ASHOKA INDIA EQUITY INVESTMENT TRUST PLC

LEGAL ENTITY IDENTIFIER ('LEI'): 213800KX5ZS1NGAR2J89

ANNUAL REPORT AND AUDITED FINANACIAL STATEMENTS

For the year from 1 July 2020 to 30 June 2021

INVESTMENT OBJECTIVE, FINANCIAL INFORMATION AND PERFORMANCE SUMMARY

INVESTMENT OBJECTIVE
The investment objective of the Ashoka India Equity Investment Trust plc (the "Company") is to achieve long-term capital appreciation, mainly through investments in securities listed in India and listed securities of companies with a significant presence in India.

FINANCIAL INFORMATION

PERFORMANCE SUMMARY

1     These are Alternative Performance Measures.

2     Total returns in Sterling for the year/period ended 30 June 2021 and 2020.

3     Source: Bloomberg

ALTERNATIVE PERFORMANCE MEASURES ("APMS")
The disclosures as indicated in the footnote above represent the Company's APMs. Definitions of these APMs and other performance measures used by the Company, together with how these measures have been calculated, can be found in the annual report.

STRATEGIC REPORT

CHAIRMAN'S STATEMENT

I am pleased to present the third annual results of Ashoka India Equity Investment Trust plc for the year to 30 June 2021. Whilst the performance of your Company's investment portfolio has been commendable over this period, and will be covered in more detail later, we must first reflect on a challenging year for the whole world, India in particular, as it continues to deal with the effects of the COVID-19 virus. The accelerated development of several vaccines, and the more recent realisation that humanity will have to learn to live with the virus, has led to the re-opening of many world economies, India's included. Whilst initially the Indian vaccination programme was slower than the Modi Government would have liked, official statistics suggest the incidence of the virus may be lower than feared, with fewer associated deaths. Against this backdrop, it is very good news that India's economic growth has bounced back so strongly and, for this Company's shareholders, particularly reassuring that the investment team has maintained its focus, remained diligent and has been able to continue producing outstanding returns.

I am pleased to report that Acorn Asset Management Ltd, the Investment Manager, and PraxisIFM Fund Services (UK) Limited, the Company's Administrator and Secretary, have worked effectively and efficiently during periods when working remotely was advised. Additionally, the same applies regarding the continued efficient operation of all service providers to the Company, including the registrar, depositary, custodian, auditor and corporate adviser, all of which should be complimented for their professional attitude.

PERFORMANCE
As alluded to above, the Company's net asset value (NAV) has had another good year returning 52.6%, comfortably outperforming its benchmark index, the MSCI India IMI, which returned 45.2% in sterling terms. Since the Company's inception in July 2018, the NAV has increased by 62.1% compared to the return on the index of 34.2% (in sterling), an outperformance of 27.9%.

Outperformance over the last year, and since inception, has been driven by skilled stock selection from the investment team which has stayed true to its principles of disciplined risk management, an expertise your Board values highly. The Company's share price stood at 162.5p at the year end, a 2.3% premium to NAV. As at 28 September 2021, the closing share price was 191.0p.

SHARE ISSUANCE
The Company responded to further demand from Shareholders to issue new shares, at a small premium to the prevailing net asset value. In total, 18.3 million new shares were issued during the year under review and a prospectus was published on 28 May 2021 implementing a new share issuance programme. As at the year-end there were 85.9 million shares in issue.

REVENUE AND DIVIDENDS
The Company's principal objective is to provide returns through long-term capital appreciation, with income being a secondary consideration. Therefore, Shareholders should not expect that the Company will pay an annual dividend, under normal circumstances. Whilst the portfolio does generate a small amount of income, this is used to meet running costs. However, if a sufficient surplus is generated, the Company may declare an annual dividend to maintain UK investment trust status. In the year under review, the revenue surplus amounted to £55,000. No dividend has been declared.

REDEMPTION FACILITY
The Company has a redemption facility through which Shareholders will be entitled to request the redemption of all or part of their holding of Ordinary Shares on an annual basis. The Redemption Point for the Ordinary Shares is 30 September 2021. The Company has received requests to redeem a larger number of shares than in previous years mainly due to the prospective change of mandate of one of the Company's major Shareholder's internal funds, an unavoidable event. As announced on 3 September 2021, the total number of Ordinary Shares in respect of which valid redemption requests were received for this Redemption Point was 5,386,826.

PERFORMANCE FEE
I reminded Shareholders of the management fee arrangements of the Company in the last half-year report, namely that no annual management fee has been levied since inception and that the Investment Manager (Acorn Asset Management Ltd) will be remunerated solely by means of a performance fee, based on the level of performance relative to the Company's benchmark index, the MSCI India IMI, over a three-year period ended 30 June 2021. This is an actively managed portfolio, one that seeks an excess return relative to its benchmark index (known as "alpha"), an investment style that has produced outstanding returns for Shareholders in this three-year period; an NAV return of 62.1% compared to 34.2% from the index (in sterling). As a result, a performance fee equal to 30% of this outperformance (capped at 12% of NAV) is due to the Investment Manager soon after the 2021-year financial statements have been audited by Ernst & Young LLP, the Company's auditor. This performance fee is expected to amount to £7.9 million and will be paid to the Investment Manager in the form of new shares in the Company, at least 50% of which will be locked-in over a three-year period from the date of issue, thus continuing to align the interests of the Investment Manager with those of all shareholders. These new Ordinary Shares will be issued at the prevailing net asset value on the date of issue, to take place within 20 business days of publication of the Company's audited annual accounts for the year to 30 June 2021.

I would also remind Shareholders that, throughout this period, the varying and current level of the relevant performance fee has been fully accounted for in the Company's NAV and continues to be on a daily basis.

REVIEW OF MANAGEMENT FEE ARRANGEMENTS
The Chairman of the Company's Management Engagement Committee will comment on this in her report but I am delighted to say that the Board is retaining the services of the current Investment Manager and Investment Adviser on the same terms for the three-year period ending 30 June 2024. The Board firmly believes that retaining such talented individuals to manage the Company's portfolio on remuneration based solely on outperformance of a benchmark index is in the best interests of all Shareholders.

ANNUAL GENERAL MEETING
The Company will hold its Annual General Meeting on 8 December 2021. As I write, it is expected that this will revert to an in-person AGM and be held at the offices of Stephenson Harwood, 1, Finsbury Circus, London, EC2M 7SH, starting at 10:45 am. However, should this situation alter whereby Shareholders are not permitted to attend, the Company will announce any changes to the London Stock Exchange. Being optimists, my fellow Directors and I hope to see you then.

OUTLOOK
The Investment Manager's report that follows goes into its usual detail on the portfolio's performance over the last year. In it you will read about the growing market and consumer interest in India's blossoming internet economy and the types of businesses that are either planning to or have already listed as public companies. As I mentioned last year, this is an exciting development that, as India's use of digital technology in everyday life expands, one can only see such enterprises dominating for many years to come, as witnessed elsewhere in the world. This is especially true amongst India's young population, half of which is under 30 and tech-savvy.

The emergence and growth of such technology disruptors could be transformational for India and recognising the businesses to back plays right into the hands of this Company's skilled stock pickers. Occasionally, the opportunity to invest is available whilst these businesses are still privately owned, one that should not be ignored if due diligence is favourable. The maximum exposure to all pre-IPO (Initial Public Offering) investments is 10% of gross assets (at the time of investment) and the Board imposes an additional internal limit related to those investments in subsequent post-IPO lock-in periods to ensure the aggregate exposure does not exceed 15% of gross assets (at the time of investment). This is an area on which the Board keeps a prudent eye to ensure the correct portfolio balance is always maintained whilst also recognising the potential gains of first-mover advantage.

The Modi Government retains a business-friendly approach and, whilst some of the reforms have not met with popular acclaim, the move towards a more open economy must be the right approach if India's intention to compete with China for global trade is to be realised. This intent becomes more realistic by the day as global companies reassess their exposure to China.

As the world emerges from the worst effects of COVID-19, India's economy is well placed to benefit with a young, adaptable workforce and market reforms that should enable it to continue a robust trend of economic growth. As part of a diversified, balanced portfolio, an investment in Indian equities remains as compelling as ever.

ANDREW WATKINS
Chairman
29 September 2021

INVESTMENT MANAGER'S REPORT

MARKET REVIEW
The MSCI India Investable Market Index (MSCI India IMI) was up 45.2% during the year to 30 June 2021, outperforming both the developed as well as emerging markets. In the same period the S&P 500 returned (in GBP) 25.7%, MSCI World Index 24.7%, and MSCI Emerging Markets Index 26.4%. Crude oil prices increased by 63.3% and the Indian rupee depreciated by 10.0%. Amongst sectors, materials and information technology outperformed whilst communication services and consumer staples underperformed.

PERFORMANCE REVIEW
The Company has delivered a sterling NAV total return of 52.6% during the year, outperforming the benchmark MSCI India IMI by 7.4%.

Overall, despite a turbulent environment, the portfolio has held up well as the stock market has rewarded companies delivering growth with resilience and we anticipate this continuing to be a feature of future returns.

KEY CONTRIBUTORS & DETRACTORS
Contributors
Coforge is a fast-growing, mid-sized IT services company with approximately $650 million in annual revenues and is present across three major verticals: travel & transportation, insurance & banking and financial services. These collectively account for 70% of revenues. It has a niche positioning in both travel as well as insurance verticals. The company underwent a management change around three years ago and under the new leadership has consistently demonstrated strong improvement across all Key Performance Indicators (KPIs) including order intake, the number of million-dollar clients, large deal wins, digital business growth and client diversification. The stock price outperformed during the year due to continued robust performance and a strong growth outlook.

Infosys is India's second largest IT services company with $13 billion in revenues, a strong global presence, and a high-quality customer portfolio. It operates across seven major verticals: (a) banking, financial services, and insurance, (b) retail & Consumer Packaged Goods (CPG), (c) communications, (d) energy and utilities, (e) manufacturing, (f) hi-tech, and (g) life sciences. Since Salil Parekh's appointment as CEO in January 2018, Infosys has made strong investments in building digital capacities, onshore talent acquisition and increased sales and marketing efforts. The results of these initiatives are showing up in strong deal wins translating into industry leading growth with improving margins. The stock price outperformed on the back of several multi-billion-dollar deal wins over the past few quarters and continued strength in the overall demand environment.

ICICI Bank is the second largest private sector bank in India with a strong retail deposit franchise, leading CASA (Current and Savings accounts) metrics and one of the lowest cost of funds across private banks. Post a leadership change in October 2018, the bank has strengthened credit underwriting and risk functions, thereby creating a foundation for industry leading performance over the coming years. The company's asset quality has remained resilient during the two waves of COVID-19 with only 1.16% of Net Non-Performing Assets (NPAs) as of Q1 of the financial year ending 2022. Given the provision coverage on existing NPAs of 78% and contingent provisions of 0.9% of advances available to absorb any fresh shocks, ICICI Bank is well poised to gain market-share and deliver mid-teens Return on Equity over the medium term. The strong business performance has also resulted in a commensurately strong stock performance.

Detractors
Bharti Airtel is India's second largest telecom operator providing wireless and fixed line broadband services. The Indian telecom industry is worth approximately $25 billion in revenues and has consolidated into a three-player market with Reliance Jio, Bharti Airtel and Vodafone-Idea controlling 93% of the market after a period of unprecedented disruption and intense price competition. Bharti Airtel has demonstrated superior execution on the back of its high-quality customer base and continues to gain market share from Vodafone Idea which is struggling with a highly leveraged balance sheet. Whilst we broadly expect price discipline to be observed by the industry over time, we are likely to see intermittent instances of price aggression along the way which we anticipate to be unsettling for competitors. This was seen in September 2020 when Reliance Jio, the market leader introduced a slightly aggressive post-paid plan causing Bharti's stock price to underperform. We have exited this position.

Nestle India is India's largest food products company. With household brands like Maggi, KitKat, Nescafe, Cerelac and Nan in its portfolio, it is a market leader in most of the categories that it operates in. Under the leadership of its new CEO, Suresh Narayanan, it has significantly increased focus on volume growth driven by new product development and distribution. It has launched more than 40 products in various categories over the past two years and is following a cluster-based approach to enhance distribution. We expect Nestle to continue to deliver strong performance led by increasing penetration and new product introductions. Given the defensive nature of the business, the stock often tends to lag in a sharply rising market. We remain invested in the business.

Indigo Paints is one of the fastest growing companies in the decorative paints industry with a strong position in certain niche product segments. Its revenue has grown by 39% annually over the last decade as the company has expanded its distribution and tinting machines network. Indigo has created a portfolio of differentiated products such as floor coatings which command leadership positions in terms of brand recall and market share in several states across the country. The company derives approximately 30% of its revenue from these products which have higher profitability compared to peers. The stock underperformed, due to concerns around higher raw material prices impacting profitability in the near term. We remain invested.

INVESTMENT OUTLOOK
The steep fall in the markets in the first quarter of Calendar Year 2020 was followed by a sharp recovery throughout the rest of the year and this has continued during 2021. India underwent one of the most stringent lockdowns in the second quarter of 2020, and as restrictions gradually relaxed, economic activity too gained momentum, buoyed by strong pent-up demand. The fiscal response, while modest, was well-directed towards ensuring food security and support for small businesses.

The government also used this crisis as an opportunity to introduce other long-standing, growth-enhancing reforms, including production-linked incentives (PLI) for manufacturing and a landmark overhaul of labour legislation, which significantly simplify an archaic set of complex laws, many of which were written in the pre-independence era. This reform significantly reduces the compliance burden and encourages formalisation with more than 40 laws being merged into four codes.

While there was a severe second wave of COVID-19 over April and May 2021, the impact on the economy, with only localized lockdowns, was far less damaging than during the first wave. Most manufacturing and construction activity was allowed, albeit with some restrictions, and corporates in general were better prepared to deal with these restrictions. It was a health crisis more than an economic crisis, as India's healthcare system, just like many other countries, was not equipped to handle the peak of the second wave of COVID-19.

India's vaccination roll-out has been the largest globally with over 660 million doses administered as of August 2021. Approximately 37% of the total population has received at least one dose. The more important metric to look at is the vaccination progress within the adult population where almost 55% have received at least one dose. In large urban centres, which are the big drivers of economic growth, the adult vaccination rate is even higher, with at least 75% receiving their first dose. The pace of vaccination had ramped up to five million doses per day in mid-August, and at this rate the entire adult population could be vaccinated by March 2022.

The normalisation of economic activity continues to gather pace following the second wave. After the dip in April and May 2021, most high-frequency economic indicators have shown continued improvement over the last three months. A potential third wave is a risk, although most estimates suggest a much milder wave, with the faster vaccination rate as a possible mitigating factor.

The annual budget presented in February 2021 has been termed as possibly the most pro-reform and pro-growth budget in over a decade. The budget made several simplifying changes to the administration of direct taxes, thereby addressing the key pain points of 'ease of doing business' in India. The key announcement was the privatisation of state-owned banks and insurance companies, with the enabling legislation having been enacted since. In addition, infrastructure spending was increased with a focus on executing the National Infrastructure Pipeline (NIP), which entails a capital outlay of US$1.4 trillion over five years.

The PLI scheme mentioned above, offers US$27 billion in incentives across 13 key industries such as automobiles, electronics and pharmaceuticals, and is progressing well. This, along with the sharp cut in corporate tax rates and labour reforms is part of the 'Make in India' push, which could transform India's manufacturing capabilities over the next decade. Global players like Apple, Samsung, Dell, and Foxconn have either set up or are in the process of setting up operations in India.

Over the last few years, the government has also taken many steps to improve the ease of doing business. A recent example is a rollback of the Retrospective Taxation clause, which had been a cause of uncertainty for foreign investors and corporates. As per the United Nations Conference on Trade and Development, India was the only country in the Calendar Year 2020 (excluding China) to show yearly positive change in Foreign Direct Investment flows.

Our investment philosophy of seeking compelling combinations of great businesses at attractive valuations continues to place us in good stead. Overall, the companies in our portfolio have shown immense resilience in dealing with intermittent lockdowns. We expect our companies to emerge even stronger as economic normalisation gathers pace.

Despite the overhang of the pandemic, corporate fundamentals remain intact, with secular trends such as balance sheet improvement, consolidation, and market share shifts from the unorganised sector to the organised sector playing out. Additionally, several large corporates have been quick to leverage digital technologies and online delivery models, making them far better prepared to deal with disruptions. It is particularly true of our portfolio companies, which are market leaders in their respective segments. Despite a pandemic year, when GDP declined by 7.5%, earnings growth for the NIFTY (India's most commonly used benchmark) came in at a decade high of 14% for the Financial Year 2021. As per consensus expectations, earnings growth over the next two years is expected to be in the high teens.

Another notable feature over the last year has been the buoyant capital market sentiment in India, with initial public offerings (IPOs) worth US$10 billion to date in 2021. While the public listings pipeline is broad-based, a particular segment that has generated significant interest is that of 'new-age' tech companies. The listing of Zomato, India's leading food tech company, is being hailed as the coming-of-age moment for the internet and start-up ecosystem in the country. India has a vibrant start-up ecosystem with 60 'unicorns' (privately held start-ups each valued at more than US$1 billion), the third highest globally after the US and China. Many more technology-enabled, new-age companies are expected to IPO in the coming months.

Many of these technology companies are fundamentally changing the way consumers and businesses interact with each other. Traditional industries are being disrupted in more ways than one, and a new crop of digital-native, mobile-first companies are scaling up at speed. We believe that these will become a larger part of the market over the next decade and, given the heterogeneous nature of business models, will create large winners and losers. As investors, we focus on identifying dominant companies with large and fast growing markets, positive unit economics, and strong management teams. As with all investments, these companies should be attractively valued in our discounted cash flow based OpcoFinco^TM framework. At Acorn, we have also been able to make successful investments in selected IPOs over the past few years.

We pay special emphasis on corporate governance standards of the companies we evaluate. We qualitatively screen out companies where we believe corporate governance is below average or otherwise of unacceptable standard. This approach has helped us to side-step many of the recent corporate governance disasters.

Your Investment Manager employs significant research resources to build a deep understanding of various business models across emerging and developed markets, including engaging with experts and industry professionals from across the world. As a result, the firm has delivered best-in-class performance and has scaled up its research and investment team, including a dedicated resource to track Environmental Social Governance (ESG) issues. The portfolio outperformed in Q1 of 2020 when markets fell by 40% and also in the subsequent periods when the markets rallied sharply by almost 100%. This outperformance across various market cycles has been due to the balanced portfolio construction approach, which ensures that alpha generation is a function of stock selection, rather than sector rotation or other top-down bets.

In closing, we remain cautiously optimistic and continue to believe that the structural growth drivers of the Indian economy are deep rooted and, near-term challenges notwithstanding, India presents an attractive long-term investment opportunity.

ACORN ASSET MANAGEMENT LTD
29 September 2021

TOP TEN HOLDINGS

INVESTMENT POLICY, RESULTS AND KEY PERFORMANCE INDICATORS

INVESTMENT POLICY
The Company shall invest primarily in securities listed on any recognised stock exchange in India and securities of companies with a Significant Presence in India that are listed on stock exchanges outside India. The Company may also invest up to 10 per cent. of Gross Assets (calculated at the time of investment) in unquoted companies with a Significant Presence in India.

A company has a "Significant Presence in India" if, at the time of investment, it has its registered office or principal place of business in India, or exercises a material part of its economic activities in India.

The Company shall primarily invest in equities and equity-related securities (including preference shares, convertible unsecured loan stock, rights, warrants and other similar securities). The Company may also, in pursuance of the investment objective:

·        hold publicly traded and privately placed debt instruments (including bonds, notes and debentures);

·        hold cash and cash equivalents including money market liquid/debt mutual funds;

·        hold equity-linked derivative instruments (including options and futures on indices and individual securities);

·        hedge against directional risk using index futures and/or cash;

·        hold participation notes; and

·        invest in index funds, listed funds and exchange traded funds.

Notwithstanding the above, the Company does not intend to utilise derivatives or other financial instruments to take short positions, nor to increase the Company's gearing in excess of the limit set out in the borrowing policy, and any restrictions set out in this investment policy shall apply equally to exposure through derivatives.

The Company will invest no more than 15 per cent. of Gross Assets in any single holding or in the securities of any one issuer (calculated at the time of investment) and will typically invest no more than 40 per cent. of Gross Assets in any single sector (calculated at the time of investment).

The Company is not restricted to investing in the constituent companies of any benchmark. It is expected that the Company's portfolio will comprise approximately 25 to 50 investments.

In order to comply with the Listing Rules, the Company will not invest more than 10 per cent. of its Gross Assets in other listed closed-ended investment funds, except that this restriction shall not apply to investments in listed closed-ended investment funds which themselves have stated investment policies to invest no more than 15 per cent. of their gross assets in other listed closed-ended investment funds. Additionally, in any event the Company will itself not invest more than 15 per cent. of its gross assets in other investment companies or investment trusts which are listed on the Official List.

The Company does not expect to take controlling interests in investee companies and will at all times invest and manage the portfolio in a manner consistent with spreading investment risk and in accordance with the FPI Regulations and applicable law.

It is expected that the Company's investments will predominantly be exposed to non-Sterling currencies (principally Rupees) in terms of their revenues and profits. The base currency of the Company is Sterling, which creates a potential currency exposure. Whilst the Company retains the flexibility to do so, it is expected in the normal course that this potential currency exposure will not be hedged using any sort of foreign currency transactions, forward transactions or derivative instruments.

BORROWING POLICY
The Company may deploy gearing to seek to enhance long-term capital growth and for the purposes of capital flexibility and efficient portfolio management.

The Company may be geared through bank borrowings, the use of derivative instruments that have the effect of gearing the Company's portfolio, and any such other methods as the Board may determine. Gearing will not exceed 20 per cent. of Net Asset Value at the time of drawdown of the relevant borrowings or entering into the relevant transaction, as appropriate.

No material change will be made to the investment policy without the approval of Shareholders by ordinary resolution.

ASSET ALLOCATION AT PERIOD END
The breakdown of the top ten holdings and the industrial classification of the portfolio at the Company's year end are shown in the annual report.

DIVIDEND POLICY
The Board intends to manage the Company's affairs to achieve Shareholder returns through capital growth rather than income. Therefore, it should not be expected that the Company will pay a significant annual dividend, if any.

Regulation 19 of the Investment Trust (Approved Company) (Tax) Regulations 2011 provides that, subject to certain exceptions, an investment trust may not retain more than 15 per cent. of its income in respect of each accounting period. Accordingly, the Company may declare an annual dividend from time to time for the purpose of seeking to maintain its status as an investment trust.

RESULTS AND DIVIDEND
The Company's revenue surplus after tax for the year amounted to £55,000 (30 June 2020: revenue surplus of £14,000). The Company made a capital surplus after tax of £40,299,000 (30 June 2020: capital deficit of £3,409,000). Therefore, the total surplus after tax for the Company was £40,354,000 (30 June 2020: deficit of £3,395,000).

As per the amended ITC regulations by the Investment Trust (Approved Company) (Tax) (Amendment) Regulations 2013 (SI 2013/1406), which allows an investment trust with an accumulated deficit on revenue reserves brought forward to utilise this against a revenue surplus in an accounting period. As such, the Board is not proposing that a dividend be paid in respect of the year to 30 June 2021.

KEY PERFORMANCE INDICATORS ('KPIS')
The Board measures the Company's success in attaining its investment objective by reference to the following KPIs:

(i) Achievement of NAV and share price growth over the long term
The Board monitors both the NAV and share price performance and compares with the MSCI India IMI Index (in Sterling) and other similar investment trusts. A review of performance is undertaken at each quarterly Board meeting and the reasons for relative under and over performance against various comparators is discussed. The Company's NAV and share price total returns for the year to 30 June 2021 were 52.6% and 65.0% (30 June 2020: -4.3% and -9.6%) respectively compared to a total return of 45.2% (30 June 2020: -16.0%) for the MSCI India IMI Index (Sterling).

The Chairman's statement incorporates a review of the highlights during the year. The Investment Manager's Report highlights investments made during the year and how performance has been achieved.

(ii) Maintenance of a reasonable level of premium or discount of share price to NAV
The Company's Broker monitors the premium or discount on an ongoing basis and keeps the Board updated as and when appropriate. At quarterly Board meetings the Board reviews the premium or discount in the period since the previous meeting in comparison with other investment trusts with a similar mandate. The Company has a redemption facility through which Shareholders will be entitled to request the redemption of all or part of their holding of Ordinary Shares on an annual basis. The Company's shares traded at a premium of 2.3% on 30 June 2021 (30 June 2020: discount of 5.4%).

(iii) Maintenance of a reasonable level of ongoing charges (excluding performance fee)
The Board receives monthly management accounts which contain an analysis of expenditure, and these are formally reviewed at quarterly Board meetings. The Management Engagement Committee formally reviews the fees payable to the Company's main service providers on an annual basis. The Board reviews the ongoing charges on a quarterly basis and considers these to be reasonable in comparison to the Company's peers.

Based on the Company's average net assets during the year ended 30 June 2021, the Company's ongoing charges figure calculated in accordance with the AIC methodology was 0.5% (30 June 2020: 0.9%).

RISK AND RISK MANAGEMENT

PRINCIPAL AND EMERGING RISKS AND UNCERTAINTIES

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable laws and regulations.

The Companies Act 2006 (the "company law") requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Company financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006.

Under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules, the Company's financial statements are required to be prepared in accordance with IFRSs in conformity with the Companies Act 2006 and IFRSs adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company during and as at the end of the year. In preparing these financial statements, the Directors are required to:

·        select suitable accounting policies and then apply them consistently;

·        make judgements and estimates, which are reasonable and prudent;

·        present information including accounting policies and additional disclosures as required to ensure the report is presented in a manner that provides relevant, reliable, comparable and understandable information;

·        state whether applicable accounting standards in conformity with the requirements of the Companies Act 2006 and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union 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 adequate accounting records that are sufficient to show and explain the Company's transactions and which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the accounts comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The accounts are published on the Company's website at https://www.ashokaindiaequity.com, which is maintained by the Investment Manager. The work carried out by the auditors does not involve consideration of the maintenance and integrity of this website and, accordingly, the auditors accept no responsibility for any changes that have occurred to the accounts since being initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

DIRECTORS' CONFIRMATION STATEMENT
The Directors each confirm to the best of their knowledge that:

(a)     the financial statements, prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company as required by DTR 4.1.12R; and

(b)     this Annual Report comprising the Strategic Report and Governance Statements includes a fair review of the development and performance of the business and position of the Company, together with a description of the principal and emerging risks and uncertainties that it faces as required by DTR 4.1.8R and DTR 4.1.9R.

Having taken advice from the Audit Committee, the Directors consider that the Annual Report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company's performance, business model and strategy.

FOR AND ON BEHALF OF THE BOARD
ANDREW WATKINS
Chairman
29 September 2021

FINANCIAL STATEMENTS

STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

There is no other comprehensive income and therefore the 'profit/(loss) for the year' is the total comprehensive income for the year ended 30 June 2021.

The total column of the above statement is the profit and loss account of the Company. The supplementary revenue and capital columns, including the earnings per Ordinary Share, are prepared under guidance from the Association of Investment Companies.

All revenue and capital items in the above statement derive from continuing operations.

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021

Approved by the Board of Directors on 29 September 2021 and signed on its behalf by:

ANDREW WATKINS
Director

Ashoka India Equity Investment Trust plc incorporated in England and Wales with registered number 11356069.

STATEMENT OF CHANGES IN EQUITY

For the financial year ended June 2021

For the financial year ended June 2020

The Company's distributable reserves consist of the special distributable reserve, capital reserve and revenue reserve.

STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

NOTES TO THE FINANCIAL STATEMENTS

1. REPORTING ENTITY
Ashoka India Equity Investment Trust plc is a closed-ended investment company, registered in England and Wales on 11 May 2018. The Company's registered office is 1st Floor, Senator House, 85 Queen Victoria Street, London, EC4V 4AB. Business operations commenced on 6 July 2018 when the Company's Ordinary Shares were admitted to trading on the LSE. The financial statements of the Company are presented for the year from 1 July 2020 to 30 June 2021.

The Company primarily invests in securities listed on any stock exchange in India and can invest in the securities of companies with a significant presence in India that are listed on stock exchanges outside India.

2. BASIS OF PREPARATION
Statement of compliance
These financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and the applicable legal requirements of the Companies Act 2006. In addition to complying with international accounting standards in conformity with the requirements of the Companies Act 2006. The financial statements have been prepared on a historical cost basis, except for the measurement at fair value of investments.

When presentational guidance set out in the Statement of Recommended Practice ('SORP') for Investment Companies issued by the Association of Investment Companies ('the AIC') in April 2021 is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.

Going concern
The Directors have concluded that there is a reasonable expectation that the Company will have adequate liquidity and cash balances to meet its liabilities as they fall due and continue in operational existence for the foreseeable future and continue as a going concern for the period to 31 December 2022. As such the Directors have adopted the going concern basis in preparing the financial statements.

Details of the Directors assessment of the going concern status of the Company, which considered the adequacy of the Company's resources and the impacts of the COVID-19 pandemic, are given in the annual report.

Use of estimates and judgements
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results.

Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

The Indian capital gains tax provision represents an estimate of the amount of tax payable by the Company. Tax amounts payable may differ from this provision depending on when the Company disposes of investments. The current provision for Indian capital gains tax is calculated based on the long-term or short-term nature of the investments and the applicable tax rate at the year end. Currently, the short-term tax rate is 15% and the long-term tax rate is 10%. The estimated tax charge is subject to regular review including a consideration of the likely period of ownership, tax rates and market valuation movements.

As disclosed in the statement of financial position, the Company made a capital gains tax provision as at 30 June 2021 of £7,629,000 (30 June 2020: £1,001,000) in respect of unrealised gains on investments held.

The Directors do not believe that any accounting judgements or estimates have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year.

The Company's investments are denominated in Indian Rupees. However, the Company's shares are issued in Sterling and the majority of its investors are UK based. The Company's expenses and dividends are also paid in Sterling. Therefore, the financial statements are presented in Sterling, which is the Company's functional currency. All financial information has been rounded to the nearest thousand pounds.

The key estimate in the financial statements is the determination of the fair value of the unlisted investments by the Investment Manager for consideration by the Directors. This estimate is key as it significantly impacts the valuation of the unlisted investments at the year end. The fair valuation process involves estimation using subjective inputs that are unobservable (for which market data is unavailable). The key inputs considered in the valuation are described in the annual report.

Fair value estimates are cross-checked to alternative estimation methods where possible to improve the robustness of the estimates. The risk of an over or under estimation of fair values is greater when methodologies are applied using more subjective inputs.

Basis of measurement
The financial statements have been prepared on the historical cost basis except for financial instruments at fair value through profit or loss, which are measured at fair value.

3. ACCOUNTING POLICIES
(a) Investments
Listed investments
Upon initial initial recognition, investments are classified by the Company "at fair value through profit or loss" as they are equity instruments. They are accounted for on the date they are traded and are included initially at fair value which is taken to be their cost. Subsequently quoted investments are valued at fair value, which is the bid market price, or if bid price is unavailable, last traded price on the relevant exchange.

Changes in the fair value of investments held at fair value through profit or loss and gains or losses on disposal are included in the capital column of the Statement of Comprehensive Income within "gains/(losses) on investments".

Investments are derecognised on the trade date of their disposal, which is the point where the Company transfers substantially all the risks and rewards of the ownership of the financial asset.

Transaction costs directly attributable to the acquisition of investments at fair value through profit or loss are recognised under gains/(losses) on investments.

Unlisted investments
The Investment Manager unlisted investment valuation policy applies techniques consistent with the IPEV Guidelines.

The techniques applied are predominantly market-based approaches or discounted cash flows where appropriate forecasts can be done. The market-based approaches available under IPEV Guidelines are set out below and are followed by an explanation of how they are applied to the Company's unlisted portfolio:

-       Multiples;

-       Industry Valuation Benchmarks; and

-       Available Market Prices.

The nature of the unlisted portfolio currently will influence the valuation technique applied. The valuation approach recognises that, as stated in the IPEV Guidelines, the price of a recent investment, if resulting from an orderly transaction, generally represents fair value as at the transaction date and may be an appropriate starting point for estimating fair value at subsequent measurement dates. However, consideration is given to the facts and circumstances as at the subsequent measurement date, including changes in the market or performance of the investee company. Milestone analysis is used where appropriate to incorporate the operational progress of the investee company into the valuation. Additionally, the background to the transaction must be considered. As a result, various Multiples-based techniques are employed to assess the valuations particularly in those companies with established revenues. Discounted cashflows are used where appropriate. An absence of relevant industry peers may preclude the application of the industry valuation benchmarks technique and an absence of observable prices may preclude the available market prices approach. All valuations are cross-checked for reasonableness by employing relevant alternative techniques.

(b) Foreign currency
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At the date of each Statement of Financial Position, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on that date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on retranslation are included in the Statement of Comprehensive Income within the revenue or capital column depending on the nature of the underlying item. Foreign exchange movements on investments are included in the Statement of Comprehensive Income within "losses on currency" movements.

(c) Income from investments
Dividend income from shares is accounted for on the basis of ex-dividend dates. Overseas income is grossed up at the appropriate rate of tax.

Special dividends are assessed on their individual merits and may be credited to the Statement of Comprehensive Income as a capital item if considered to be closely linked to reconstructions of the investee company or other capital transactions. All other investment income is credited to the Statement of Comprehensive Income as a revenue item.

Interest on fixed income instruments is accounted on an accrual basis.

(d) Capital reserves
Profits or losses arising on the sale of investments and changes in fair value arising upon the revaluation of investments are credited or charged to the capital column of the Statement of Comprehensive Income and allocated to the capital reserve.

Company's redemption facility is subject to approval by the Board and as such the redemption facility does not represent a contractual obligation on the Company and the shares are accordingly classified as equity.

(e) Expenses
All expenses are accounted for on an accruals basis. Expenses are recognised through the Statement of Comprehensive Income as revenue items except as follows:

Performance fees
Performance fees, if any, are payable directly by reference to the capital performance of the Company as per the Investment Management Agreement and are therefore charged to the Statement of Comprehensive Income as a capital item. No other management fees are payable.

(f) Cash and cash equivalents
Cash comprises cash at hand and demand deposits. For purposes of the statement of cash flows, cash equivalents, including bank overdrafts, are short-term, highly liquid investments that are readily convertible to known amounts of cash, are subject to insignificant risks of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

(g) Taxation
Irrecoverable taxation on dividends is recognised on an accruals basis in the Statement of Comprehensive Income. Indian tax rates for dividends with ex-dividend dates post 1 April 2020 are subject to 20% withholding tax.

The tax charges on Indian capital gains taxes are shown in the Statement of Comprehensive Income, recognised on an accrual basis. The Company is not subject to UK capital gains tax.

Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the statement of financial position liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Investment trusts which have approval as such under Section 1158 of the Corporation Tax Act 2010 are not liable for taxation on capital gains.

(h) Adoption of new IFRS standards
A number of new standards, amendments to standards and interpretations are effective for the annual periods beginning after 1 January 2020. None of these are expected to have a significant effect on the measurement of the amounts recognised in the financial statements of the Company.

At the date of authorisation of the financial statements, the following standards and interpretations were assessed to be relevant and are all effective for annual periods beginning on or after 1 January 2021:

IFRS 9 Financial Instruments - Fees in the '10 per cent' test for derecognition of financial liabilities
As part of its 2018-2020 Annual Improvements to IFRS standards process, the IASB issued an amendment to IFRS 9. The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier adoption permitted. This amendment is unlikely to have any impact on the financial statements of the Company.

Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform
The amendments to IFRS 7, IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide a number of reliefs, which apply to all hedging relationships that are directly affected by interest rate benchmark reform. These amendments have no impact on the financial statements of the Company.

There are no other accounting standards, amendments, or interpretations effective, that have or will have material impact on these financial statements. Furthermore, the Company has not been an early adopter of any such standards, amendments, and interpretations to existing standards prior to their effective date. The Directors expect that the adoption of the standards listed above will have either no impact or that any impact will not be material on the financial statements of the Company in future periods.

4. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
(a) Investments held at fair value through profit or loss

(b) Movements in valuation

Transaction costs on investment purchases for the year ended 30 June 2021 amounted to £142,000 (30 June 2020: £156,000) and on investment sales for the financial year to 30 June 2021 amounted to £121,000 (30 June 2020: £110,000). As at year end £9.8 million of investments were subject to lock in periods.

(c) (Losses)/gains on investments

Under IFRS 13 'Fair Value Measurement', an entity is required to classify investments using a fair value hierarchy that reflects the significance of the inputs used in making the measurement decision.

The following shows the analysis of financial assets recognised at fair value based on:

Level 1
Unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date.

Level 2
Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly.

Level 3
Inputs that are unobservable (i.e. for which market data is unavailable) for the asset or liability.

The classification of the Company's investments held at fair value is detailed in the table below:

The movement on the Level 3 unquoted investments during the period is shown below:

As at year end, the Company had two unquoted investments. Unquoted investments are valued by the Investment Manager in accordance with the International Private Equity and Venture Capital Valuation Guidelines 2018 ("IPEV") guidelines. The Investment Manager applies techniques consistent with the IPEV. The key inputs considered in the valuation are described in the annual report.

Significant Holdings
Details of significant holdings are noted below in accordance with the disclosure requirements paragraph 82 of the AIC Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (updated in April 2021), in relation to unlisted investments included in the top ten holdings as disclosed in the annual report.

Financial assets and liabilities are held at fair value in the financial statements with the exception of short-term assets and liabilities where their carrying value approximates to fair value.

5. INCOME

6. OTHER PAYABLES

7. PERFORMANCE FEES EXPENSE

The Investment Manager does not receive a fixed management fee in respect of its portfolio management services to the Company. The Investment Manager will become entitled to a performance fee subject to the Company delivering excess returns versus the MSCI India IMI Index in the medium term. The performance fee will be measured over periods of three years (Performance Period), with the first period ending (approximately three years from the date of Admission) on 30 June 2021. The performance fee in any Performance Period shall be capped at 12% of the time weighted average adjusted net assets during the relevant Performance Period.

The performance fee is calculated at a rate of 30% of the excess returns between adjusted NAV per share on the last day of the performance period and the MSCI India IMI Index (Sterling) over the performance period, adjusted for the weighted average number of Ordinary Shares in issue during the performance period.

As at 30 June 2021, the performance fee payable to the Investment Manager amounted to £7.9 million (30 June £2.9 million. 30 June 2019: £52,000). This amount represents the total performance fee accrued in the three year performance period ending 30 June 2021 which will be paid following the publication of these financial statements.

8. Expenses

*     Auditor's remuneration excludes VAT.

The Auditor performed reporting accountant services in connection with the Company's new prospectus and fees of £25,000 (30 June 2020: £23,000) were paid during the year, which have been treated as a capital expenses and included in 'share issue costs' in the Statement of Changes in Equity.

9. TAXATION
(a) Analysis of charge in the year:

A Company is liable to Indian capital gains tax under Section 115 AD of the Indian Income Tax Act 1961. A tax provision on Indian capital gains is calculated based on the long term (securities held more than one year) or short term (securities held less than one year) nature of the investments and the applicable tax rate at the period end. The short-term tax rates are 15% and the long term tax rates are 10%.

On April 2020, the Indian Government withdrew an exemption from withholding tax on dividend income. The Company's dividends are received net of 20% withholding tax. Of this 20% withholding tax charge, 10% is irrecoverable with the remainder being shown in the Statement of Financial Position as an asset due for reclaim.

(b) Factors affecting the tax charge for the year:
The effective UK corporation tax rate for the year is 19%. The tax charge differs from the charge resulting from applying the standard rate of UK corporation tax for an investment trust company. The differences are explained below:

Company is not liable to UK Corporation tax on capital gains due to its status as an investment trust. The Company has an unrecognised deferred UK Corporation tax asset of £1,809,000 (2020: £744,000) based on the UK corporation tax rate of 19% in 2020 (2020: 19%). This asset has accumulated because deductible expenses exceeded taxable income for the year ended 30 June 2021. No asset has been recognised in the accounts because, given the composition of the Company's portfolio, it is unlikely that this asset will be utilised in the foreseeable future.

Changes to the UK corporation tax rates were substantively enacted as part of the Finance Bill 2015 (on 26 October 2015) and Finance Bill 2016 (on 7 September 2016). These include reductions to the main rate to 19% from 1 April 2017 and to 17% from 1 April 2020.

In the Spring Budget 2020, it was announced that the corporation tax rate would remain at 19% from 1 April 2020 rather than reducing to 17%. This was substantively enacted on 17 March 2020.

(c) Movements on the capital gains tax provision for the year
The capital gains tax provision represents an estimate of the amount of tax provisionally payable by the Company on direct investment in Indian equities. It is calculated based on the long term or short term nature of the investments and the unrealised gain thereon at the applicable tax rate at the year end. As of 30 June 2021, the Company made a capital gains tax provision of £7,629,000 (30 June 2020: £1,001,000) in respect of unrealised gains on investments held.

10. EARNINGS PER ORDINARY SHARE

Earnings per Ordinary Share is based on the profit for the year of £40,354,000 (30 June 2020: loss of £3,395,000) attributable to the weighted average number of Ordinary Shares in issue during the year ended 30 June 2021 of 73,735,386 (30 June 2020: 61,425,509). Revenue and capital profits are £55,000 (30 June 2020: revenue profit of £14,000) and £40,299,000 (30 June 2020: capital loss of £3,409,000) respectively.

11. DIVIDEND
The Company's objective is to provide shareholder returns through capital growth with income being a secondary consideration. It should not be expected that the Company will pay a significant annual dividend, but the Board intends to declare such annual dividends as are necessary to maintain the Company's UK investment trust status. The Company generated a revenue profit in the year ended 30 June 2021, however the Investment Trust (Approved Company) (Tax) (Amendment) Regulations 2013 (SI 2013/1406) allows an investment trust with an accumulated deficit on revenue reserves brought forward, to utilise this against a current year profit in an accounting period. Therefore the Directors do not recommend the payment of a final dividend in respect of the year.

12. SHARE CAPITAL

Ordinary Shares
On incorporation, the issued share capital of the Company was 1 Ordinary Share of £0.01.

During the year, 18,310,388 Ordinary Shares have been issued; raising aggregate gross proceeds of £25,855,000 (30 June 2020: £19,777,000).

As at the date of this Annual Report, the total number of Ordinary Shares in issue is 85,958,888.

The Ordinary Shares have attached to them full voting, dividend and capital distribution rights. They confer rights of redemption. The Company's special distribution reserve will also be used for share repurchases, both into treasury or for cancellation.

Management shares
In addition to the above, on incorporation the Company issued 50,000 Management Shares of nominal value of £1.00 each.

The holder of the Management Shares undertook to pay or procure payment of, one quarter of the nominal value of each Management share on or before the fifth anniversary of the date of issue of the Management Shares. The Management Shares are held by an associate of the Investment Manager.

The Management Shares do not carry a right to attend or vote at general meetings of the Company unless no other shares are in issue at that time. The Management Shares have been treated as equity in accordance with IFRS.

13. SPECIAL DISTRIBUTABLE RESERVE
As indicated in the Company's prospectus dated 19 June 2018, following admission of the Company's Ordinary Shares to trading on the LSE, the Directors applied to the Court and obtained a judgement on 4 December 2018 to cancel the amount standing to the credit of the share premium account of the Company. The amount of the share premium account cancelled and credited to a special distributable reserve was £44,275,898. This reserve may also be used to fund dividend payments.

14. NET ASSET VALUE ('NAV') PER ORDINARY SHARE
Net assets per ordinary share as at 30 June 2021 is based on £136,575,000 (30 June 2020: £70,450,000) of net assets of the Company attributable to the 85,958,888 (30 June 2020: 67,648,500) Ordinary Shares in issue as at 30 June 2021.

15. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES
(i) Market risks
The Company is subject to a number of market risks in relation to economic conditions in India. Further detail on these risks and the management of these risks are included in the Annual Report.

The Company's financial assets and liabilities comprised:

Market price risk sensitivity
The effect on the portfolio of a 10.0% increase or decrease in market prices would have resulted in an increase or decrease of £14,740,000 (30 June 2020: £7,212,000) in the investments held at fair value through profit or loss at the year end, which is equivalent to 10.8% (30 June 2020: 10.2%) of the net assets attributable to equity holders. This analysis assumes that all other variables remain constant.

The Company's portfolio of unlisted level 3 investments is not necessarily affected by market performance, however the valuations may be affected by the performance of the underlying securities in line with the valuation criteria in note 3.

The unlisted securities sensitivity analysis recognises that the valuation methodologies employed involve different levels of subjectivity in their inputs. The valuations as at 30 June 2021 were primarily driven by recent transactions however the manager also considered the impact of market changes.

Key variable inputs
The variable inputs applicable to each broad category of valuation basis will vary dependent on the particular circumstances of each unlisted company valuation. An explanation of each of the key variable inputs is provided below and includes an indication of the range in value for each input, where relevant.

Selection of appropriate benchmarks
The selection of appropriate benchmarks is assessed individually for each investment. The industry and geography of each company are key inputs to the benchmark selection, with either one or two key indices or benchmarks being used for comparison.

Selection of comparable companies
The selection of comparable companies is assessed individually for each investment at the point of investment, and the relevance of the comparable companies is continually evaluated at each valuation. The key criteria used in selecting appropriate comparable companies are the industry sector in which they operate and the geography of the company's operations.

Application of valuation basis
Each investment is assessed and the valuation basis applied will vary depending on the circumstances of each investment. For those investments where a trading multiples approach can be taken, the methodology will factor in revenue, earnings or net assets as appropriate for the investment. Discounted cash flows will be considered where appropriate forecasts are available. The valuation will also consider any recent transactions, where appropriate.

Estimated sustainable earnings and cash flows
The selection of sustainable revenue or earnings and cash flows will depend on whether the company is sustainably profitable or not, and where it is not then sustainable revenues will be used in the valuation. The valuation approach will typically assess companies based on the last twelve months of revenue or earnings, as they are the most recent available and therefore viewed as the most reliable. Where a company has reliably forecasted earnings previously or there is a change in circumstance at the business which will impact earnings going forward, then forward estimated revenue or earnings may be used instead.

Application of liquidity discount
A liquidity discount may be applied either through the calibration of a valuation against the most recent transaction, or by application of a specific discount.

(ii) Liquidity risks
Liquidity risk is that the Company will not be able to meet its obligations when due. An analysis of the Company's portfolio that could be liquidated over different time periods as at the year end is shown below:

Management of liquidity risks
The Company has a diversified portfolio which is readily realisable. The liquidity of the portfolio is reviewed regularly by the Investment Manager and the Board.

(iii) Currency risks
Although the Company's performance is measured in Sterling, a high proportion of the Company's assets are denominated in Indian Rupees. Change in the exchange rate between Sterling and Indian Rupees may lead to a depreciation of the value of the Company's assets as expressed in Sterling and may reduce the returns to the Company from its investments.

Currency sensitivity
The below table shows the foreign currency profile of the Company.

Foreign currency risk profile

Based on the financial assets and liabilities at 30 June 2021, and with all other variables remaining constant, if Sterling had weakened/strengthened against the Indian Rupee by 10%, the impact on the Company's net assets at 30 June 2021 would have been an increase/(decrease) in fair value as follows:

Management of currency risks
The Company's Investment Manager monitors the currency risk of the Company's portfolio on a regular basis. Foreign currency exposure is regularly reported to the Board by the Investment Manager.

The Board does not intend to use hedge currency risk using any sort of foreign currency transactions, forward transactions or derivative instruments.

(iv) Credit risks
Credit risk is the risk that the issuer of a financial instrument will fail to fulfil an obligation or commitment that it has entered into with the Company.

Cash and other assets are held by the custodian.

Management of credit risks
The Company has appointed Kotak Mahindra Bank Limited ('Kotak') as its depositary. The credit rating of Kotak was reviewed at the time of appointment and will be reviewed on a regular basis by the Investment Manager and/or the Board.

The Investment Manager monitors the Company's exposure to its counterparties on a regular basis and trades in equities are performed on a delivery versus payment basis. Impairment assessment based on an expected credit loss model is not considered material to the Company.

At 30 June 2020, the Depository held £147,399,000 (30 June 2020: £72,120,000) in respect of quoted investments and £7,447,000 (30 June 2020: £1,433,000) in respect of cash on behalf of the Company.

(v) Capital management policies and procedures
The Company considers its capital to consist of its share capital of Ordinary Shares of 1p each, Management Shares of £1 each, and reserves totalling £136,575,000 (30 June 2020: £70,450,000).

The Company is not subject to any externally imposed capital requirements.

The Investment Manager and the Company's Broker monitor the demand for the Company's shares and the Directors review the position at Board meetings.

16. RELATED PARTY TRANSACTIONS
Performance fees payable to the Investment Manager are disclosed in Note 7.

White Oak Capital Management Consultants LLP provides investment advisory services to the Investment Manager and no fees are paid to them from the Company.

Since commencement of operations on 6 July 2018 fees have been payable at an annual rate of £35,000 to the Chairman, £27,500 to the Chair of the Audit Committee, and £25,000 to the other Directors.

The Directors had the following shareholdings in the Company, all of which are beneficially owned.

17. POST BALANCE SHEET EVENTS
As announced on 3 September 2021, the total number of Ordinary Shares in respect of redemption requests were received for this Redemption Point was 5,386,826.

OTHER INFORMATION

ALTERNATIVE PERFORMANCE MEASURES

ALTERNATIVE PERFORMANCE MEASURES 30 JUNE 2021
Ordinary share price to NAV discount
The amount, expressed as a percentage, by which the share price is less than the Net Asset Value per Ordinary Share.

Ongoing charges
A measure, expressed as a percentage of average net assets, of the regular, recurring annual costs of running an investment company.

*     Annualised expenses excludes performance fee expenses.

Share price/NAV total return
A measure of performance that includes both income and capital returns.

Financial information

This announcement does not constitute the Company's statutory accounts.  The financial information is derived from the statutory accounts, which will be delivered to the registrar of companies and will be put forward for approval at the Company's Annual General Meeting.   The auditors have reported on the accounts for the year ended 30 June 2021, their report was unqualified and did not include a statement under Section 498(2) or (3) of the Companies Act 2006.

The Annual Report for the year ended 30 June 2021 was approved on 29 September 2020. The report will be available in electronic format on the Company's website, www.ashokaindiaequity.com.

The Annual Report will be submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism

This announcement contains regulated information under the Disclosure Guidance and Transparency Rules of the FCA.

Annual General Meeting

The Annual General Meeting will be held at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, London, EC2M 7SH on 8 December 2021 at 10:45 am.

Company Secretary and registered office:

PraxisIFM Fund Services (UK) Limited

1st Floor, Senator House

85 Queen Victoria Street

London, EC4V 4AB