rate for any taxation payable in respect
of the results for the year. Taxation related to investments is disclosed
under 'Capital' and all other taxes are disclosed under 'Revenue'.
Deferred taxation
Deferred taxation is recognised in respect of all temporary differences at the
Statement of Financial Position date, where transactions or events that result
in an obligation to pay more tax in the future or right to pay less tax in the
future have occurred at the Statement of Financial Position date. This is
subject to deferred taxation assets only being recognised if it is considered
more likely than not that there will be suitable profits from which the future
reversal of the temporary differences can be deducted. Deferred taxation
assets and liabilities are measured at the rates applicable to the legal
jurisdictions in which they arise, using enacted taxation rates that are
expected to apply at the date the deferred taxation position is unwound.
Financial instruments
The Company's investment in ICG Q Limited is designated at Fair Value through
Profit or Loss (FVTPL) as the Company meets the definition of an investment
entity under IFRS 10. It is initially recognised at fair value, being the cost
incurred at acquisition. Transaction costs are expensed in the statement of
comprehensive income. Gains and losses arising from changes in fair value are
presented in the statement of comprehensive income in the period in which they
arise and are presented in the Capital column of the Statement of
Comprehensive Income.
The investment is designated at FVTPL at inception because it is managed, and
its performance evaluated on a fair value basis in accordance with the
Company's investment strategy as documented in the Admission Document and
information thereon is evaluated by the management of the Company on a fair
value basis.
The basis of the fair value of the investment in the underlying subsidiary,
ICG Q Limited, is its NAV. ICG Q Limited's investments are designated at
FVTPL, fair value is determined by reference to the market closing price
ruling at the balance sheet date, or if this is not available, the latest
closing price from the Investment Manager.
Financial assets
Portfolio investments held by the Company are stated at the mid-market price
quoted on the Indian Stock Exchanges. Purchases and sales are recognised on
the trade date - the date on which the Company commits to purchase or sell the
investment. Realised gains and losses are calculated with reference to book
cost on a FIFO (First in First out) basis.
The financial asset is derecognised when the rights to receive cash flows from
the investment have expired or the Company has transferred substantially all
risks and rewards of ownership.
Impairment of financial assets
The Company holds only cash and cash equivalents with reputable institutions
at amortised cost and, as such, has chosen to apply an approach similar to the
simplified approach for expected credit losses (ECL) under IFRS 9. Therefore,
the Company does not track changes in credit risk, but instead, recognises a
loss allowance based on lifetime ECLs at each reporting date. The Company's
approach to ECLs reflects a probability-weighted outcome, the time value of
money and reasonable and supportable information that is available without
undue cost or effort at the reporting date about past events, current
conditions and forecasts of future economic conditions.
Receivables and payables
Receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted on an active market. These are initially
recognised at fair value plus transaction costs that are directly attributable
to the acquisition. Such financial assets are subsequently measured at
amortised cost using the effective interest rate method (EIR), less
impairment, such impairment to be determined using the simplified expected
credit losses approach in accordance with IFRS 9. Amortised cost is calculated
by taking into account any discount or premium on acquisition and fees or
costs that are an integral part of the EIR. The EIR amortisation is included
in profit or loss. The losses arising from impairment are recognised in profit
or loss.
Other financial liabilities include all financial liabilities, other than
those classified as at FVTPL, are initially measured at fair value plus
transaction costs. The Company includes in this category short-term payables.
Foreign currency translation
The Company's shares are denominated in Sterling (£) and the majority of its
expenses are incurred in Sterling. Accordingly, the Board has determined that
the functional currency is Sterling. Sterling is also the presentational
currency of the financial statements.
Monetary foreign currency assets and liabilities are translated into Sterling
at the rate of exchange ruling at the statement of financial position date.
Investment transactions and income and expenditure items are translated at the
rate of exchange ruling at the date of the transactions. Gains and losses on
foreign exchange are included in the statement of comprehensive income.
Cash and cash equivalents
Cash consists of Bank current accounts. Cash equivalents are short-term highly
liquid investments that are readily convertible into known amounts of cash and
which are subject to insignificant changes in value.
Share capital
The share capital of the Company consists of Ordinary Shares which have all
the features and have met all the conditions for classification as equity
instruments under IAS 32 (amended) and have been classified as such in the
financial statements.
Treasury shares are equity instruments which are created when the Company
reacquires its own ordinary shares. Treasury shares are recognised at the
consideration paid, including any attributable transaction costs net of income
taxes. Where such shares are subsequently sold or reissued, any consideration
received, net of transaction costs, is included in the shareholders' equity.
No gain or loss is recognised on the purchase, sale, issue or cancellation of
the Company's own ordinary shares.
Changes in material accounting policies
New standards, amendments and interpretations adopted during the year
There have been amendments and interpretations that have become effective for
the current year. The Company has adopted the following new and amended IFRS
Accounting Standards:
Classification of liabilities as current or non-current with covenants
(Amendments to IAS 1)
Under existing IAS 1 requirements, companies classify a liability as current
when they do not have an unconditional right to defer settlement of the
liability for at least twelve months after the end of the reporting period. As
part of its amendments, the IASB has removed the requirement for a right to be
unconditional and instead, now requires that a right to defer settlement must
have substance and exist at the end of the reporting period.
This right may be subject to a company complying with conditions (covenants)
specified in a loan arrangement. Additional disclosure is also required for
non-current liabilities subject to future covenants. The amendments also
clarify how an entity classifies a liability that can be settled in its own
shares.
The amendments apply retrospectively for annual reporting periods beginning on
or after 1 January 2024, with early application permitted.
The above amendment is not expected to have a material impact on the Company's
financial statements.
New and revised standards
Standards and interpretations published, but not yet effective for the annual
period beginning on 1 January 2024, which may be relevant to the Company are
set out below. The Company does not plan to adopt these standards early. These
will be adopted in the period that they become mandatory unless otherwise
indicated:
· Amendments to IFRS 9 and IFRS 7: Classification and Measurements of
Financial instruments (applicable for annual periods beginning on or after 1
January 2026)
The above amendments are not expected to have a material impact on the
Company's financial statements.
2. Critical accounting judgements and key sources of estimation uncertainty
Directors make judgements, estimates and assumptions that affect the
application of policies and the reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of
making judgements about the carrying value of assets and liabilities that are
not readily apparent from other sources. The Company makes estimates and
assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equate to the related actual results.
Critical accounting judgements
IFRS 10 defines an investment entity and requires a reporting entity that
meets the definition of an investment entity not to consolidate its
subsidiaries, but instead to measure its subsidiaries at FVTPL in its
financial statements.
Critical accounting judgements
An investment entity is defined as an entity that:
· Obtains funds from one or more investors for the purpose of providing
them with professional investment management services.
· Commits to its investor(s) that its business purpose is to invest funds
solely for returns from capital appreciation, investment income, or both.
· Measures and evaluates performance of substantially all of its
investments on a fair value basis.
The board has concluded that the Company is an investment entity as it
satisfies more than one of the typical characteristics of an investment entity
as noted above.
Key sources of estimation uncertainty
The Company invests in listed shares to which no estimation is required to
determine the closing values. The underlying investments in ICG Q are all
listed securities. All other components of ICG Q's NAV pertain to instruments
which do not require estimation. Details of the valuation methodologies and
assumptions applied in determining the fair value of the Company's investments
and sensitivities to those assumptions, are disclosed in Note 9.
3. Operating expenses
2024 2023
£000 £000
Administration and secretarial fees 96 84
Audit fees 69 52
Broker fee 43 23
D&O insurance 8 8
Directors' fees and expenses 144 126
General expenses 54 60
Marketing expenses 81 88
Other professional fees 132 45
Registrar fee 16 7
Regulatory fees 40 45
Other expenses 23 -
706 538
4. Earnings per share
Earnings per Ordinary Share and the fully diluted earnings per share are
calculated on the profit for the year of £23,440,000 (2023: profit of
£38,608,000) divided by the weighted average number of Ordinary Shares of
86,682,493 (2023: 96,487,421).
5. Financial assets at fair value through profit or loss
Financial assets at FVTPL consists of investments in securities listed on
Indian Stock Exchanges, namely the National Stock Exchange or the Bombay Stock
Exchange, as well as investments in the wholly owned subsidiary ICG Q Limited.
A summary of movements is shown below.
2024 2023
£000 £000
Fair value at beginning of year 169,649 134,986
Disposal of investments (55,130) (24,977)
Acquisition of investments 30,381 19,471
Realised gains on disposal of investments 41,306 17,181
Unrealised (losses)/gains on revaluation (14,906) 22,988
Fair value at end of year 171,300 169,649
The net realised and unrealised gains above totalling £26,400,000 (2023:
£40,169,000) on financial assets at FVTPL comprise of gains on the Company's
holding in ICG Q Limited to the extent of £19,017,000 (2023: gains of
£35,412,000) and gains of £7,383,000 (2023: gains of £4,757,000) arising
from investments in securities listed on Indian stock markets. The movement
arising from the Company's holding in ICG Q Limited is driven by the following
amounts within the financial statements of ICG Q Limited, as set out below.
2024 2023
£000 £000
Dividend income 599 959
Unrealised (loss)/gain on financial assets at FVTPL (3,923) 24,310
Foreign exchange gain/(loss) 285 (2,612)
Realised gain on disposal of investments 28,188 19,035
Investment management fees (1,464) (1,702)
Other operating expenses (98) (91)
Withholding tax on dividend income (125) (197)
Tax refund 75 -
Other taxes (4,416) (4,208)
Transaction costs (104) (82)
Net profit of ICG Q Limited 19,017 35,412
The equity investment represents ICG Q Limited, the Company's wholly owned
subsidiary. ICG Q Limited is incorporated and has its principal place of
business in the Republic of Mauritius. The Company holds Participating Shares
in ICG Q Limited, which confer voting rights to the Company, hence controlling
interests.
6. Taxation
Guernsey
India Capital Growth Fund Limited is exempt from taxation in Guernsey on
non-Guernsey sourced income. The Company is exempt under The Income Tax
(Exempt Bodies) (Guernsey) Ordinance 1989 (as amended) and paid the annual
exemption fee of £1,200. For the year ended 31 December 2024, the Company had
a tax liability of £Nil (2023: £Nil).
India
Capital gains arising from equity investments in Indian companies are subject
to Indian Capital Gains Tax Regulations. Consequently, with effect from July
2024, the Company and its subsidiary, ICG Q Limited, have been subject to both
short and long-term capital gains tax in India on the growth in value of their
investment portfolios at the rate of 20% and 12.5% (2023: 15% and 10%)
respectively. Although this additional tax only becomes payable at the point
at which the underlying investments are sold and profits crystallised, the
Company and its subsidiary must accrue for this additional cost as a deferred
taxation liability, notwithstanding that they seek to minimise the impact of
these taxation rates applicable to capital gains by maintaining its investment
strategy of investing in a concentrated portfolio for long-term capital
appreciation. An amount of £120,000 was paid during 2024. The Indian Capital
Gains Tax deferred tax liability is determined at each month end by the
Company's India Tax Agent based upon the period each investment has been held
and the Indian Capital Gains Tax Regulations in force at the time of that
assessment. The deferred taxation liability relating to Indian capital gains
tax for the Company was £2,510,000 at 31 December 2024 (2023: £1,093,000)
and for its subsidiary was £8,859,308 at 31 December 2024 (2023:
£7,833,000).
Dividend withholding tax
The Company and its subsidiary are also subject to withholding tax on their
dividend income in India. The withholding tax charge for the Company for the
year ended 31 December 2024 was £93,000 (2023: £30,000) and for its
subsidiary was £125,000 (2023: £197,000).
Minimum top-up tax
The Company has adopted mandatory exception to the International Tax Reform -
Pillar Two Model Rules (Amendments to IAS 12) upon their release on 23 May
2023. The amendments provide a temporary mandatory exception from deferred tax
accounting for the top-up tax, which is effective immediately, and require new
disclosures about the Pillar Two exposure. However, because no new legislation
to implement the top-up tax was enacted or substantively enacted in India
hence no related deferred tax was recognised at that date, the retrospective
application has no impact on the Company's financial statements. The adoption
of Pillar Two by Guernsey effective 1 January 2025 does not have an impact on
the Company.
7. Segmental information
The Board has considered the provisions of IFRS 8 in relation to segmental
reporting and concluded that the Company's activities are from a single
segment under the standard. From a geographical perspective, the Company's
activities are focused in a single area - India. The subsidiary, ICG Q
Limited, focuses its investment activities in listed securities in India.
Additional disclosures have been provided in this Annual Report as elaborated
in the Directors' Report to disclose the underlying information.
8. Share capital
Authorised Share Capital
Unlimited number of Ordinary Shares of £0.01 each
Issued and Paid Share Capital Number of shares Share Capital
£000
Ordinary shares of £0.01 each:
At 31 December 2023 96,330,656 963
Shares issued from Treasury 5,828,500 58
Shares bought back to Treasury (1,613,512) (16)
Redemption Shares redeemed (15,159,876) (151)
Redemption Shares sold 424,876 4
At 31 December 2024 85,810,644 858
The Ordinary Shares of the Company carry the following rights:
(i) The holders of Ordinary Shares have the right to receive in proportion
to their holdings all the revenue profits of the Company (including
accumulated revenue reserves) attributable to the Ordinary Shares as a class
available for distribution and determined to be distributed by way of interim
and/or final dividend at such times as the Directors may determine.
(ii) On a winding-up of the Company, after paying all the debts
attributable to and satisfying all the liabilities of the Company, holders of
the Ordinary Shares shall be entitled to receive by way of capital any surplus
assets of the Company attributable to the Ordinary Shares as a class in
proportion to their holdings.
(iii) Subject to any special rights or restrictions for the time being
attached to any class of shares, on a show of hands every member present in
person has one vote. Upon a poll every member present in person or by proxy
has one vote for each share held by him.
Treasury shares
There was a total of 5,828,500 ordinary shares issued during the year ended 31
December 2024. These shares were transferred from the Treasury Shares account
to the Issued Share Capital Account and were issued at a premium to the NAV
per share, as per below:
Date Number of shares Par Value (£) Discount/(Premium) on day of buyback Sale Price (£) Value of Sale (£)
29 January 2024 500,000 0.01 (0.5%) 1.816 908,750
30 January 2024 350,000 0.01 (1.4%) 1.820 637,000
1 February 2024 340,000 0.01 (0.6%) 1.850 629,000
2 February 2024 700,000 0.01 (0.8%) 1.840 1,288,000
5 February 2024 525,000 0.01 (0.5%) 1.851 971,775
6 February 2024 425,000 0.01 (0.6%) 1.858 789,438
7 February 2024 335,000 0.01 (0.6%) 1.860 623,100
8 February 2024 210,000 0.01 (0.6%) 1.839 386,190
9 February 2024 210,000 0.01 (0.7%) 1.835 385,350
12 February 2024 285,000 0.01 (0.6%) 1.795 511,575
13 February 2024 115,000 0.01 (0.8%) 1.805 207,575
14 February 2024 90,000 0.01 (0.6%) 1.818 163,620
16 February 2024 150,000 0.01 (0.5%) 1.866 279,900
21 February 2024 70,000 0.01 (0.6%) 1.855 129,850
22 February 2024 75,000 0.01 (0.7%) 1.855 139,125
26 February 2024 75,000 0.01 (0.6%) 1.868 140,063
27 February 2024 100,000 0.01 (0.6%) 1.873 187,250
28 February 2024 258,000 0.01 (0.6%) 1.838 474,075
1 March 2024 165,000 0.01 (0.5%) 1.878 309,788
4 March 2024 285,500 0.01 (0.5%) 1.865 532,458
5 March 2024 100,000 0.01 (0.6%) 1.843 184,250
6 March 2024 370,000 0.01 (0.7%) 1.820 673,400
12 March 2024 95,000 0.01 (0.7%) 1.760 167,200
5,828,500 10,718,730
Shares bought back to Treasury
There was a total of 1,613,512 ordinary shares bought back during the year
ended 31 December 2024. These shares were transferred from Issued Share
Capital Account to Treasury Shares Account and were purchased at a discount to
the NAV per share, as per below:
Date Number of shares Par Value (£) Discount/(Premium) on day of buyback Buy Back Price (£) Value of Buy back (£)
20 March 2024 50,000 0.01 14.8% 1.460 73,000
21 March 2024 100,000 0.01 14.8% 1.450 145,000
4 April 2024 100,000 0.01 12.0% 1.614 161,400
5 April 2024 25,000 0.01 9.7% 1.650 41,250
9 April 2024 15,000 0.01 9.5% 1.650 24,750
11 April 2024 50,000 0.01 9.9% 1.639 81,945
12 April 2024 25,000 0.01 9.8% 1.640 41,000
16 April 2024 20,447 0.01 9.5% 1.660 33,942
22 April 2024 30,770 0.01 9.3% 1.647 50,666
23 April 2024 50,000 0.01 10.7% 1.630 81,500
26 April 2024 40,000 0.01 9.6% 1.675 67,000
30 April 2024 12,663 0.01 9.6% 1.680 21,274
31 May 2024 40,000 0.01 8.1% 1.640 65,600
13 June 2024 14,404 0.01 8.3% 1.720 24,775
24 June 2024 19,000 0.01 9.0% 1.780 33,820
25 June 2024 20,000 0.01 7.7% 1.808 36,150
3 July 2024 20,000 0.01 9.8% 1.818 36,360
4 July 2024 50,000 0.01 9.3% 1.828 91,400
5 July 2024 20,000 0.01 9.1% 1.850 37,000
9 July 2024 25,000 0.01 8.6% 1.856 46,400
11 July 2024 20,000 0.01 8.6% 1.850 37,000
15 July 2024 25,000 0.01 8.1% 1.860 46,500
18 July 2024 30,000 0.01 8.3% 1.839 55,170
30 July 2024 13,000 0.01 9.4% 1.861 24,193
30 July 2024 20,000 0.01 9.3% 1.840 36,800
5 August 2024 7,000 0.01 8.4% 1.890 13,230
30 August 2024 21,000 0.01 8.3% 1.870 39,270
4 September 2024 50,000 0.01 8.6% 1.885 94,250
10 September 2024 50,000 0.01 9.0% 1.860 93,000
16 September 2024 38,000 0.01 9.9% 1.870 71,041
19 September 2024 20,000 0.01 8.2% 1.890 37,800
27 September 2024 30,000 0.01 9.4% 1.865 55,950
3 October 2024 14,000 0.01 9.0% 1.870 26,180
14 October 2024 50,000 0.01 11.4% 1.869 93,450
14 October 2024 50,000 0.01 11.2% 1.850 92,475
16 October 2024 50,000 0.01 12.2% 1.878 93,900
17 October 2024 50,000 0.01 11.5% 1.900 95,000
22 October 2024 50,000 0.01 9.8% 1.855 92,760
30 October 2024 50,000 0.01 11.1% 1.800 90,000
6 November 2024 23,000 0.01 11.8% 1.820 41,860
11 November 2024 50,000 0.01 10.7% 1.840 92,000
15 November 2024 6,000 0.01 10.9% 1.800 10,800
20 November 2024 50,000 0.01 11.8% 1.815 90,725
22 November 2024 50,000 0.01 11.7% 1.820 91,000
27 November 2024 49,228 0.01 11.2% 1.889 93,002
20 December 2024 20,000 0.01 9.1% 1.950 39,000
1,613,512 2,840,588
Redemption Shares redeemed to Treasury
In accordance with the Company's Redemption Facility as at 31 December 2023,
on 16 January 2024 the Company redeemed 15,159,876 ordinary shares (Redemption
Shares) at 180.11p per share for a total cost of £26,197,327. At the same
time the Company sold 424,876 Redemption Shares at 180.11p per share realising
total proceeds of £734,215 and transferred the remaining 14,735,000
Redemption Shares to Treasury Share Account.
Other distributable reserves
Other distributable reserves includes all other gains and losses during the
year except for the realised and unrealised gains and losses on the
investments measured at FVTPL. Other distributable reserves also includes
foreign exchange gains and losses made on ordinary transactions, dividend
income and general expenses, as well as taxation.
9. Fair value of financial instruments
The following tables show financial instruments recognised at fair value,
analysed between those whose fair value is based on:
· Quoted prices in active markets for identical assets or
liabilities (Level 1);
· Those involving inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly (as prices) or
indirectly (derived from prices) (Level 2); and
· Those with inputs for the asset or liability that are not based on
observable market data (unobservable inputs) (Level 3).
The analysis as at 31 December 2024 is as follows:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
£000 £000 £000 £000
Listed securities 65,924 - - 65,924
Unlisted securities - 105,376 - 105,376
Total 65,924 105,376 - 171,300
The analysis as at 31 December 2023 is as follows:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
£000 £000 £000 £000
Listed securities 34,948 - - 34,948
Unlisted securities - 134,701 - 134,701
Total 34,948 134,701 - 169,649
The Company's investment in ICG Q Limited, the Company's wholly owned
subsidiary is priced based on the subsidiary's NAV as calculated as at the
reporting date. The Company has the ability to redeem its investment in ICG Q
Limited at the NAV at the measurement date therefore this is categorised as
level 2. The classification within the hierarchy does not necessarily
correspond to the Investment Manager's perceived risk of the investment, nor
the level of the investments held within the subsidiary. All the underlying
investments of ICG Q Limited are categorised as level 1 at 31 December 2024
and 2023. The year-end fair value of those investments, together with cash
held in ICG Q Limited, comprise all but an insignificant proportion of the NAV
of the subsidiary.
There has been no movement between levels for the year ended 31 December 2024.
There were no changes in valuation techniques during the year ended 31
December 2024.
10. Financial instruments and risk profile
The primary objective of the Company is to provide long-term capital
appreciation by investing predominantly in companies based in India. The
investment policy permits making investments in a range of equity and equity
linked securities of such companies. The portfolio of investments comprises of
listed Indian companies, predominantly mid cap and small cap. The specific
risks arising from exposure to these instruments and the Investment Manager's
policies for managing these risks, which have been applied throughout the
period, are summarised below:
Capital management
The Company is a closed-ended investment company and thus has fixed capital
for investment. It has no legal capital regulatory requirement. The Board has
the power to purchase shares for cancellation thus reducing capital and the
Board considers on a regular basis whether it is appropriate to exercise such
powers. In the year ended 31 December 2024, the Board determined that it was
inappropriate to exercise such powers, although continuation of these powers
will be sought at the Annual General Meeting.
The Board also considers from time to time whether it may be appropriate to
raise new capital by a further issue of shares. The raising of new capital
would, however, be dependent on there being genuine market demand (see note
8).
Environmental and Social (E&S) impact risk
E&S impact risk is a transverse risk that impacts most of our other risks:
market risk, foreign currency risk, credit risk, liquidity risk, operational
non-financial risk, legal and regulatory risk, and reputation risk. Our
Investment Manager has developed a qualitative scoring model which measures
climate and other environmental impacts and the reporting thereof by the
Company's investment portfolio companies.
The Investment Manager considers all factors that may have a financial
material impact on returns. Climate change is a key factor. The related
physical and transition risks are vast and are becoming increasingly
financially material for many investments. Not only in the obvious
high-emitting sectors, such as energy, utilities and transportation, but also
along the supply chain, providers of finance and in those reliant on
agricultural outputs and water. It is important that the financial
implications of material climate-change risks are assessed across all asset
classes, including real assets, and make portfolios more resilient to climate
risk. Comparable climate-related data is necessary to enable effective
decision making and is something the Investment Manager actively sources and
incorporates into its process and scoring model. Regular engagement with all
investee companies allows the Investment Manager to better understand their
exposure and management of climate change risks and influence corporate
behavior positively in relation to climate risk management. There have been no
financial material impacts as a result of E&S risk.
Market risk
Market price risk arises mainly from the uncertainty about future price of the
financial instrument held by the Company and its subsidiary, ICG Q Limited
(the Group). It represents the potential loss the Group may suffer through
holding market positions in the face of price movements.
The Group's investment portfolio is exposed to market price fluctuations,
including the impact of inflation, which are monitored by the Investment
Manager in pursuit of the investment objectives and policies and in adherence
to the investment guidelines and the investment and borrowing powers set out
in the Admission Document. The Group's investment portfolio is concentrated
and, as at 31 December 2024, comprised investment in 36 (2023: 35) companies.
Thus, the Group has higher exposure to market risk in relation to individual
stocks than more broadly spread portfolios.
The Investment Manager has a team on the ground in India who keep abreast of
the latest political developments and economic forecasts that may impact the
listed equities market in India and regularly advise the Board thereof.
The Group's investment portfolio consists predominantly of mid cap and small
cap listed Indian securities, and thus the effect of market movements is not
closely correlated with the principal market index, the BSE Sensex. The BSE
Mid Cap Total Return Index provides a better (but not ideal) indicator of the
effect of market price risk on the portfolio. Assuming perfect correlation,
the sensitivity of the Group's investment portfolio to market price risk can
be approximated by applying the percentage of funds invested (2024: 94.8%;
2023: 90.90%) to any movement in the BSE Mid Cap Total Return Index.
At 31 December 2024, with all other variables held constant, this
approximation would produce a movement in the net assets of the Group's
investment portfolio of £18,089,065 (2023: £16,590,731) for a 10% (2023:
10%) movement in the index which would impact the Company via a fair value
movement of the same magnitude in its holding in ICG Q Limited and its
investments.
Foreign currency risk
Foreign currency risk arises mainly from the fair value or future cash flows
of the financial instruments held by the Group fluctuating because of changes
in foreign exchange rates. The Group's investment portfolio consists of
predominantly Rupee denominated investments but reporting, and in particular
the reported NAV, is denominated in Sterling. Any appreciation or depreciation
in the Rupee would have an impact on the performance of the Company. The
underlying currency risk in relation to the Group's investment portfolio is
the Rupee. The Group's policy is not to hedge the Rupee exposure. The Group
may enter into currency hedging transactions but appropriate mechanisms on
acceptable terms are not expected to be readily available.
At 31 December 2024, if the Indian Rupee had strengthened or weakened by 10%
(2023: 10%) against Sterling with all other variables held constant, pre-tax
profit for the period would have been £18,449,000 (2023: £17,761,359) higher
or lower, respectively, mainly as a result of foreign exchange gains or losses
on translation of Indian Rupee denominated financial assets designated at
FVTPL in ICG Q Limited, the consequent impact on the fair value of the
Company's investment in ICG Q Limited and in the Company's investment
portfolio.
Credit risk
Credit risk arises mainly from an issuer or counterparty being unable to meet
a commitment that it has entered into with the Company. Credit risk in
relation to securities transactions awaiting settlement is managed through the
rules and procedures of the relevant stock exchanges. In particular
settlements for transactions in listed securities are affected by the
custodian on a delivery against payment or receipt against payment basis.
Transactions in unlisted securities are affected against binding subscription
agreements.
The principal credit risks are in relation to cash held by the custodian.
Kotak Mahindra Bank Limited (Kotak) acts as the custodian to the Company. The
aggregate exposure to Kotak at 31 December 2024 was £3,127,763 (2023:
£65,379).
Kotak acted as custodian of the Company's assets during the period. The
securities held by Kotak as custodian are held in trust and are registered in
the name of the Company. Kotak has a long-term credit rating of AAA (2023:
AAA) (CRISIL Ratings - a S&P company).
Interest rate risk
Interest rate risk represents the uncertainty of investment return due to
changes in the market rates of interest. The direct effect of movements in
interest rates is not material as any surplus cash is predominantly in Indian
Rupees, and foreign investors are not permitted to earn interest on Rupee
balances.
Liquidity risk
Liquidity risk arises mainly from the Group encountering difficulty in
realising assets or otherwise raising funds to meet financial commitments. As
the trading volume on the Indian stock markets is lower than that of more
developed stock exchanges the Group may be invested in relatively illiquid
securities. The Group has no unlisted securities, and its focus is to invest
predominantly in mid and small cap listed stocks. However, there remain
holdings where there is relatively little market liquidity, which may take
time to realise. The Directors do not believe that the market is inactive
enough to warrant a discount for liquidity risk on the Group's investment
portfolio. ICG Q Limited seeks to maintain sufficient cash to meet its working
capital requirements. The Directors do not believe it to be appropriate to
adjust the fair value of the Company's investment in ICG Q Limited for
liquidity risk, as it has the ability to affect a disposal of any investment
in ICG Q Limited's investment portfolio at the prevailing market price and the
distribution of proceeds back to the Company should it so wish.
All financial liabilities are current and due on demand.
Taxation risk
Taxation risk arises mainly from the taxation of income and capital gains of
ICG Q Limited and the Company increasing as a result of changes in the tax
regulations and practice in Guernsey, Mauritius and India. The Company and ICG
Q Limited are registered with the Securities and Exchange Board of India
(SEBI) as a foreign portfolio investor (FPI) with a Category I licence, and
ICG Q Limited holds a Global Business Licence in Mauritius and has obtained a
Mauritian Tax Residence Certificate (TRC) which have been factors in
determining its resident status under the India-Mauritius Double Taxation
Avoidance Agreement (DTAA) and General Anti Avoidance Rules (GAAR) under the
Income Tax Act 1961 (ITA).
However, with effect from April 2017, the DTAA was amended such that the
advantages of investing in India via Mauritius were removed and capital gains
arising from investments in Indian companies are subject to Indian Capital
Gains Tax regulations. With effect from 22 July 2024 the short-term
(investments held less than 12 months) Indian CGT rate increased from 15% to
20% and the long-term Indian CGT rate increased from 10% to 12.5%. Full
deferred tax provision is made for Indian CGT applying to the investment
portfolio.
The Group seeks to minimise the impact of these changes in the taxation rates
applicable to its capital gains by maintaining its investment strategy of
investing in a concentrated portfolio for long-term capital appreciation.
11. Related party transactions and material contracts
Parties are considered to be related if one party has the ability to control
the other party or exercise significant influence over the other party in
making financial or operational decisions. The Directors are responsible for
the determination of the investment policy and have overall responsibility for
the Company's activities. Directors' fees are disclosed in the unaudited
Directors' remuneration report.
During the year 2024, the investment management fee was equivalent to 1.25 per
cent per annum of the lower of the Company's market capitalisation or
aggregate value of its assets less current liabilities, calculated and payable
monthly in arrears. The Investment Manager earned £1,944,000 in management
fees during the year ended 31 December 2024 (2023: £1,702,000) of which
£181,000 was outstanding at 31 December 2024 (2023: £162,000).
From March 2024, the method of calculation for these fees has been updated.
Investment management fees receivable from ICG Q are calculated based on the
NAV of ICG Q. Investment management fees payable to Ocean Dial Asset
Management Limited are based on the assets of ICGF. The calculation of
investment management fees payable to Ocean Dial Asset Management Limited
remains unchanged
Under the terms of the Administration Agreement, Apex Fund and Corporate
Services (Guernsey) Limited is entitled to a minimum annual fee of US$41,000
or a fee of 5 basis points of the NAV of the Company, whichever is greater.
The Administrator is also entitled to reimbursement of all out-of-pocket
expenses recoverable by way of a fixed disbursement charge of $50 per month
excluding all international calls and courier. The Administrator earned
£96,000 for administration and secretarial services during the year ended 31
December 2024 (2023: £84,000) of which £24,000 was outstanding at 31
December 2024 (2023: £23,000).
12. Cash and cash equivalents
Cash and cash equivalents are comprised of:
2024 2023
£000 £000
Cash at bank 5,307 5,009
Short-term investment 4,200 -
9,507 5,009
13. Contingent liabilities
The Directors are not aware of any contingent liabilities as at 31 December
2024 and at the date of approving these financial statements.
14. Significant events
During the month of January 2024, 15,159,876 ordinary shares, equivalent to
15.7% of the shares in issue as at 31 December 2023 (excluding treasury
shares), were redeemed at 180.11p per Redemption Share. These Redemption
Shares were held in treasury following the redemption of shares paid in
January 2024, which resulted in a £26.2m reduction in the NAV of the Company.
15. Ultimate controlling party
In the opinion of the Directors of the Company, the Company has no ultimate
controlling party.
16. Subsequent events
During the period from 31 December 2024 to the date of signing of these
Financial Statements, no shares have been issued from Treasury and 395,000
shares have been bought back into Treasury.
Following the transactions, the Company's issued share capital comprises:
- 85,415,644 Ordinary Shares (excluding treasury shares)
- 27,086,529 Ordinary Shares held in treasury
- 112,502,173 Ordinary Shares (including treasury shares)
The Company's NAV has fallen by 19.3% since the year-end and was £144.8m as
of 28 February 2025. The latest estimated NAV of £151.7m as of 25 March 2025
shows a rise of 4.8% during the month to date. These movements are in line
with wider market fluctuations.
There are no other material events since the end of the reporting period which
would require disclosure or adjustment to the financial statements for the
year ended 31 December 2024.
ALTERNATIVE PERFORMANCE MEASURES
The Company uses the following Alternative Performance Measures ("APMs"). APMs
do not have a standard meaning prescribed by Generally Accepted Accounting
Principles and therefore may not be comparable to similar measures presented
by other entities.
Premium or Discount - the share price of an Investment Company is derived from
buyers and sellers trading their shares on the stock market. This price is not
identical to the NAV per share of the Company. If the share price is lower
than NAV per share, the shares are trading at a discount. This usually
indicates that there are more sellers of shares than buyers. The discount is
shown as a percentage of the NAV per share. Shares trading at a price above
NAV per share are deemed to be at a premium.
2024 2023
pence pence
NAV per share (a) 209.01 180.11
Share price per share (b) 192.50 173.00
(Discount) or Premium ((b-a)/a) (c) (7.9%) (3.9%)
Ongoing Charges - are those expenses of a type which are likely to recur in
the foreseeable future, whether charged to capital or revenue, and which
relate to the operation of the Investment Company, expressed as a proportion
of the average net assets of the Company over the reporting year. In
accordance with AIC guidance the costs of buying and selling investments and
derivatives are excluded, as are interest costs, taxation, non-recurring costs
and the costs of buying back or issuing shares. Ongoing charges are based on
aggregate costs incurred in the year by both the Company and its Mauritian
subsidiary, as being the best estimate of future costs.
2024 2023
£000 £000
Management fee 1,944 1,702
Directors' fees 133 126
Mauritian subsidiary operating expenses 97 91
Administration fee 84 74
Auditor's fee 63 49
Other expenses 430 284
Ad-hoc non-recurring expenses (91) -
Total ongoing & recurring expenses (a) 2,660 2,326
Average monthly net assets (b) 168,647 148,384
Ongoing charges (a/b) (c) 1.58% 1.57%
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR JFMMTMTITTTARecent news on India Capital Growth Fund
See all newsREG - India CapitalGrwthFd - Net Asset Value Daily Estimate
AnnouncementREG - India CapitalGrwthFd - Total Voting Rights
AnnouncementREG - India CapitalGrwthFd - Net Asset Value Daily Estimate
AnnouncementREG - India CapitalGrwthFd - Net Asset Value Daily Estimate
AnnouncementREG - India CapitalGrwthFd - Net Asset Value Daily Estimates
Announcement