<PAGE> 1
THE INDIA FUND, INC.
August 5, 1995
DEAR FUND SHAREHOLDER:
We are pleased to present you with the unaudited financial statements of The
India Fund, Inc. ("the Fund") for the first half of its second fiscal year
covering the period from January 1, 1995 to June 30, 1995.
The first six months of 1995 has been a volatile period for the Indian
securities markets, with the Bombay Sensex, the most widely followed market
index of the top 30 capitalized companies, declining by approximately 17%. A
number of factors contributed to this downward pressure including tightened
monetary conditions, continuing political uncertainty and overall negative
emerging market sentiment as a result of the Mexican peso crisis. However, in
the past several weeks, many of the emerging markets have been recovering, due
in part to positive monetary conditions in the U.S. markets. Boosted by the
improved emerging market sentiment as well as several other recent positive
developments in India, the Sensex increased by approximately 6% between June 30,
1995 and July 28, 1995.
The Fund was created to provide investors with the opportunity to participate in
the program of economic reform which has been occurring within India in the last
several years. As of June 30, 1995, the Fund was invested in 231 securities in
25 industries. Despite the volatility of the first six months of 1995, we
believe that the fundamentals of the Indian market remain strong as demonstrated
by continued high corporate earnings growth (55% for the fiscal year ended March
1995), reduction in inflation from 11% in February to 8% in July 1995, and what
we believe are increasingly attractive valuations on B as well as A Group
shares. To provide you with a macroeconomic perspective as well as further
insight as to why the Fund is invested in particular sectors and securities
within the Indian market, the Fund's Investment Adviser has provided below its
views of the Indian economy as well as a description of the Fund's key sectoral
and top equity holdings.
The Fund's net asset value is calculated weekly and published in The Wall Street
Journal every Monday under the heading "Closed End Funds." The Fund's net asset
value is also published in The New York Times on Mondays and in Barron's on
Saturdays. The Fund is listed on the New York Stock Exchange, ticker symbol
"IFN."
We thank you for your participation in the Fund. If you have any questions or
would like an update on the Fund, please call our toll free number at
1-800-421-4777. This number also provides callers with a recorded monthly update
that reviews the markets in which the Fund invests as well as specific details
about the Fund, its portfolio, and performance.
Sincerely,
/s/ ALAN RAPPAPORT
--------------------
ALAN RAPPAPORT
CHAIRMAN
1
<PAGE> 2
REPORT OF THE INVESTMENT ADVISER
OVERVIEW
As we began 1995, there were three major concerns in the Indian market:
politics, oversupply of new issues and inflation. Over the course of the first
half of the year, these issues moved to the background as investors watched to
see if the downward pressure of low liquidity could be offset by bullish
corporate earning results. In our view, the answer to that question will likely
determine market performance in the latter half of the year.
In March, the results of the second and final set of local and state elections
were announced. The outcome was similar to December's round and showed the
ruling national Congress Party losing ground to local parties and the BJP, the
main opposition party. These results have raised doubts about the Congress
Party's ability to retain control in the general elections to be held within the
next year. We believe that the market now expects a coalition government, led
either by the Congress Party or the BJP. Both parties appear to be committed to
economic reform and are pro-corporate, though the BJP has been somewhat less
welcoming to multinational corporations. For the time being politics is on the
back burner.
Throughout the first quarter of 1995, the market was plagued by an oversupply of
paper. In the first three months, new issues totalling U.S. $5.3 billion drained
funds from the secondary market. After the failure of a new issue shut down the
Bombay Stock Exchange for three days, the primary market dried up in the second
quarter to U.S. $1.3 billion. The new issue calendar in the second half of the
year is difficult to forecast, but will likely be dominated by privatizations
such as the U.S. $700 million IDBI issue which recently closed in July.
Inflation steadily increased through the end of 1994 and into early 1995. As
inflation topped 11% in February, the government took action. Ceiling deposit
rates were raised twice, pushing prime rates from 14% to 16%. Changes in credit
policy also tightened loan supply. These actions quickly affected inflation,
driving it down towards 8% by the end of June. The side effects of the liquidity
squeeze have been rising coupons on recently auctioned government securities,
and yields in the inter-corporate debt market hovering around 20%. Given these
substantial real yields, many domestic investors have found the debt markets to
be more attractive than equity. Consequently, domestic investors were generally
sellers of equities in the market.
By contrast, foreign investors, attracted by good earnings growth and low price
to earnings ratios, began to return to India. Earnings for the fiscal year ended
March 1995 met high expectations. Corporate sales increased by 29% while
earnings per share grew by 55%. Given estimates of 25% earnings growth for the
fiscal year ending March 1996, the Sensex is now trading at 14 times projected
earnings, while the smaller capitalization stocks of B Group companies are at 10
times earnings estimates. It is these numbers which have drawn the attention of
foreign investors. Foreign investor interest was reflected in GDRs which swung
from average 10% discounts to local stocks in January to 10% premiums by the end
of June, and in the declining discounts to net asset values of dedicated funds
such as IFN over the same period.
2
<PAGE> 3
PERFORMANCE
The second quarter of 1995 was a particularly difficult period for smaller
company stocks in India. The traditional buyers, domestic institutions and
individuals, generally remained on the sidelines for the reasons mentioned
above, while foreign investors focused on large, well-known names. Consequently,
any strength in the market was narrowly concentrated in a few pivotal stocks, a
phenomenon that was reflected in the performance of the Fund which is two-thirds
invested in smaller capitalized B Group company shares. Net asset value per
share declined 21.8% over the six-month period, to $10.88 on June 30, 1995
versus the narrow-based Sensex, which fell by roughly 17% over the same period.
By contrast, the broader-based Bombay Stock Exchange 200 dropped 21.8%. We
believe this divergence is a short-term phenomenon and we will continue to focus
on B Group shares. Net asset value has moved up 3.6% between June 30, 1995 and
July 28, 1995.
STRATEGY
During the bear market of the first half of 1995, the Fund maintained a
defensive position. Cash was 12.0% of assets on December 30, 1994 and by June
30, 1995 had increased to 15.4%. Positions in GDRs and B Group shares remained
steady at around 10% and 65%, respectively. Over the period, there were some
sector shifts as we continued to build core positions in technology (up 1.9%)
and pharmaceuticals (up 0.8%), as well as add to some cyclical industries which
we believe are entering a strong pricing cycle like pulp and paper (up 1.5%)
and cement (up 1.3%). Attractive valuations on market leader Reliance led to an
increase in the Fund's position in synthetic textiles (up 1.4%). Funding these
changes were sales in household appliances (down 2.7%) as increasing foreign
competition had driven down margins; a reduced weighting in fertilizers (down
1.5%), driven by selective selling and the underperformance of some large B
Group holdings; and consolidation ofthe steel weighting (down 1.6%) as
positions shifted from large integrated producers to higher value-added
companies.
SECTORAL BREAKDOWN
<TABLE>
<S> <C> <C> <C>
SECTORAL ALLOCATION AS OF 12/31/94 SECTORAL ALLOCATION AS OF 6/30/95
VEHICLES & VEHICLE COMPONENTS 9.6 VEHICLES & VEHICLE COMPONENTS 9.6
CEMENT 3.0 CEMENT 4.3
STEEL & STEEL PRODUCTS 9.7 STEEL & STEEL PRODUCTS 8.1
TEXTILES - SYNTHETIC 6.0 TEXTILES - SYNTHETIC 7.4
CONSUMER PRODUCTS 9.7 CONSUMER PRODUCTS 6.7
CHEMICALS 3.3 CHEMICALS 2.6
PHARMACEUTICALS 5.5 PHARMACEUTICALS 6.3
TECHNOLOGY 3.0 TECHNOLOGY 4.9
CASH 12.0 CASH 15.4
OTHER 16.4 OTHER 15.6
FERTILIZERS 5.6 FERTILIZERS 4.1
ELECTRICALS 4.2 ELECTRICALS 3.6
DIVERSIFIED INDUSTRIES 9.3 DIVERSIFIED INDUSTRIES 8.1
EXTRACTIVE INDUSTRIES 2.8 EXTRACTIVE INDUSTRIES 3.3
</TABLE>
3
<PAGE> 4
REVIEW OF KEY SECTOR HOLDINGS
SYNTHETIC TEXTILES
7.4% OF THE FUND'S NET ASSETS WERE INVESTED IN THE SYNTHETIC TEXTILE SECTOR AS
OF JUNE 30, 1995
Textiles represent India's largest industry, based traditionally on India being
a major producer of cotton, responsible in 1994 for an estimated 12% of global
production. From this base, a strong modern industry in synthetic textiles has
developed. Domestic use of synthetic fibers is still very low. For example,
polyester use is only one-third that of China on a per capita basis. We believe
that rising disposable incomes and volatile cotton prices will support future
growth in the Indian synthetic fiber market.
The largest holding in the Fund's portfolio is represented by RELIANCE
INDUSTRIES. Reliance's vertically integrated operations span the entire
production and distribution process for synthetic textiles. Reliance is dominant
in its sectors, being seven times larger than the nearest competitor in fibers
and six times larger than the closest competitor in fiber intermediates.
Operating efficiencies are high and labor costs are low (3% of sales against a
global industry average of 20%). Continuing its strategy of vertical backward
integration, Reliance's new projects include a world-scale gas cracker producing
ethylene (currently its only major imported commodity) due onstream in 1996, an
oil refinery planned to be the second largest in India, new polyester production
facilities and three captive power plants.
--------------------------------------------------------------------------------
STEEL & STEEL PRODUCTS
8.1% OF THE FUND'S NET ASSETS WERE INVESTED IN THE STEEL SECTOR AS OF JUNE 30,
1995
India's steel industry enjoys the natural advantage of being based upon the
world's fourth largest known iron ore reserves. After several stagnant years,
domestic demand rebounded sharply in the fiscal year ended March 31, 1995,
reflecting the increase in industrial activity. Estimated current per capita
consumption of less than 22 kg per year is low compared with a world average of
an estimated 143 kg, and is approximately 6% of that of the U.S.
The Fund has a range of holdings across the steel and steel products sectors,
with a particular focus on value-added and speciality steels. For example, the
Jindal group is one of the fastest growing industrial houses in India and their
flagship company, JINDAL STRIPS, is one of the country's largest producers of
value-added, cold-rolled and stainless steels.
--------------------------------------------------------------------------------
PHARMACEUTICALS
6.3% OF THE FUND'S NET ASSETS WERE INVESTED IN THE PHARMACEUTICAL SECTOR AS OF
JUNE 30, 1995
The current Indian Patents Act recognizes only processes, not products or
individual molecules. This has given rise to a thriving but highly competitive
local pharmaceutical industry based on re-engineering patented drugs and then
introducing them to the fast-growing domestic market, a market that accounts for
an estimated 16% of the world's population. We believe that this considerable
incentive, allied with a technically-skilled, a low-cost labor force and low
laboratory costs, has stimulated the Indian pharmaceutical industry to develop
cost-efficient process technologies. Now, many local industry participants are
beginning to focus aggressively on export markets, where profit margins can be
larger than those from domestic sales.
4
<PAGE> 5
As a result, we believe the Indian pharmaceutical sector to be quite attractive
with growth potential. At the forefront is RANBAXY LABORATORIES, the Fund's
largest holding in the sector. Ranbaxy exports to over 40 countries and has
recently entered into a "strategic global alliance" with Eli Lilly to
manufacture generic products for supply to the U.S. market via the Eli Lilly
distribution channels. According to Ranbaxy's published accounts, in 1995, the
company's exports have increased to 42% of sales.
--------------------------------------------------------------------------------
VEHICLES & COMPONENTS
9.6% OF THE FUND'S NET ASSETS WERE INVESTED IN THE VEHICLE SECTOR AS OF JUNE 30,
1995
The Indian automobile industry consists of commercial trucks, cars and jeeps,
tractors, "three-wheeler" urban mini-taxis (or motorized rickshaws), and
two-wheeler motorbikes, mopeds and scooters. Each segment is characterized by
its own pattern of demand growth; however, each generally performed well in the
fiscal year ended March 31, 1995. The Fund has exposure to each segment of the
Indian vehicle industry as well as to a range of automotive component
manufacturers, which have benefitted from local demand, and from growing exports
to global original equipment manufacturers.
The Fund's largest position is in BAJAJ AUTO, a company very much oriented to
the urban mobility requirements of the Indian population, commanding an
estimated 72% market share in domestic scooters, a 31% market share in
motorcycles, a 14% market share in mopeds and a 95% market share in
three-wheelers. Overall, its vehicle sales rose by 24% in the year ending March
1995 which resulted in a bottom line profit growth of 109%. We estimate that
Bajaj is the lowest cost producer among the six major world scooter
manufacturers. Exports have grown five-fold in the last three years, focused
primarily on the growing markets in Latin America and Southeast Asia.
--------------------------------------------------------------------------------
TECHNOLOGY
4.9% OF THE FUND'S NET ASSETS WERE INVESTED IN THE TECHNOLOGY SECTOR AS OF JUNE
30, 1995
Over the past eight years, India's software industry has shown an estimated
compounded annual sales growth of 46%. Due to the availability of a large local
pool of English-speaking, skilled technology professionals, the industry has
become a significant global player. Local companies are utilizing the latest
satellite communications to take advantage of the trend towards off-site
outsourcing of software engineering requirements by large companies such as
General Motors. Reflecting this, the Fund has significant exposure to the sector
via weightings in several major software exporting companies and has increased
this exposure since the beginning of 1995.
Although only 14 years old, NIIT is the market leader in both technology
training and the re-selling of packaged software in the domestic market and is
the Fund's largest holding in the sector. Software exports began in 1990, and
NIIT's client base includes IBM, Sun Microsystems and the World Bank.
Furthermore, late in 1994, NIIT signed an alliance with AT&T to train software
professionals for the telecommunications industry, which has been a rapidly
growing sector of the Indian economy.
5
<PAGE> 6
--------------------------------------------------------------------------------
CEMENT
4.3% OF THE FUND'S NET ASSETS WERE INVESTED IN THE CEMENT SECTOR AS OF JUNE 30,
1995
Along with steel, cement is an essential component in India's infrastructure
development drive. India is the fifth largest producer of cement in the world,
but for decades the industry was restrained by stringent price and distribution
controls. Decontrol in 1989 sparked renewed investment in greater capacity and
modern process technology.
The Indian cement industry is fragmented, but some of the most important players
are large, diversified industrial companies such as GRASIM INDUSTRIES and INDIAN
RAYON AND INDUSTRIES, both of which are represented in the Fund's portfolio.
Since it is difficult and expensive to transport, cement suffers regional
imbalances in supply and demand, so in our view, locally-based companies with
guaranteed limestone supplies have a distinct advantage in cement-deficient
areas. Therefore, in addition to the larger, diversified companies mentioned
above, the Fund has holdings in a number of relatively small regional cement
producers, such as CHETTINAD CEMENT in the far south and SHREE CEMENT in the
northwest, which both have a locational advantage and a focus on operational
efficiency.
--------------------------------------------------------------------------------
FERTILIZERS
4.1% OF THE FUND'S NET ASSETS WERE INVESTED IN THE FERTILIZER SECTOR AS OF JUNE
30, 1995
Agriculture remains the mainstay of the Indian economy, accounting for an
estimated 33% of GDP for the fiscal year ended March 31, 1995. The fact that
India is currently self-sufficient in food and grain production (particularly
wheat and rice) can be largely attributed to increased fertilizer usage.
Nitrogenous fertilizers, primarily urea, are the most important, accounting for
nearly two-thirds of India's total fertilizer consumption. Demand for urea has
outpaced supply for many years, with the shortfall being met through imports.
The strategic importance of fertilizers to India is illustrated by the
government's subsidization of the price farmers pay for urea, in order to ensure
affordability, while guaranteeing a market return to the urea producers, thus
ensuring the health and development of the industry. Consequently, the urea
industry has been characterized in recent years by particularly strong cash
flows and relatively high returns on assets. A good example is CHAMBAL
FERTILIZERS AND CHEMICALS, which is represented in the Fund's portfolio and
which in our view is an efficient operation utilizing modern process technology.
During 1995, Chambal experienced operating margins in excess of 50%, yet traded
on June 30, 1995, at just 6.5 times historic earnings.
--------------------------------------------------------------------------------
EXTRACTIVE INDUSTRIES
3.3% OF THE FUND'S NET ASSETS WERE INVESTED IN THE EXTRACTIVE INDUSTRIES SECTOR
AS OF JUNE 30, 1995
Historically, India has been renowned for the production of gems and precious
metals. Today, India's mining industry is dominated by the extraction of iron
ore, coal and bauxite. Bauxite is the basic raw material for aluminum and India
has the world's fifth largest known reserves. Demand for aluminum in India has
been growing, driven by its increasing use in packaging, construction, transport
and consumer durables.
6
<PAGE> 7
The Fund's largest holding in this sector is INDIAN ALUMINUM (Indal), 31% owned
by Alcan Aluminum of Canada. Indal is the country's fourth largest primary
aluminum producer, with an emphasis on value-added, high growth market segments.
For example, it is particularly strong in aluminum sheets and foils. Indal is
fully integrated from bauxite mining to fabricated end products like kitchen
foil and is attempting to evolve towards a more high-tech and value-added
product range, such as aluminum beverage can production, of which there is
currently none in India. In our view, the Alcan relationship gives Indal a
significant technological advantage in fabrication.
--------------------------------------------------------------------------------
DIVERSIFIED INDUSTRIES
8.1% OF THE FUND'S NET ASSETS WERE INVESTED IN THE DIVERSIFIED INDUSTRIES SECTOR
AS OF JUNE 30, 1995
Two companies, GRASIM INDUSTRIES and INDIA RAYON AND INDUSTRIES, account for 70%
of the Fund's exposure to this sector. Both companies belong to the Aditya Birla
group, India's premier family business group which is highly regarded for its
significant project management expertise. The group's strategy is to be the
dominant player in each respective sector, with a strong emphasis on technology
and modernization. Grasim is a significant manufacturer of viscose fibre and
India's fifth largest producer of cement. Other operations include caustic soda,
sponge iron and textiles. In addition to being India's second largest
manufacturer of rayon yarn, Indian Rayon is the largest producer of grey cement.
OUTLOOK
The monsoons have arrived, albeit a bit late, and economic growth continues to
be strong. We estimate that real GDP growth will top 5% in the year ending March
31, 1996, and corporate earnings will grow by an average 25%. Inflation has
dropped to a manageable 8.1%. New paper supply has moderated to more normal
levels, while existing listed securities are trading at an average of 12 times
estimated earnings for the fiscal year ending March 31, 1996. We believe that
this is good news for the market over the next year. Politics will add some
volatility to the market as we near the general elections and await their
results, but in our opinion, the risks of political change have already largely
been discounted. In the near term, we remain cautious in view of the tight
liquidity in the system, and we currently hold 15% of the Fund's portfolio in
cash. We expect to continue to focus on what we believe are the attractive
valuations represented in the B Group shares as well as sectors and companies
with prospects of good long-term growth and strong balance sheets. We look
forward to the possibility of further market reforms, such as the establishment
of a central depository and additional measures to encourage more foreign
capital to enter the Indian markets.
Respectfully,
/s/ LAUREL GRASSIN-DRAKE
----------------------------
Laurel Grassin-Drake
Portfolio Manager
BZW INVESTMENT MANAGEMENT
7
<PAGE> 8
RESULTS OF ANNUAL SHAREHOLDERS MEETING
The Fund held its initial annual shareholders meeting on April 18, 1995. At the
meeting, shareholders elected each of the nominees proposed for election to the
Fund's Board of Directors and ratified the selection of Price Waterhouse LLP as
the independent accountants of the Fund for the year ending December 31, 1995.
The following table provides information concerning the matters voted on at the
meetings:
I. ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
VOTES
NOMINEES VOTES FOR AGAINST
------------------------------------------------- ----------- --------
<S> <C> <C>
Leslie H. Gelb................................... 26,248,484 506,472
Gabriel Seeyave.................................. 26,254,923 500,033
Jeswald W. Salacuse.............................. 26,314,213 440,743
Charles F. Barber................................ 26,291,646 463,310
Alan H. Rappaport................................ 26,313,224 441,732
Sir Rene Maingard................................ 26,237,239 517,717
</TABLE>
II. RATIFICATION OF PRICE WATERHOUSE LLP AS THE INDEPENDENT ACCOUNTANTS OF THE
FUND
<TABLE>
<CAPTION>
VOTES VOTES
VOTES FOR AGAINST ABSTAINED
----------- -------- --------
<S> <C> <C>
25,978,631 617,593 158,372
</TABLE>
8
<PAGE> 9
SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
Shares Security Cost Value
----------- -------------------------------------------------------------- ------------- -------------
<C> <S> <C> <C>
INDIA -- 100.00%
COMMON STOCKS -- 96.57%
Cement -- 3.98%
45,075 Associated Cement Companies................................... $ 5,801,413 $ 4,952,508
54,300 Birla Jute.................................................... 563,494 326,837
78,000 Chettinad Cement.............................................. 885,375 1,192,357
133,000 Dalmia Cement................................................. 1,583,260 1,579,904
80,000 India Cement GDR*............................................. 676,000 880,000
585,000 Jaiprakash Industries......................................... 1,603,628 884,952
1,273,700 Mysore Cements................................................ 2,749,262 1,876,071
369,700 Shree Cement.................................................. 906,336 676,998
------------- -------------
14,768,768 12,369,627
------------- -------------
Chemicals -- 3.08%
396,050 Atul Products................................................. 1,944,964 882,914
550,000 BOC India..................................................... 2,530,269 1,891,719
126,800 Caprihans India............................................... 1,004,625 900,522
100,000 Chemplast..................................................... 644,251 525,477
200 Ganesh Benzoplast*............................................ 480 535
500,000 Hindustan Organic Chemicals*.................................. 960,956 453,822
515,500 ICI (India)................................................... 2,743,333 2,199,904
537,900 India Glycols*................................................ 1,229,263 676,658
465,400 Indian Organic Chemicals...................................... 1,285,746 704,029
266,900 JF Laboratories*.............................................. 393,729 225,250
8,400 Pidilite Industries........................................... 87,404 80,255
638,350 Punjab Alkalies............................................... 1,859,693 787,773
251,800 Tuticorin Alkali Chemicals & Fertilizers...................... 432,320 258,616
300 United Phosphorus............................................. 12,716 6,344
------------- -------------
15,129,749 9,593,818
------------- -------------
Construction & Building Materials -- 0.50%
100,000 Bell Ceramics................................................. 289,750 121,815
100,000 Bharat Earth Movers........................................... 528,358 243,631
205,500 Novopan India................................................. 580,683 526,839
250,000 Sand Plast (India)............................................ 112,058 111,465
140,000 Unitech*...................................................... 415,077 566,242
------------- -------------
1,925,926 1,569,992
------------- -------------
Consumer Miscellaneous -- 2.70%
500,000 Hytaisun Magnetics*........................................... 580,948 461,783
750,000 Mideast (India)*.............................................. 1,898,618 1,910,828
95,800 Nahar Spinning Mills.......................................... 2,495,760 1,446,153
375,400 Namaste Exports............................................... 1,351,077 711,347
494,650 Premier Vinyl Flooring........................................ 834,034 362,323
110,000 Real Value Appliances......................................... 296,307 189,172
249,975 Surya Roshni.................................................. 645,128 597,074
638,100 Timex Watches*................................................ 1,796,963 894,153
438,600 Titan Industries.............................................. 2,190,285 1,815,860
------------- -------------
12,089,120 8,388,693
------------- -------------
</TABLE>
9
<PAGE> 10
SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
JUNE 30, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Shares Security Cost Value
----------- -------------------------------------------------------------- ------------- -------------
<C> <S> <C> <C>
Consumer Non-Durable -- 1.41%
138,650 Hindustan Lever............................................... $ 3,463,155 $ 2,578,713
176,200 ITC........................................................... 2,060,529 1,357,975
60,000 ITC-GDR*...................................................... 663,750 442,500
------------- -------------
6,187,434 4,379,188
------------- -------------
Diversified Industries -- 9.44%
34 Century Textiles.............................................. 10,667 5,360
400,000 DCM Shriram Consolidated...................................... 2,646,993 2,484,076
100,000 EID Parry (India)............................................. 889,100 442,675
200,000 EID Parry (India) GDS......................................... 1,751,825 850,000
716,600 Grasim Industries............................................. 14,928,428 13,921,210
555,500 HMG Industries................................................ 1,083,622 468,814
376,000 Indian Rayon.................................................. 7,936,463 5,448,408
175,000 Indian Rayon GDR*............................................. 3,053,625 2,581,250
38,100 J K Corp...................................................... 338,970 191,713
612,300 Kesoram Industries............................................ 2,762,001 1,950,000
235,400 Prakash Industries............................................ 271,321 884,624
45,200 Triveni Engineering Works..................................... 417,662 156,904
------------- -------------
36,090,677 29,385,034
------------- -------------
Electricity -- 1.28%
75,000 CESC Ltd...................................................... 650,736 351,115
37,494 CESC Warrants (GDR), expiration date 4/25/96*................. 109,996 8,436
439,000 CESC Warrants (INR), expiration date 1/3/97**................. 5,964,076 2,935,987
185,450 Tata Power Co................................................. 1,045,813 696,914
------------- -------------
7,770,623 3,992,452
------------- -------------
Electronics & Electrical -- 2.86%
76,900 Asea Brown Boveri............................................. 1,844,838 1,376,363
500,000 Asian Cables & Industries..................................... 1,120,580 501,592
50,000 Asian Electronics............................................. 764,280 748,408
200,000 BPL Engineering Ltd*.......................................... 576,574 283,439
776,600 Crompton Greaves.............................................. 5,150,185 4,501,312
300,000 KEC International............................................. 1,616,740 1,242,038
61,000 Modern Malleables*............................................ 296,457 194,268
3,850 Siemens India................................................. 85,668 63,758
------------- -------------
11,455,322 8,911,178
------------- -------------
Engineering -- 0.93%
183,500 Advani Oerlikon............................................... 571,516 765,557
370,000 Artson Engineering............................................ 533,146 471,338
138,600 Kabra Extrusiontechnik........................................ 667,725 485,541
139,500 Larsen & Toubro............................................... 1,109,281 1,159,538
------------- -------------
2,881,668 2,881,974
------------- -------------
Extractive Industries -- 3.92%
30,000 Hindalco Industries........................................... 1,087,150 735,669
1,810,200 Hindustan Zinc................................................ 1,978,516 850,333
211,500 Indian Aluminium.............................................. 2,104,011 2,155,414
350,000 Indian Aluminium GDR.......................................... 4,329,625 3,718,750
370,300 Sesa Goa...................................................... 7,296,454 4,728,990
------------- -------------
16,795,756 12,189,156
------------- -------------
</TABLE>
10
<PAGE> 11
SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
JUNE 30, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Shares Security Cost Value
----------- -------------------------------------------------------------- ------------- -------------
<C> <S> <C> <C>
Fertilizers -- 4.83%
11,295,500 Chambal Fertilizers & Chemicals*.............................. $ 9,826,907 $ 7,284,518
150,000 Gujarat Narmada Valley Fertilizers GDR........................ 1,890,000 1,425,000
6,888,100 Nagarjuna Fertilizer & Chemicals.............................. 7,004,665 5,374,473
552,900 Southern Petrochemicals Ind Corp.............................. 2,191,779 959,651
------------- -------------
20,913,351 15,043,642
------------- -------------
Finance -- 0.65%
300,000 Autoriders Finance*........................................... 2,427,962 2,015,924
------------- -------------
Food -- 0.77%
396,200 American Dry Fruits........................................... 792,880 542,567
450 Brooke Bond Lipton India...................................... 7,355 4,199
130,000 Nath Seeds*................................................... 332,973 198,726
1,500 Nestle India.................................................. 20,036 14,904
100,000 Praj Industries*.............................................. 824,821 633,758
250,000 Rahul Dairy & Allied Products*................................ 80,041 79,618
226,700 Rank Aqua Estates............................................. 545,161 194,933
320,000 S & S Industries.............................................. 403,565 298,089
200,000 Unified Agro Industries*...................................... 160,261 133,758
73,166 Western Hatcheries............................................ 346,545 309,907
------------- -------------
3,513,638 2,410,459
------------- -------------
Healthcare -- 0.12%
250,000 Apollo Hospitals Enterprise................................... 339,535 278,662
200,000 Trans Plastics*............................................... 163,258 66,879
17,400 TTK Biomedical................................................ 77,243 38,790
------------- -------------
580,036 384,331
------------- -------------
Hotels & Leisure -- 0.49%
70,250 Indian Hotels................................................. 1,184,614 1,114,156
25,870 Indian Resort Hotels.......................................... 418,276 411,943
------------- -------------
1,602,890 1,526,099
------------- -------------
Household Appliances -- 3.84%
1,000 Atco Industries............................................... 3,556 6,561
496,700 BPL Refrigeration............................................. 704,280 458,736
381,700 IFB Industries................................................ 3,069,891 2,188,089
56,400 JCT Electronics............................................... 138,209 74,541
121,900 Kalyani Sharp*................................................ 160,146 99,966
519,400 Kelvinator of India........................................... 2,810,701 1,918,803
82,050 MIRC Electronics.............................................. 763,805 530,451
344,100 Phil Industries............................................... 834,766 684,912
130 Phillips India................................................ 125 1,246
1,145,600 Samtel Colour................................................. 2,741,263 1,714,752
89,200 TVS Whirlpool*................................................ 93,276 100,847
141,500 Videocon Appliances........................................... 888,285 337,978
1,045,600 Videocon International........................................ 5,920,572 3,329,936
80,000 Videocon International GDR.................................... 245,000 300,000
70,450 Voltas........................................................ 339,950 190,709
------------- -------------
18,713,825 11,937,527
------------- -------------
</TABLE>
11
<PAGE> 12
SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
JUNE 30, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Shares Security Cost Value
----------- -------------------------------------------------------------- ------------- -------------
<C> <S> <C> <C>
Packaging -- 2.41%
237,500 Canbay Polyfilms*............................................. $ 76,076 $ 75,637
542,360 Flex Industries............................................... 3,778,368 3,074,525
450,800 Peacock Industries............................................ 580,534 1,105,465
548,400 Pearl Polymers................................................ 1,655,614 1,135,223
588,100 Polyplex Corporation.......................................... 2,042,135 1,685,637
4,900 Sharp Industries.............................................. 7,911 3,433
190,000 Tainwala Chemicals & Plastics................................. 334,733 228,424
390,000 Universal Cans & Containers................................... 618,003 186,306
------------- -------------
9,093,374 7,494,650
------------- -------------
Petroleum Related -- 3.43%
200,000 Cenlub Industries*............................................ 64,033 87,580
250,000 Cochin Refineries Balmer Lawrie*.............................. 280,278 254,777
586,800 Hindustan Petroleum........................................... 8,783,984 6,727,643
351,100 Indian Petrochemicals......................................... 1,493,340 1,621,322
667,250 Madras Refineries............................................. 3,384,942 1,445,000
263,500 Reliance Industrial Infrastructure............................ 1,030,313 528,678
------------- -------------
15,036,890 10,665,000
------------- -------------
Pharmaceuticals -- 7.39%
50,000 Dr Reddy's Laboratories....................................... 548,016 410,828
125,000 Dr Reddy's Laboratories-GDR................................... 1,206,250 1,062,500
376,100 E. Merck (India).............................................. 2,757,935 1,868,522
169,950 German Remedies............................................... 1,611,294 1,244,857
318,550 Glaxo (India)................................................. 2,261,477 1,785,503
127,000 Merind........................................................ 1,566,109 837,229
250 Nicholas Piramal.............................................. 2,894 2,189
141,100 Orchid Chemicals & Pharmaceuticals............................ 435,817 346,010
121,200 Pfizer India.................................................. 1,555,380 907,070
476,950 Ranbaxy Laboratories.......................................... 10,226,226 9,873,169
177,800 Rhone-Poulenc India........................................... 2,237,613 1,828,962
433,000 SOL Pharmaceuticals........................................... 2,756,567 1,323,822
125,000 Unichem Laboratories*......................................... 1,091,886 1,492,834
------------- -------------
28,257,464 22,983,495
------------- -------------
Pulp & Paper -- 3.16%
1,098,100 Andhra Pradesh Rayons......................................... 3,215,732 2,850,164
386,400 Ballarpur Industries.......................................... 3,362,162 2,264,255
250,000 Orient Paper Industries....................................... 1,863,347 1,791,401
118,200 Pudumjee Pulp & Paper......................................... 836,201 771,688
1,575,000 Rama Newsprint................................................ 1,176,129 689,689
458,200 Seshasayee Papers............................................. 1,281,758 1,473,828
------------- -------------
11,735,329 9,841,025
------------- -------------
Rubber -- 0.17%
160,000 Dewan Rubber Industries....................................... 211,579 407,643
150,000 India Rubber*................................................. 337,722 119,427
------------- -------------
549,301 527,070
------------- -------------
Steel -- 7.36%
1,346,600 Essar Gujarat................................................. 4,357,424 2,530,236
300,000 Isibars....................................................... 951,953 621,019
275,000 Jindal Iron & Steel........................................... 2,502,255 1,734,076
647,500 Jindal Strips................................................. 8,591,032 6,866,799
</TABLE>
12
<PAGE> 13
SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
JUNE 30, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Shares Security Cost Value
----------- -------------------------------------------------------------- ------------- -------------
<C> <S> <C> <C>
Steel (continued)
1,266,300 Kirloskar Ferrous Industries*................................. $ 1,168,732 $ 917,463
300,000 Mukand........................................................ 3,125,100 2,560,510
360,800 Nahar International*.......................................... 693,260 574,522
236,600 Raipur Alloys................................................. 506,785 258,075
400,000 Rajinder Steels............................................... 1,520,004 477,707
1,054,100 Steel Authority of India...................................... 2,150,336 1,216,915
722,800 Tata Iron & Steel............................................. 5,220,968 5,133,261
------------- -------------
30,787,849 22,890,583
------------- -------------
Steel Products -- 1.48%
261,900 Choksi Tubes.................................................. 570,981 492,105
500,000 Rajinder Pipes................................................ 720,717 740,446
310,000 SAW Pipes..................................................... 2,383,953 2,023,885
649,100 Super Forging................................................. 991,359 790,703
148,500 Tata Metaliks*................................................ 189,581 133,603
250,000 Usha Martin Industries........................................ 639,618 421,975
------------- -------------
5,496,209 4,602,717
------------- -------------
Technology -- 5.83%
1,617,800 Digital Equipment (India)*.................................... 3,460,579 4,250,589
199,600 Infosys Technologies.......................................... 3,127,782 2,987,643
1,070,200 NIIT.......................................................... 5,404,928 5,794,076
323,300 Pentafour Software and Exports................................ 1,316,324 1,904,793
682,700 Satyam Computer............................................... 1,549,727 989,263
966,500 Silverline Industries......................................... 1,365,216 1,392,807
436,900 Square D Software*............................................ 665,418 827,884
------------- -------------
16,889,974 18,147,055
------------- -------------
Telecom -- 0.14%
17,900 Videsh Sanchar Nigam.......................................... 662,356 442,369
------------- -------------
Telecom Equipment -- 1.93%
300,000 Bhagyanagar Metals............................................ 727,576 477,707
300,000 Bharti Telecom*............................................... 883,657 707,006
318,200 Himachal Futuristic Communications............................ 830,260 1,008,309
175,000 MSL Industries................................................ 728,726 735,669
200,000 Punjab Wireless*.............................................. 2,306,295 1,541,401
435,700 Telephone Cables.............................................. 2,006,904 860,299
96,900 Vindhya Tele-Links............................................ 1,104,418 678,917
------------- -------------
8,587,836 6,009,308
------------- -------------
Textiles -- Cotton -- 1.19%
4,400 Arvind Mills.................................................. 30,020 20,599
187,550 Coats Viyella India........................................... 1,163,472 919,831
200,000 Delta Industries.............................................. 960,956 738,854
148,000 HP Cotton Textile Mills....................................... 358,439 183,822
350,000 Midland Industries*........................................... 305,138 195,064
151,050 Morarjee Goculdas Spinning & Weaving.......................... 1,264,420 774,492
145,800 Suryavanshi Spinning Mills*................................... 373,620 257,704
122,700 Vardhaman Spinning & General Mills............................ 758,519 625,223
------------- -------------
5,214,584 3,715,589
------------- -------------
</TABLE>
13
<PAGE> 14
SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
JUNE 30, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Shares Security Cost Value
----------- -------------------------------------------------------------- ------------- -------------
<C> <S> <C> <C>
Textiles -- Synthetic -- 8.09%
300,000 Bombay Dyeing GDR*............................................ $ 3,949,483 $ 3,487,500
1,932,000 DCL Polyesters................................................ 3,838,802 1,553,599
258,900 Ester Industries*............................................. 275,465 346,299
366,300 Haryana Petrochemicals........................................ 433,857 192,482
94,250 JCT GDR*...................................................... 1,817,975 1,696,500
485,600 Rajashree Polyfil*............................................ 202,115 266,771
1,616,700 Reliance Industries........................................... 17,742,317 13,541,150
100,000 Reliance Industries GDR*...................................... 2,150,000 1,837,500
667,300 Sanghi Polyesters............................................. 1,689,623 642,861
150,000 Sanghi Polyesters GDR......................................... 715,000 675,000
228,700 Shree Rajasthan Syntex*....................................... 972,237 447,932
200,000 Shriram Fibres................................................ 541,080 477,707
------------- -------------
34,327,954 25,165,301
------------- -------------
Transport -- 1.54%
1,732,300 Modiluft*..................................................... 3,208,897 1,393,012
78,000 NEPC Micon.................................................... 167,798 156,497
1,374,000 NEPC Micon GDR................................................ 4,062,820 3,057,150
120,000 Skypak Couriers*.............................................. 199,783 173,885
------------- -------------
7,639,298 4,780,544
------------- -------------
Vehicles -- 7.46%
422,700 Bajaj Auto.................................................... 8,607,316 9,854,025
515,700 Hindustan Motors*............................................. 709,863 509,131
221,100 Mahindra & Mahindra........................................... 2,273,856 2,288,455
188,800 Majestic Auto*................................................ 1,860,136 625,325
500 Premier Automobile............................................ 849 892
323,850 Punjab Tractors............................................... 4,114,088 3,939,831
21,000 Tata Engineering & Locomotive................................. 335,787 375,860
712,050 TVS Suzuki.................................................... 3,872,991 5,623,834
------------- -------------
21,774,886 23,217,353
------------- -------------
Vehicle Components -- 3.84%
120,000 Amtek Auto.................................................... 395,410 334,395
160,075 Antifriction Bearings Corp.................................... 642,531 382,345
120,200 Auto Corp of Goa.............................................. 592,472 635,452
234,025 FAG Precision Bearings........................................ 650,730 536,618
176,300 Gleitlager (India)*........................................... 169,335 101,064
451,000 Goetze India*................................................. 1,951,924 1,378,854
348,500 Kirloskar Oil Engines......................................... 1,652,136 1,442,834
192,600 Laser Lamps (Haryana)*........................................ 241,011 134,943
151,000 Lumax Industries.............................................. 608,136 538,599
4,390 Motor Industries Co........................................... 615,662 829,067
30,000 Munjal Showa.................................................. 142,520 176,752
950,000 Patheja Forgings & Auto Parts................................. 2,747,362 3,025,478
</TABLE>
14
<PAGE> 15
SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
JUNE 30, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Shares Security Cost Value
----------- -------------------------------------------------------------- ------------- -------------
<C> <S> <C> <C>
Vehicle Components (continued)
15,995 SKF Bearings India............................................ $ 1,606,946 $ 1,324,427
187,500 Wartsila Diesel India......................................... 668,316 1,110,669
------------- -------------
12,684,491 11,951,497
------------- -------------
Water -- 0.35%
130,000 EPC Irrigation................................................ 376,971 163,535
191,562 ION Exchange (India).......................................... 1,147,615 683,278
190,000 Pasumai Irrigation............................................ 121,663 242,038
------------- -------------
1,646,249 1,088,851
------------- -------------
TOTAL COMMON STOCKS........................................... 383,230,789 300,501,501
------------- -------------
<CAPTION>
Par
(000)
-----------
<C> <S> <C> <C>
CONVERTIBLE BONDS -- 3.43%
Cement -- 1.09%
$2,550 Gujarat Ambuja Cement 3.5%, 06/30/99.......................... 3,561,881 3,404,250
------------- -------------
Construction & Building Materials -- 0.02%
3,000 INR Bharat Earth Movers NCD 12.5%, 02/26/02**..................... 96,065 62,417
------------- -------------
Diversified Industrials -- 0.08%
4,250 INR DCM Shriram NCD 13%, 11/6/01**................................ 136,223 87,301
4,125 INR DCM Shriram NCD 13%, 11/6/02**................................ 132,215 84,733
4,125 INR DCM Shriram NCD 13%, 11/6/03**................................ 132,216 84,733
------------- -------------
400,654 256,767
------------- -------------
Packaging -- 0.00%
57 INR Flex Inds NCD, 13.5%**........................................ 1,826 1,290
------------- -------------
Pulp & Paper -- 0.73%
2,500 Ballarpur Industries 4%, 04/01/99............................. 2,839,281 2,262,500
------------- -------------
Steel -- 0.76%
2,500 Jindal Strips 4.25%, 03/31/99................................. 2,903,524 2,362,500
------------- -------------
Textiles--Synthetic -- 0.70%
2,000 Reliance Industries 3.5%, 11/03/99............................ 2,828,792 2,175,000
------------- -------------
</TABLE>
15
<PAGE> 16
SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
JUNE 30, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Shares Security Cost Value
----------- -------------------------------------------------------------- ------------- -------------
<C> <S> <C> <C>
Water -- 0.05%
3,448 INR ION Exchange FCD 0% 06/15/96**................................ $ 110,449 $ 146,415
------------- -------------
TOTAL CONVERTIBLE BONDS....................................... 12,742,472 10,671,139
------------- -------------
TOTAL INDIA................................................... 395,973,261 311,172,640
------------- -------------
TOTAL INVESTMENTS*** -- 100.00%............................... $ 395,973,261 $ 311,172,640
============= =============
</TABLE>
---------------
<TABLE>
<S> <C> <C>
* Non-income producing security
** At fair value as determined by the Board of Directors
*** Aggregate cost for Federal income tax purposes is
substantially the same as for book purposes.
The aggregate gross unrealized appreciation
(depreciation) for all securities is as follows:
Excess of value over tax cost $ 9,633,247
Excess of tax cost over value (94,433,868)
------------
$(84,800,621)
=============
</TABLE>
GDR -- Global Depository Receipt
INR -- Indian Rupee
GDS -- Global Depository Security
FCD -- Fully Convertible Debenture
NCD -- Non Convertible Debenture
See accompanying notes to financial statements.
16
<PAGE> 17
STATEMENT OF ASSETS AND LIABILITIES THE INDIA FUND, INC.
JUNE 30,1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost $395,973,261).................................... $ 311,172,640
Cash (including Indian Rupees of $2,011,752 with a cost of $2,012,356)....... 62,168,576
Receivables:
Dividends............................................................... 410,993
Interest................................................................ 250,296
Securities sold......................................................... 2,472,467
Unamortized organization costs............................................... 215,065
Prepaid expenses............................................................. 46,997
-------------
Total assets....................................................... 376,737,034
-------------
LIABILITIES:
Payable for securities purchased............................................. 5,429,582
Due to investment manager.................................................... 351,992
Due to administrator......................................................... 63,999
Accrued expenses............................................................. 872,680
-------------
Total liabilities.................................................. 6,718,253
-------------
NET ASSETS (APPLICABLE TO 34,007,133 SHARES OF COMMON STOCK ISSUED AND
OUTSTANDING, 100,000,000 SHARES AUTHORIZED, $.001 PER SHARE)............... $ 370,018,781
=============
NET ASSET VALUE PER SHARE ($370,018,781/34,007,133).......................... $10.88
Net assets consist of:
Capital stock................................................................ $ 34,007
Paid-in-capital.............................................................. 475,391,077
Accumulated net investment loss.............................................. (3,239,906)
Accumulated net realized loss on investments and foreign
currency transactions...................................................... (17,363,493)
Net unrealized depreciation in value of investments and on translation of
assets and liabilities denominated in foreign currencies................... (84,802,904)
-------------
$ 370,018,781
=============
</TABLE>
See accompanying notes to financial statements.
17
<PAGE> 18
STATEMENT OF OPERATIONS THE INDIA FUND, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of Indian taxes withheld of $137,224)..................... $ 777,605
Interest (net of Indian taxes withheld of $10,721)....................... 413,083
-------------
Total investment income.................................................. 1,190,688
-------------
EXPENSES:
Management fees............................................... 2,286,584
Custodian fees................................................ 1,338,904
Administration fees........................................... 426,455
Transfer agent fees........................................... 29,753
Directors' fees............................................... 19,340
Insurance..................................................... 112,987
Audit fees.................................................... 61,987
Legal fees.................................................... 59,507
Printing...................................................... 33,224
Amortization of organizational costs.......................... 31,575
Miscellaneous expenses........................................ 15,472
NYSE fees..................................................... 14,806
---------
Total expenses................................................. 4,430,594
-------------
Net investment loss...................................................... (3,239,906)
-------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS, FOREIGN
CURRENCY HOLDINGS AND TRANSLATION OF OTHER ASSETS AND
LIABILITIES DENOMINATED IN FOREIGN CURRENCIES:
Net realized loss on:
Security transactions.................................................... (14,534,006)
Foreign currency related transactions.................................... (171,841)
-------------
(14,705,847)
-------------
Net change in unrealized (depreciation) appreciation in value of
investments and translation of assets and liabilities denominated in
foreign currencies..................................................... (85,276,489)
-------------
Net realized and unrealized loss on investments, foreign currency
holdings, and translation of other assets and liabilities denominated
in foreign currency.................................................... (99,982,336)
-------------
Net decrease in net assets resulting from operations..................... $(103,222,242)
==============
</TABLE>
See accompanying notes to financial statements.
18
<PAGE> 19
STATEMENTS OF CHANGES IN NET ASSETS THE INDIA FUND, INC.
<TABLE>
<CAPTION>
FOR THE
PERIOD
FEBRUARY 23,
1994
(COMMENCEMENT
OF
FOR THE SIX OPERATIONS)
MONTHS ENDED THROUGH
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss...................................... $ (3,239,906) $ (242,541)
Net realized (loss) gain on investments and foreign
currency related transactions.......................... (14,705,847) 2,073,837
Net change in unrealized (depreciation) appreciation in
value of investments and translation of assets and
liabilities denominated in foreign currency............ (85,276,489) 473,585
------------- -------------
Net (decrease) increase in net assets resulting from
operations........................................ (103,222,242) 2,304,881
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains ($0.132 per share).................... -- (4,488,942)
------------- -------------
Decrease in net assets from distributions........... -- (4,488,942)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from the issuance of 34,000,000 shares (net of
$33,320,000 of underwriting discount).................. -- 476,680,000
Offering costs charged to paid-in capital................ -- (1,354,921)
------------- -------------
Net increase in net assets resulting from capital
share transactions................................ -- 475,325,079
------------- -------------
Total (decrease) increase in net assets........ (103,222,242) 473,141,018
------------- -------------
NET ASSETS:
Beginning of period...................................... 473,241,023 100,005
------------- -------------
End of period............................................ $ 370,018,781 $ 473,241,023
============= =============
</TABLE>
See accompanying notes to financial statements.
19
<PAGE> 20
FINANCIAL HIGHLIGHTS THE INDIA FUND, INC.
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
FOR THE
PERIOD
FEBRUARY 23,
FOR THE 1994
SIX (COMMENCEMENT
MONTHS OF
ENDED OPERATIONS)
JUNE 30, THROUGH
1995 DECEMBER 31,
(UNAUDITED) 1994
--------- ---------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...................... $ 13.92 $ 13.98(1)
--------- ---------
Net investment loss....................................... (0.10) (0.01)
Net realized and unrealized (loss) gain on investments,
foreign currency holdings, and translation of other
assets and liabilities denominated in foreign
currencies............................................. (2.94) 0.08
--------- ---------
Net (decrease) increase from investment operations........ (3.04) 0.07
--------- ---------
Less distributions:
Dividends from net realized capital gains.............. -- (0.13)
--------- ---------
Total distributions....................................... -- (0.13)
--------- ---------
Net asset value, end of period............................ $ 10.88 $ 13.92
========= =========
Per share market value, end of period....................... $ 10.25 $ 10.75
========= =========
TOTAL INVESTMENT RETURN BASED ON MARKET VALUE(2)............ (4.65)% (23.32)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)...................... $ 370,019 $ 473,241
Ratios of expenses to average net assets.................. 2.13%(3) 1.98%(3)
Ratios of net investment loss to average net assets....... 1.56%(3) 0.06%(3)
Portfolio turnover........................................ 12.88% 20.93%
</TABLE>
---------------
(1) Initial public offering price of $15.00 per share less underwriting
discount of $0.98 per share and offering expense of $0.04 per share.
(2) Total investment return is calculated assuming a purchase of common
stock at the current market price on the first day and a sale at the current
market price on the last day of the period reported, except that for the
period ended December 31, 1994, total investment return is based on a
beginning of period price of $14.02 (initial offering price of $15.00 less
sales load of $0.98). Dividends and distributions, if any, are assumed,
for purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Total investment return does not
reflect brokerage commissions or sales charges and is not annualized.
(3) Annualized.
See accompanying notes to financial statements.
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS THE INDIA FUND, INC.
JUNE 30, 1995 (UNAUDITED)
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The India Fund, Inc. (the "Fund") was incorporated in Maryland on December
27, 1993 and commenced operations on February 23, 1994. The Fund has established
a branch in the Republic of Mauritius. The Fund is registered under the
Investment Company Act of 1940, as amended, as a closed-end non-diversified
management investment company. Prior to commencing its operations on February
23, 1994, the Fund had no activities other than the sale of 7,133 shares of
capital stock to Oppenheimer & Co., Inc. ("Oppenheimer"). At June 30, 1995,
Oppenheimer owned 7,133 shares of the Fund's Capital Stock.
SIGNIFICANT ACCOUNTING POLICIES ARE AS FOLLOWS:
PORTFOLIO VALUATION: Investments are stated at value in the accompanying
financial statements. All securities for which market quotations are readily
available are valued at (i) the last sales price prior to the time of
determination, if there was a sale on the date of determination, (ii) at the
mean between the last current bid and asked prices if there was no sales price
on such date and bid and asked quotations are available, and (iii) at the bid
price if there was no sales price on such date and only bid quotations are
available. Securities that are traded over-the counter are valued, if bid and
asked quotations are available, at the mean between the current bid and asked
prices. Investments in short-term debt securities having a maturity of 60 days
or less are valued at amortized cost which approximates market value. Securities
for which market values are not readily ascertainable, which totaled $475,328
(0.13% of net assets), are carried at fair value as determined in good faith by
or under the supervision of the Board of Directors. The net asset value per
share of the Fund is calculated weekly and at the end of each month.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax purposes. Interest income is recorded on the accrual basis; dividend
income is recorded on the ex-dividend date or when known. The collectibility of
income receivable from Indian securities is evaluated periodically, and any
resulting allowances for uncollectible amounts are reflected currently in the
determination of investment income.
TAX STATUS: No provision is made for U.S. Federal income or excise taxes
as it is the Fund's intention to qualify as a regulated investment company and
to make the requisite distributions to its shareholders which will be sufficient
to relieve it from all or substantially all Federal income and excise taxes.
FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:
(i) market value of investment securities, assets and liabilities at
the prevailing rates of exchange on the valuation date; and
(ii) purchases and sales of investment securities and investment income
at the relevant rates of exchange prevailing on the respective
dates of such transactions.
Securities denominated in currencies other than U.S. dollars are subject to
changes in value due to fluctuations in foreign exchange.
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS THE INDIA FUND, INC.
JUNE 30, 1995 (UNAUDITED) (CONTINUED)
The Fund does not generally isolate the effect of fluctuations in foreign
exchange rates from the effect of fluctuations in the market prices of
securities. The Fund reports certain realized gains and losses on foreign
currency related transactions as components of realized gains and losses for
financial reporting purposes, whereas such components are treated as ordinary
income for Federal income tax purposes.
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of domestic origin
as a result of, among other factors, the level of governmental supervision and
regulation of foreign securities markets and the possibility of political or
economic instability, and the fact that foreign securities markets may be
smaller and have less developed and less reliable settlement and share
registration procedures.
DISTRIBUTION OF INCOME AND GAINS: The Fund intends to distribute annually
to shareholders, substantially all of its net investment income, including
foreign currency gains, and to distribute annually any net realized gains. An
additional distribution may be made to the extent necessary to avoid payment of
a 4% federal excise tax.
Distributions to shareholders are recorded on the ex-dividend date. The
amount of dividends and distributions from net investment income and net
realized gains are determined in accordance with Federal income tax regulations,
which may differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their Federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income and net realized gains. To the
extent they exceed net investment income and net realized gains for tax
purposes, they are reported as distributions of additional paid-in capital.
OTHER: Costs of $301,098 incurred by the Fund in connection with its
organization are being amortized on a straight-line basis over a five-year
period beginning with the commencement of operations of the Fund.
During the period ended December 31, 1994, the Fund reclassified $242,541
from net investment loss to distributions in excess of net realized gains as a
result of permanent book and tax differences relating to net investment loss for
the period ended December 31, 1994. Net investment income and net assets were
not affected by the change.
NOTE B: MANAGEMENT, INVESTMENT ADVISORY, AND ADMINISTRATIVE SERVICES
Advantage Advisers, Inc., a subsidiary of Oppenheimer serves as the Fund's
Investment Manager under the terms of a management agreement (the "Management
Agreement"). Barclays de Zoete Wedd Investment Management Inc. serves as the
Fund's Investment Adviser under the terms of an investment advisory agreement
(the "Advisory Agreement"), and Infrastructure Leasing & Financial Services
Limited serves as the Fund's Country Adviser under the terms of an advisory
agreement (the "Country Advisory Agreement"). Pursuant to the Management Agree-
22
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS THE INDIA FUND, INC.
JUNE 30, 1995 (UNAUDITED) (CONTINUED)
ment, the Investment Manager will supervise the Fund's investment program,
including advising and consulting with the Fund's Investment Adviser. Pursuant
to the Advisory Agreement, the Investment Adviser will be responsible on a
day-to-day basis for investing the Fund's portfolio in accordance with its
investment objective and policies. Pursuant to the Country Advisory Agreement,
the Country Adviser will furnish advice and make recommendations to the
Investment Adviser regarding the purchase, sale or holding of particular Indian
securities, provide research and statistical data to the Fund and assist in the
implementation and execution of investment decisions. For its services, the
Investment Manager receives monthly fees at an annual rate of 1.10% of the
Fund's average weekly net assets and the Investment Adviser and Country Adviser
will each receive from the Investment Manager monthly fees at an annual rate of
0.30% of the Fund's average weekly net assets. For the six months ended June 30,
1995, fees paid to the Investment Manager amounted to $2,286,584.
Oppenheimer serves as the Fund's Administrator (the "Administrator")
pursuant to the terms of an Administration Agreement. For its services, the
Administrator receives a monthly fee at an annual rate of 0.20% of the Fund's
average weekly net assets. For the six months ended June 30, 1995, these fees
amounted to $415,743. The Administrator subcontracts certain of these services
to PFPC Inc. In addition, Multiconsult Ltd. (the "Mauritius Administrator")
provides certain administrative services relating to the operation and
maintenance of the Fund in Mauritius. The Mauritius Administrator receives a
monthly fee of $1,500 and is reimbursed for certain additional expenses. For the
six months ended June 30, 1995, fees and expenses of the Mauritius Administrator
amounted to $10,712.
The Fund pays each of its directors who is not a director, officer or
employee of the Investment Manager, the Investment Adviser, the Country Adviser
and Administrator or any affiliate thereof an annual fee of $5,000 plus up to
$700 for each Board of Directors meeting attended. In addition, the Fund
reimburses all directors for travel and out-of-pocket expenses incurred in
connection with the Board of Directors meetings.
NOTE C: PORTFOLIO ACTIVITY
Purchases and sales of securities other than short-term obligations,
aggregated $46,497,236 and $53,375,138, respectively, for the six months ended
June 30, 1995.
During the period November 1, 1994 to December 31, 1994, the Fund incurred
$20,580 and $2,450,689 of foreign currency losses and capital losses,
respectively. These losses were deferred for tax purposes to January 1, 1995.
At June 30, 1995 the Fund owned securities valued at approximately
$38,000,000 which were in the process of being registered in the name of the
Fund. Significant delays are common in registering the transfer of securities in
India, and such transfers can take a year or longer. Indian securities
regulations normally preclude the Fund from selling such securities until the
completion of the registration process.
NOTE D: FOREIGN INCOME TAX
The Fund invests in India through a registered branch office established in
Mauritius and intends to continue to maintain tax residency in Mauritius.
Accordingly, the Fund benefits from a tax treaty between India and Mauritius
(the "Treaty"). The terms of the Treaty provide that gains on the sale of
securities by a resident of either country will be subject to taxation only in
the resident country of the
23
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS THE INDIA FUND, INC.
JUNE 30, 1995 (UNAUDITED) (CONTINUED)
seller. Therefore, the Fund is not subject to taxation in India for realized
gains on the sale of Indian securities. The Fund is subject to and accrues
Indian withholding tax on dividends and interest earned on Indian securities at
the rates of 15% and 20%, respectively. In addition, the Mauritius tax system
currently contemplates an elective system with respect to income tax and does
not impose any withholding tax on dividends, interest and capital gains.
The foregoing is subject to future changes in Indian or Mauritius tax laws,
the Treaty and the Fund's tax residency status in Mauritius.
The Fund will generally elect to treat all foreign taxes paid by it as
having been paid proportionately by its shareholders. As a result, Form 1099-DIV
issued to shareholders by the Fund will likely include an amount of foreign
taxes paid by the Fund on behalf of its shareholders. Shareholders subject to
taxation in the U.S. will generally be able to use the foreign tax amount to
either claim a deduction or a tax credit on their U.S. Federal income tax
return.
NOTE E: TRANSACTIONS WITH AFFILIATES
Oppenheimer, an affiliate of the Investment Manager, and Barclays de Zoete
Wedd Limited ("BZW"), an affiliate of the Investment Adviser, participated in
the underwriting group as underwriters in the Fund's initial offering of common
stock. Oppenheimer and BZW informed the Fund that they each received $9,649,429
and $1,002,323, respectively, in underwriting fees for the sale of shares of the
Fund.
NOTE F: QUARTERLY RESULTS OF OPERATIONS: (UNAUDITED)
<TABLE>
<CAPTION>
NET REALIZED &
UNREALIZED GAIN
(LOSS) ON NET INCREASE
INVESTMENTS, FOREIGN (DECREASE) IN
CURRENCY NET ASSETS
INVESTMENT NET INVESTMENT & RELATED RESULTING FROM
INCOME LOSS TRANSACTIONS OPERATIONS
------------------ ------------------- --------------------- --------------------
TOTAL PER TOTAL PER TOTAL PER TOTAL PER
(000) SHARE (000) SHARE (000) SHARE (000) SHARE
------- ------- -------- ------- ---------- ------- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, 1994*................. $ 1,329 $0.04 $ (76) $ (0.00) $(11,589) $(0.34) $ (11,665) (0.34)
June 30, 1994................... 1,683 0.05 (224) (0.01) 19,340 0.57 19,116 0.56
September 30, 1994.............. 3,824 0.11 1,210 0.03 29,076 0.86 30,286 0.89
December 31, 1994............... 1,304 0.04 (1,152) (0.03) (34,280) (1.01) (35,432) (1.04)
------- ------- -------- ------- ---------- ------- ---------- ------
$ 8,140 $0.24 $ (242) $ (0.01) $ 2,547 $ 0.08 $ 2,305 $ 0.07
====== ====== ======== ====== ========== ======= ========== ======
March 31, 1995.................. $ 246 $0.01 $ (2,017) $ (0.06) $(57,421) $(1.69) $ (59,438) $(1.75)
June 30, 1995................... 945 0.03 (1,223) (0.04) (42,561) (1.25) (43,784) (1.29)
------- ------- -------- ------- ---------- ------- ---------- ------
$ 1,191 $0.04 $ (3,240) $ (0.10) $(99,982) $(2.94) $ (103,222) $(3.04)
====== ====== ======== ====== ========== ======= ========== ======
</TABLE>
---------------
* From commencement of operations on February 23, 1994
NOTE G: OTHER
At June 30, 1995, substantially all of the Fund's net assets were invested
in Indian securities. The Indian securities markets are among other things
substantially smaller, less developed, less liquid, subject to less regulation
and more volatile than the major securities markets in the United States.
Consequently, and as further discussed above acquisitions and dispositions of
securities by the Fund involve special risks and considerations not present with
respect to U.S. securities.
24
<PAGE> 25
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The following disclosure is provided to comply with certain rules of the
Securities and Exchange Commission:
Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
shareholders whose shares of Common Stock are registered in their own names will
be deemed to have elected to have all distributions automatically reinvested by
The Bank of New York (the "Plan Agent") in Fund shares pursuant to the Plan,
unless such shareholders elect to receive distributions in cash. Shareholders
who elect to receive distributions in cash will receive all distributions in
cash paid by check in dollars mailed directly to the shareholder by The Bank of
New York, as dividend paying agent. In the case of shareholders, such as banks,
brokers or nominees, that hold shares for others who are beneficial owners, the
Plan Agent will administer the Plan on the basis of the number of shares
certified from time to time by the shareholders as representing the total amount
registered in such shareholders' names and held for the account of beneficial
owners that have not elected to receive distributions in cash. Investors that
own shares registered in the name of a bank, broker or other nominee should
consult with such nominee as to participation in the Plan through such nominee,
and may be required to have their shares registered in their own names in order
to participate in the Plan.
The Plan Agent serves as agent for the shareholders in administering the
Plan. If the directors of the Fund declare an income dividend or a capital gains
distribution payable either in the Fund's Common Stock or in cash,
nonparticipants in the Plan will receive cash and participants in the Plan will
receive Common Stock, to be issued by the Fund or purchased by the Plan Agent in
the open market, as provided below. If the market price per share on the
valuation date equals or exceeds net asset value per share on that date, the
Fund will issue new shares to participants at net asset value; provided,
however, if the net asset value is less than 95% of the market price on the
valuation date, then such shares will be issued at 95% of the market price. The
valuation date will be the dividend or distribution payment date or, if that
date is not a New York Stock Exchange trading day, the next preceding trading
day. If net asset value exceeds the market price of Fund shares at such time, or
if the Fund should declare an income dividend or capital gains distribution
payable only in cash, the Plan Agent will, as agent for the participants, buy
Fund shares in the open market, on the New York Stock Exchange or elsewhere, for
the participants' accounts on, or shortly after, the payment date. If, before
the Plan Agent has completed its purchases, the market price exceeds the net
asset value of a Fund share, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Fund's shares, resulting in the
acquisition of fewer shares than if the distribution had been paid in shares
issued by the Fund on the dividend payment date. Because of the foregoing
difficulty with respect to open-market purchases, the Plan provides that if the
Plan Agent is unable to invest the full dividend amount in open-market purchases
during the purchase period or if the market discount shifts to a market premium
during the purchase period, the Plan Agent will cease making open-market
purchases and will receive the uninvested portion of the dividend amount in
newly issued shares at the close of business on the last purchase date.
25
<PAGE> 26
Participants have the option of making additional cash payments to the Plan
Agent, annually, in any amount from $100 to $3,000, for investment in the Fund's
Common Stock. The Plan Agent will use all such funds received from participants
to purchase Fund shares in the open market on or about February 15. Any
voluntary cash payment received more than 30 days prior to this date will be
returned by the Plan Agent, and interest will not be paid on any uninvested cash
payment. To avoid unnecessary cash accumulations, and also to allow ample time
for receipt and processing by the Plan Agent, it is suggested that participants
send in voluntary cash payments to be received by the Plan Agent approximately
ten days before an applicable purchase date specified above. A participant may
withdraw a voluntary cash payment by written notice, if the notice is received
by the Plan Agent not less than 48 hours before such payment is to be invested.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in an account, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in the name of the
participant, and each shareholder's proxy will include those shares purchased
pursuant to the Plan.
There is no charge to participants for reinvesting dividends or capital
gains distributions or voluntary cash payments. The Plan Agent's fees for the
reinvestment of dividends and capital gains distributions and voluntary cash
payments will be paid by the Fund. There will be no brokerage charges with
respect to shares issued directly by the Fund as a result of dividends or
capital gains distributions payable either in stock or in cash. However, each
participant will pay a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases in connection with the
reinvestment of dividends and capital gains distributions and voluntary cash
payments made by the participant. Brokerage charges for purchasing small amounts
of stock for individual accounts through the Plan are expected to be less than
the usual brokerage charges for such transactions, because the Plan Agent will
be purchasing stock for all participants in blocks and prorating the lower
commission thus attainable.
The receipt of dividends and distributions under the Plan will not relieve
participants of any income tax which may be payable on such dividends or
distributions.
Experience under the Plan may indicate that changes in the Plan are
desirable. Accordingly, the Fund and the Plan Agent reserve the right to
terminate the Plan as applied to any voluntary cash payments made and any
dividend or distribution paid subsequent to notice of the termination sent to
members of the Plan at least 30 days before the record date for such dividend or
distribution. The Plan also may be amended by the Fund or the Plan Agent, but
(except when necessary or appropriate to comply with applicable law, rules or
policies of a regulatory authority) only by at least 30 days' written notice to
participants in the Plan. All correspondence concerning the Plan should be
directed to the Plan Agent at 101 Barclay Street, New York, New York 10286.
26
<PAGE> 27
THE INDIA FUND, INC.
INVESTMENT MANAGER:
ADVANTAGE ADVISERS, INC.
INVESTMENT ADVISER:
BARCLAYS DE ZOETE WEDD
INVESTMENT MANAGEMENT INC.
COUNTRY ADVISER:
INFRASTRUCTURE LEASING &
FINANCIAL SERVICES LIMITED
ADMINISTRATOR:
OPPENHEIMER & CO., INC.
SUB-ADMINISTRATOR:
PFPC INC.
TRANSFER AGENT:
THE BANK OF NEW YORK
CUSTODIAN:
THE BANK OF NEW YORK
[L O G O]
THE INDIA FUND, INC.
Semi-Annual Report
June 30, 1995
ADVANTAGE ADVISERS, INC.
