<PAGE> 1
THE INDIA FUND, INC.
February 12, 1996
DEAR FUND SHAREHOLDER:
We are pleased to present you with the audited financial statements of The India
Fund, Inc. (the "Fund") for its second fiscal year ended December 31, 1995.
The past year was a difficult period for the Indian market as evidenced by the
fact that the Dollex, an index of two hundred Indian companies in U.S. dollar
terms, declined by over 36%. Despite continued positive corporate earnings
growth, downward pressure resulted from several factors including tightened
monetary conditions, a weakening rupee, continuing political uncertainty,
several political scandals and, for most of the year, overall negative emerging
market sentiment.
While the Fund has experienced significant volatility during the past year, we
are optimistic that the Indian market will have a much stronger 1996. General
elections expected to occur in April should provide some relief from India's
ongoing political uncertainties, allowing government officials to refocus
attention on the Indian economy, rather than on politics. Despite the Indian
market's volatility, corporate earnings grew 45% for the year ended March 1995
and are expected to continue the strong trend and grow 46% for the year ending
March 1996. Also, the government has been successful in reducing inflation.
Finally, since the beginning of the year, general investor sentiment towards the
emerging markets has dramatically improved and should provide a boost to the
Indian market.
Over the past six months, the Fund has continued to provide investors with broad
exposure to India, investing in 231 securities in 32 industries. 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
Investment Adviser has provided its views about the Indian economy as well as
descriptions of the Fund's key sectors and top equity holdings.
The Fund's net asset value is calculated weekly and is 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 updates 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,
ALAN RAPPAPORT
ALAN RAPPAPORT
CHAIRMAN
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REPORT OF THE INVESTMENT ADVISER
OVERVIEW
During 1995, India was dominated by politics and tight monetary policy, both of
which contributed to equity markets dropping in value through much of the year.
As general elections, to be held in the next few months, approached, it became
vital for the government to bring down inflation. Inflation is the single most
politically sensitive economic indicator and had risen as high as 12.1% in
January of 1995. Two options were available to try to reduce inflation, fiscal
or monetary tightening. In an election year the government appeared disinclined
to put a lid on spending, and instead, focused on curbing monetary growth.
Interest rates had already begun to move up at the end of 1994, but the real
change happened with the new credit policy announced in April of 1995.
Authorities not only raised deposit rate ceilings but also further limited the
lending which could be done on the existing capital base. As a result, prime
rates in India moved from 14% at the start of the year to 17% in December. By
year-end, few companies were able to borrow at prime and an active
inter-corporate debt market became the primary source of funds for cash
deficient companies. With returns well above 20%, those companies which have
excess funds have found debt a far more attractive investment than equity and
there has been a steady stream of domestic selling that has put pressure on the
stock market. But the government has achieved its goal of lower inflation as it
dropped to an annual rate of 6% in December and has continued to fall.
Once past the local elections of last spring, politics moved off center stage
briefly until the Enron controversy flared up in the summer. Enron, a U.S.
energy company, has been building the first large scale private power project in
India since March of 1995, a project which had been approved by the Congress
Party-led governments in the state of Maharashtra and at the national level. The
newly-elected Shiv-Sena/BJP state government had heavily campaigned against the
project as part of its election campaign, and shortly after taking power,
reviewed and cancelled the project. After a flurry of concern by foreign
investors in India, the markets stabilized as a new contract was signed which
contained few substantive changes.
1995 also saw a further liberalization of the currency, after the government
allowed the rupee to float freely in August. The rupee had been held steady at
31.35-31.4 to the U.S. dollar for some time, despite an inflation differential
of 5-10% with the U.S. The appreciation of the U.S. dollar against other key
trading currencies for India (e.g. Japanese Yen and German Deutschmark) may have
been the catalyst for the government to discontinue intervention. By year-end
the rupee had depreciated by 10.7% to 35.13 rupees to the U.S. dollar. Although
domestic market participants have been nervous about the decline, unused to the
free float, we believe that the depreciation is a natural and necessary
adjustment and will help keep Indian exports competitive in world markets.
Corporate earnings continued to advance strongly. First half earnings numbers
released for the period ended September 1995 exceeded expectations. Sensex
companies had earnings growth of 46% and many analysts revised their numbers
upwards for the year ending March 1996. Vehicle sales growth was particularly
strong as individual production growth and consumer spending were robust, and
the Fund benefited from heavy weightings in the sector. Growth is now moderating
in the face of tight monetary policy, but corporate India has been surprisingly
resilient.
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In the latter half of 1995, the government took the first steps towards creating
a central depository. This should be a positive development for the markets,
significantly reducing the complications created by India's paper-based
settlement system. Lengthy and time consuming settlement and registration have
been a barrier to entry for many foreign investors. A central depository would
help streamline the process, thereby opening up the markets further.
PERFORMANCE
Indian markets were dogged by poor performance and reduced volumes throughout
much of 1995. The local indices experienced most of their declines for the year
in the first half of 1995 with the Sensex dropping from above 3900 in January to
3247 at the end of June. For the remainder of the year it traded in a wide band
of 3000-3600. However, the decision of the government in August to let the rupee
float and the subsequent depreciation led to a further decline in U.S. dollar
terms. The Dollex, the dollar-based index of 200 Indian companies, declined a
total of 36.4% in 1995.
By comparison, the Fund slightly outperformed the Dollex, although in absolute
terms the 35.8% decline in net asset value to $8.94 per share at December 31,
1995 was clearly disappointing. As volume dried up, smaller capitalization
B-shares began to underperform the larger A-Group companies. Consequently, the
Fund was hurt in 1995 by its emphasis on B-Group shares (approximately
two-thirds of invested assets). However, this was somewhat offset by a large
cash position which was maintained at between 12-18% of assets for most of the
year.
STRATEGY
Throughout the year the Fund maintained strong cash positions. As a percentage
of total assets, cash increased through the year from 16.5% on June 30, 1995 to
roughly 18% at year-end as equity values declined. Positions in GDRs and B-Group
shares have remained steady at around 10% and 64% respectively. We continued
building core positions in technology and pharmaceuticals and made purchases in
vehicles and vehicle components. Finally, extractive industries, particularly
aluminum mining and production, have become a larger component of the Fund.
These purchases were largely funded by the sale of Grasim Industries, which was
one of our top ten holdings. We felt that this flagship company of the Aditya
Birla group was at risk from the change in management occasioned by his death.
Weightings were also reduced further in consumer products, as price competition
heated up, and in steel and chemicals, given softening world prices.
REVIEW OF KEY SECTOR HOLDINGS
VEHICLES
9.2% OF THE FUND'S TOTAL INVESTMENTS WERE INVESTED IN THE VEHICLE SECTOR AS OF
DECEMBER 31, 1995
Industry figures show that the Indian automobile industry grew by 26% over
fiscal 1995, spurred by sustained economic recovery and rising consumer
affluence. Our exposure to the sector has increased over the past half year,
partly due to its outperformance relative to other sectors but also through new
purchases. For example, we significantly increased our position in TELCO, which
is India's largest producer of commercial vehicles with a market share that
increased from 59% in September 1994 to 66% in September 1995. Industry data
shows that commercial vehicle sales grew 42% in the first half of fiscal 1996,
spurred by continued strong growth in industrial production
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combined with emerging shortages of capacity across the railway network forcing
companies to rely increasingly on road haulage for the movement of both raw
materials and products.
The Fund's largest position in the auto sector is in BAJAJ AUTO which is
dominant in the scooter and "three-wheeler" urban mini-taxi segments. For the
half year ended September 1995, turnover increased by 29% on 19% volume growth
and net profit grew 30% over the corresponding period the previous year.
Reflecting the changing domestic demand pattern, Bajaj Auto's product mix is
changing in favor of motorcycles, which was the fastest growing two-wheeler
segment in the first half of fiscal 1996.
- --------------------------------------------------------------------------------
PHARMACEUTICALS
7.0% OF THE FUND'S TOTAL INVESTMENTS WERE INVESTED IN THE PHARMACEUTICALS SECTOR
AS OF DECEMBER 31, 1995
Government statistics show that, in 1991, drug expenditures per capita were an
estimated U.S.$3 in India, compared with U.S.$7 in China, U.S.$16 in Brazil, and
U.S.$191 in the United States. That year, only 25% of the population was
estimated to have had access to modern medicines, but the government is aiming
to increase this to 45% by the year 2000. Furthermore, Indian manufacturers are
expected to capture an increasing share of the fast-growing European and U.S.
generics market. The Fund has focused on companies with both strong local brands
and high export ratios, underpinned by a solid research and development
commitment. Bearing in mind the prospects for the sector and also its
non-cyclical nature, we have increased the Fund's exposure over the last six
months.
The Fund's largest holding in the sector is RANBAXY LABORATORIES, the largest
Indian pharmaceutical company in terms of sales volume and the country's sixth
largest exporter. Ranbaxy's exports, which made up 42% of sales in fiscal 1995,
are sold in over 40 countries with China and Russia being the largest markets.
To increase its presence in the Western markets, Ranbaxy has recently acquired
Ohm Laboratories in the U.S. and Rima Pharmaceuticals in Ireland. Ranbaxy's
stock outperformed the Indian stock market in 1995, and given its long term
expansion strategy and increasing penetration of the western generics market, we
expect the company to remain a market leader.
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STEEL & STEEL PRODUCTS
6.0% OF THE FUND'S TOTAL INVESTMENTS WERE INVESTED IN THE STEEL SECTOR AS OF
DECEMBER 31, 1995
Producing over 20 million tons in fiscal 1995, the Indian steel industry is the
tenth largest in the world, larger than those of the U.K. and France.
Progressive deregulation of this sector since 1991 has instigated significant
private sector investment interest in recent years. Demand for steel and steel
products, driven by infrastructure development and growth in the automobile and
consumer goods industries in particular, is expected to be healthy, given that
India's per capita steel consumption is only 15% of the world average.
The Fund has a particular focus on companies which produce value-added and
specialty steels. For example, JINDAL STRIPS is the country's largest producer
of stainless steel and represents the Fund's largest holding. Although global
steel prices (particularly those of hot-rolled products) weakened in
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the latter half of 1995, Jindal Strips was relatively insulated from the trend
as almost 90% of fiscal 1995 sales were in cold-rolled and stainless steels.
Industry sources forecast stainless steel demand in India to grow at least 10%
per annum to the end of the century. With its current and expected capacity
growth, we believe the company is particularly well-placed to participate in
this growth.
- --------------------------------------------------------------------------------
EXTRACTIVE INDUSTRIES
5.8% OF THE FUND'S TOTAL INVESTMENTS WERE INVESTED IN THE EXTRACTIVE INDUSTRIES
SECTOR AS OF DECEMBER 31, 1995
India has world class deposits of coal, iron and manganese ore, chromite and
bauxite. Bauxite is the basic raw material for aluminum and India has the
world's fifth largest known reserves, forming the basis for its globally
competitive aluminum industry. Strong growth in demand for the metal in India
has stimulated its increasing use in packaging, construction, automobile and
consumer durable applications. We remain optimistic about the prospects for the
sector given the global growth in aluminum usage and so have used the depressed
market conditions over the past half year to increase the Fund's exposure.
The Fund's key holding in this sector is HINDALCO, the largest private sector
aluminum producer in India. The company is integrated from bauxite mining
through smelting to the fabrication of downstream products and has over 90%
low-cost captive power generation which gives it a global competitive edge. A
technical collaboration with Kaiser Aluminum of the U.S. lends emphasis to
maintaining operational efficiency at international levels. With the view of
increasing its presence in the value-added product segment, Hindalco is
currently implementing a major aluminum foil project.
- --------------------------------------------------------------------------------
SYNTHETIC TEXTILES
5.4% OF THE FUND'S TOTAL INVESTMENTS WERE INVESTED IN THE SYNTHETIC TEXTILE
SECTOR AS OF DECEMBER 31, 1995
Not only do textiles remain India's single largest export earner, but domestic
demand for polyester filament yarn is expected to grow at a rate of 15% per
annum against the background of lowering excise duties. However, in the past six
months, synthetic fiber prices have been weakening globally while input costs
have remained high. Consequently, we have reduced the Fund's exposure to the
sector from 7.4% at the end of June 1995 and are carefully monitoring the price
trends.
The biggest holding in the Fund portfolio is represented by RELIANCE INDUSTRIES,
India's leading private sector company with operations spanning the entire
production and distribution of synthetic textiles. In the first half of fiscal
1996 the company has shown an increase in sales of 20% and a net profit increase
of 33% over 1995. While we have not been happy with the recent share controversy
in the company, its industry dominance, high levels of efficiency, integrated
operations, and significant capacity expansions are hard to ignore, and at
current low price levels we believe these negative factors have been fully
discounted.
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- --------------------------------------------------------------------------------
TECHNOLOGY
5.4% OF THE FUND'S TOTAL INVESTMENTS WERE INVESTED IN THE TECHNOLOGY SECTOR AS
OF DECEMBER 31, 1995
India has the third largest pool of software professionals in the world and the
cost of hiring a programmer is one eleventh of the cost in the U.S. Indian
software companies are exploiting this significant competitive edge with the
help of satellite communication technology to provide off-site software
engineering to large overseas clients. Industry figures show that software
exports grew 58% in fiscal 1995, while the domestic market is witnessing a boom
in demand for information technology. Furthermore, since a significant portion
of earnings of leading software companies are dollar-denominated, they provide a
natural hedge against rupee depreciation. Reflecting this, the Fund has holdings
in several major software companies and this exposure has increased during the
past half year through the outperformance of the sector as well as through the
purchase of new stock.
The Fund's largest holding in this sector is NIIT, the largest computer
education company in India, responsible for the training of many of the
country's bright, young software professionals. Additionally, although software
exports began only recently, results to September 1995 show the company is
already the sixth largest in India with a client base including IBM and the
World Bank. NIIT also has an affiliation with Microsoft for the provision of
software training and an alliance with AT&T for the training of
telecommunications professionals.
- --------------------------------------------------------------------------------
ELECTRICITY & ELECTRONICS AND ELECTRICAL
5.2% OF THE FUND'S TOTAL INVESTMENTS WERE INVESTED IN THE ELECTRONICS AND
ELECTRICAL SECTOR AS OF DECEMBER 31, 1995
Suppliers of power transformation and distribution equipment are likely to
benefit from increased demand generated by the power sector. A number of both
public and private-sector power projects are currently being implemented or are
at the planning stage in an attempt to reduce India's power deficit.
Consequently, we have increased the Fund's exposure to the electrical equipment
sector in the second half of 1995. As a result, CROMPTON GREAVES is a new
entrant in our list of top ten holdings. Crompton Greaves is the largest private
sector electrical engineering company and is a leading player in product lines
such as transformers, motors, switch-gears and electrical fans. With a focus on
segments that are technology-sensitive and require sophisticated engineering
skills, the company's competition is limited and operating margins are high.
- --------------------------------------------------------------------------------
DIVERSIFIED INDUSTRIALS
4.2% OF THE FUND'S TOTAL INVESTMENTS WERE INVESTED IN THE DIVERSIFIED INDUSTRIES
SECTOR AS OF DECEMBER 31, 1995
Major conglomerates such as Indian Rayon and Industries, Grasim Industries and
Larsen and Toubro are rightly classified as diversified industrials, with
business from synthetic fibers to cement and engineering. With some of these
segments being affected by potential oversupply and declining
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product prices the Fund's exposure to the sector has been reduced over the past
half year. In particular, we have sharply reduced our holdings in Grasim.
The Fund's largest holding in the sector is now INDIAN RAYON AND INDUSTRIES, a
multi-product and multi-locational company with interests in cement, textiles,
carbon black, insulators and argon gas, as well as being India's second largest
manufacturer of rayon yarn. The location of Indian Rayon's cement plants are
particularly advantageous in accessing the cement deficit regions of India.
- --------------------------------------------------------------------------------
FERTILIZERS
4.2% OF THE FUND'S TOTAL INVESTMENTS WERE INVESTED IN THE FERTILIZER SECTOR AS
OF DECEMBER 31, 1995
Agriculture still contributes 33% to GDP and provides livelihood to 67% of the
population. Therefore, a key objective of government policy has been to ensure
farmers affordable fertilizer prices and to ensure that attractive returns are
available to fertilizer manufacturers. Furthermore, the prevailing fertilizer
pricing mechanism provides an incentive for manufacturers to maximize
operational efficiency, thereby earning higher incremental profits. Over the
last six months we have maintained our sector weighting and are closely
monitoring government plans for relaxation of controls in the industry.
Nitrogenous fertilizers, primarily urea, account for nearly 60% of India's total
fertilizer consumption. Demand for urea has long outpaced domestic supply and
the deficit is expected to continue until the end of the century. The Fund's top
holding in this sector is CHAMBAL FERTILIZERS AND CHEMICALS, a new company
operating at very high capacity that has already gained a 5% share of the entire
nitrogenous fertilizer market. The plant is located in a region of high
fertilizer consumption and the company intends to double capacity over the next
four years.
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CEMENT
2.9% OF THE FUND'S TOTAL INVESTMENTS WERE INVESTED IN THE CEMENT SECTOR AS OF
DECEMBER 31, 1995
The Indian cement industry is the fourth largest in the world with total
capacity of over 70 million tons. The industry is highly fragmented, however,
with over 80 companies operating in the national market. Some of the most
important players are large companies with geographically dispersed plants such
as INDIAN RAYON AND INDUSTRIES and ASSOCIATED CEMENT COMPANIES, both of which
are represented in the Fund's portfolio.
Abundant raw material supplies, the availability of captive power, and easy
access to markets are critical factors driving profitability of cement
companies, and have been the chief criteria used to select our cement holdings.
Many large cement companies have announced increases in capacity to be
commissioned during 1996-1999 and sector analysts have therefore been predicting
possible oversupply in the industry. With this in view, we have reviewed our
sector holdings in the last six months and have sold stocks most sensitive to
this potential oversupply.
OUTLOOK
Economic growth continues apace, and real GDP growth should again top 5% in the
year ending March 1996. At the same time inflation is now close to 5%. Despite
pressure from interest rates,
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corporate earnings should exceed last year's numbers by more than 25%. The
combination of poor market performance and strong earnings have brought P/E
multiples for the Sensex down to 12.3 times March 1996 earnings, while most
B-Group securities are trading on single-digit P/Es. All this should be good
news for the market over the next year. In the near term, we remain cautious in
view of the tight liquidity in the system, and the looming elections. General
elections are likely to be held in April and the results are even less
predictable in light of the major corruption scandal which has recently
resurfaced, affecting all major parties. However, we remain confident that the
basic economic reform process will continue, no matter which party wins, and
over the coming months we will be looking for the right opportunities to invest
some of the significant cash holdings of the Fund, now totaling 17.4% of net
assets. We will continue to focus on the attractive valuations of the B-Group,
as well as sectors and companies with prospects of good long-term growth and
strong balance sheets. We also look forward to further market reforms, such as a
central depository, encouraging additional foreign capital to enter the Indian
markets and potentially helping fuel future market advances.
Sincerely,
LAUREL GRASSIN-DRAKE
LAUREL GRASSIN-DRAKE
Portfolio Manager
BZW INVESTMENT MANAGEMENT
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SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Shares Security Cost Value
- ----------- -------------------------------------------------------------- ------------- -------------
<S> <C> <C> <C>
INDIA -- 86.79%
COMMON STOCKS -- 83.16%
Cement -- 2.85%
45,075 Associated Cement Companies................................... $ 5,801,412 $ 3,679,147
21,200 Birla Jute.................................................... 222,250 104,114
156,000 Chettinad Cement.............................................. 885,375 897,139
133,000 Dalmia Cement................................................. 1,583,260 1,029,922
80,000 India Cement GDR.............................................. 676,000 640,000
210,000 Jaiprakash Industries......................................... 610,377 198,790
1,273,700 Mysore Cements................................................ 2,749,262 1,133,185
369,700 Shree Cement.................................................. 906,336 573,627
------------- -------------
13,434,272 8,255,924
------------- -------------
Chemicals -- 2.07%
491,750 Atul Products................................................. 2,183,638 966,000
22,050 Caprihans India............................................... 168,251 78,470
100,000 Chemplast..................................................... 644,251 370,107
200 Ganesh Benzoplast............................................. 480 300
500,000 Hindustan Organic Chemicals................................... 960,956 462,633
515,500 ICI (India)................................................... 2,743,333 2,377,537
452,600 India Glycols................................................. 1,043,536 571,468
215,250 Indian Organic Chemicals...................................... 637,152 211,420
266,900 JF Laboratories*.............................................. 393,729 119,678
500 Pidilite Industries........................................... 5,154 4,356
638,350 Punjab Alkalies............................................... 1,859,693 658,795
251,800 Tuticorin Alkali Chemicals & Fertilizers...................... 432,320 164,880
600 United Phosphorus............................................. 12,716 5,031
------------- -------------
11,085,209 5,990,675
------------- -------------
Construction & Building Materials -- 0.31%
205,500 Novopan India*+............................................... 580,683 438,790
65,400 Sand Plast (India)*........................................... 29,315 18,247
140,000 Unitech....................................................... 415,077 446,406
------------- -------------
1,025,075 903,443
------------- -------------
Consumer Miscellaneous -- 2.39%
500,000 Hytaisun Magnetics*........................................... 580,947 199,288
750,000 Mideast (India)............................................... 1,898,618 1,067,616
95,800 Nahar Spinning Mills.......................................... 2,495,760 861,859
260,400 Namaste Exports............................................... 950,284 324,342
494,650 Premier Vinyl Flooring*....................................... 834,034 299,254
110,000 Real Value Appliances......................................... 296,307 125,267
249,975 Surya Roshni.................................................. 645,128 341,603
951,900 Timex Watches*................................................ 2,267,835 1,159,895
770,800 Titan Industries.............................................. 3,811,716 2,529,102
------------- -------------
13,780,629 6,908,226
------------- -------------
Consumer Non-Durable -- 2.27%
219,800 Hindustan Lever............................................... 4,903,489 3,892,259
176,200 ITC........................................................... 2,060,529 1,255,096
160,000 ITC-GDR....................................................... 1,551,250 1,419,200
------------- -------------
8,515,268 6,566,555
------------- -------------
</TABLE>
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SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Shares Security Cost Value
- ----------- -------------------------------------------------------------- ------------- -------------
<S> <C> <C> <C>
Diversified Industries -- 4.19%
34 Century Textiles.............................................. $ 10,668 $ 4,501
400,000 DCM Shriram Consolidated...................................... 2,646,993 2,186,477
125,000 DCM Shriram Consolidated Warrants*+........................... 0 0
100,000 EID Parry (India)............................................. 889,100 295,943
200,000 EID Parry (India) GDS......................................... 1,751,825 450,000
170,600 Grasim Industries............................................. 3,580,508 2,627,604
443,500 HMG Industries................................................ 886,056 270,835
376,000 Indian Rayon.................................................. 7,936,463 4,549,466
75,000 Indian Rayon GDR.............................................. 1,153,625 918,750
38,100 J K Corp...................................................... 338,970 134,231
296,800 Kesoram Industries*........................................... 1,400,280 485,865
50,500 Prakash Industries*........................................... 58,207 122,925
45,200 Triveni Engineering Works..................................... 417,662 82,036
------------- -------------
21,070,357 12,128,633
------------- -------------
Electricity -- 0.90%
75,000 CESC Ltd...................................................... 650,737 234,876
439,000 CESC Class A & B Warrants (INR), Expiration dates 1/31/98 and
9/30/99, respectively*+..................................... 5,964,076 1,724,754
185,450 Tata Power Co................................................. 1,045,814 637,526
------------- -------------
7,660,627 2,597,156
------------- -------------
Electronics & Electrical -- 4.34%
185,350 Asea Brown Boveri............................................. 3,884,083 2,736,056
471,800 Asian Cables & Industries*.................................... 1,057,380 315,653
104,800 Asian Electronics............................................. 1,600,494 1,432,143
200,000 BPL Engineering............................................... 576,574 148,043
1,226,600 Crompton Greaves.............................................. 7,977,610 6,984,199
300,000 KEC International............................................. 1,616,740 888,256
100 Modern Malleables............................................. 486 162
3,850 Siemens India................................................. 85,667 53,593
------------- -------------
16,799,034 12,558,105
------------- -------------
Engineering -- 1.78%
259,000 Advani Oerlikon............................................... 943,354 1,155,822
370,000 Artson Engineering*........................................... 533,146 308,114
138,600 Kabra Extrusiontechnik........................................ 667,725 398,537
7,500 Lakshmi Machine Works*........................................ 3,028,735 2,231,317
139,500 Larsen & Toubro............................................... 1,109,280 1,044,512
------------- -------------
6,282,240 5,138,302
------------- -------------
Extractive Industries -- 5.79%
239,350 Hindalco Industries........................................... 7,131,422 6,290,220
1,810,200 Hindustan Zinc*............................................... 1,978,516 644,199
317,250 Indian Aluminium.............................................. 2,104,011 1,517,381
525,000 Indian Aluminium GDR.......................................... 4,332,406 3,281,250
407,330 Sesa Goa...................................................... 7,404,012 5,005,085
------------- -------------
22,950,367 16,738,135
------------- -------------
Fertilizers -- 4.19%
11,295,500 Chambal Fertilizers & Chemicals............................... 9,826,908 5,868,836
150,000 Gujarat Narmada Valley Fertilizers GDR........................ 1,890,000 956,250
</TABLE>
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SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Shares Security Cost Value
- ----------- -------------------------------------------------------------- ------------- -------------
<S> <C> <C> <C>
Fertilizers (continued)
6,834,900 Nagarjuna Fertilizer & Chemicals.............................. $ 6,945,239 $ 4,533,898
552,900 Southern Petrochemicals Industrial Corp....................... 2,191,778 755,564
------------- -------------
20,853,925 12,114,548
------------- -------------
Finance -- 0.17%
300,000 Autoriders Finance............................................ 2,427,962 492,812
------------- -------------
Food -- 0.55%
376,200 American Dry Fruits........................................... 755,453 384,501
450 Brooke Bond Lipton India...................................... 7,356 3,179
130,000 Nath Seeds.................................................... 332,973 186,904
1,500 Nestle India.................................................. 20,036 12,811
124,000 Praj Industries............................................... 962,734 457,167
250,000 Rahul Dairy & Allied Products*+............................... 80,041 46,263
226,700 Rank Aqua Estates............................................. 545,161 127,468
281,100 S & S Industries.............................................. 347,493 140,050
200,000 Unified Agro Industries....................................... 160,261 96,797
73,166 Western Hatcheries............................................ 346,546 139,562
------------- -------------
3,558,054 1,594,702
------------- -------------
Healthcare -- 0.05%
85,000 Apollo Hospitals Enterprise................................... 115,442 87,118
200,000 Trans Plastics*+.............................................. 163,258 45,552
700 TTK Biomedical................................................ 3,169 1,026
------------- -------------
281,869 133,696
------------- -------------
Hotels & Leisure -- 0.54%
70,250 Indian Hotels................................................. 1,184,614 1,168,100
25,870 Indian Resort Hotels+......................................... 418,276 405,082
------------- -------------
1,602,890 1,573,182
------------- -------------
Household Appliances -- 2.75%
1,000 Atco Industries............................................... 3,557 5,011
496,700 BPL Refrigeration............................................. 704,280 325,241
381,700 IFB Industries................................................ 3,069,891 1,543,100
56,400 JCT Electronics............................................... 138,209 47,769
9,800 Kalyani Sharp*................................................ 13,473 6,138
519,400 Kelvinator of India........................................... 2,810,701 1,212,549
68,800 MIRC Electronics.............................................. 646,806 235,046
344,100 Phil Corporation.............................................. 834,766 406,552
130 Phillips India................................................ 125 570
1,145,600 Samtel Colour................................................. 2,741,263 1,467,673
83,200 TVS Whirlpool*................................................ 87,030 66,323
141,500 Videocon Appliances........................................... 888,285 216,530
1,095,900 Videocon International........................................ 6,085,605 2,269,800
70,450 Voltas........................................................ 339,950 145,513
------------- -------------
18,363,941 7,947,815
------------- -------------
Packaging -- 2.06%
67,300 Canbay Polyfilms.............................................. 21,557 12,454
542,360 Flex Industries*.............................................. 3,778,368 2,485,978
443,300 Peacock Industries............................................ 720,028 1,365,553
548,400 Pearl Polymers................................................ 1,655,614 577,674
588,100 Polyplex Corporation.......................................... 2,042,135 1,222,243
</TABLE>
11
<PAGE> 12
SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Shares Security Cost Value
- ----------- -------------------------------------------------------------- ------------- -------------
<S> <C> <C> <C>
Packaging (continued)
4,900 Sharp Industries*............................................. $ 7,911 $ 1,925
190,000 Tainwala Chemicals & Plastics*................................ 334,733 154,164
390,000 Universal Cans & Containers................................... 618,003 148,783
------------- -------------
9,178,349 5,968,774
------------- -------------
Petroleum Related -- 2.93%
154,600 Cenlub Industries*............................................ 49,498 45,775
250,000 Cochin Refineries Balmer Lawrie*.............................. 280,278 142,705
586,800 Hindustan Petroleum........................................... 8,783,985 4,928,285
242,700 Indian Petrochemicals......................................... 1,051,864 853,337
1,316,350 Madras Refineries............................................. 4,899,545 2,154,879
263,500 Reliance Industrial Infrastructure............................ 1,030,313 356,335
------------- -------------
16,095,483 8,481,316
------------- -------------
Pharmaceuticals -- 6.99%
188,000 Dr. Reddy's Laboratories...................................... 1,749,345 1,207,482
125,000 Dr. Reddy's Laboratories-GDR*................................. 1,206,250 875,000
394,200 E. Merck (India).............................................. 2,854,565 1,795,644
169,950 German Remedies............................................... 1,611,294 748,506
318,550 Glaxo (India)................................................. 2,261,477 1,686,841
127,000 Merind........................................................ 1,566,109 578,505
250 Nicholas Piramal.............................................. 2,894 1,658
291,000 Orchid Chemicals & Pharmaceuticals............................ 848,693 563,359
121,200 Pfizer India.................................................. 1,555,380 741,865
476,950 Ranbaxy Laboratories.......................................... 10,226,226 8,839,021
177,800 Rhone-Poulenc India........................................... 2,237,613 2,201,936
5,000 SOL Pharmaceuticals........................................... 29,932 12,598
125,000 Unichem Laboratories.......................................... 1,091,886 960,854
------------- -------------
27,241,664 20,213,269
------------- -------------
Pulp & Paper -- 2.93%
1,098,100 Andhra Pradesh Rayons......................................... 3,215,731 2,360,329
524,700 Ballarpur Industries.......................................... 4,327,056 2,793,421
250,000 Orient Paper Industries....................................... 1,863,347 1,224,199
111,200 Pudumjee Pulp & Paper......................................... 791,003 459,046
1,575,000 Rama Newsprint*............................................... 1,176,129 524,626
458,200 Seshasayee Papers............................................. 1,281,758 1,108,811
------------- -------------
12,655,024 8,470,432
------------- -------------
Rubber -- 0.09%
80,000 Dewan Rubber Industries....................................... 105,790 166,263
145,000 India Rubber.................................................. 326,465 94,947
------------- -------------
432,255 261,210
------------- -------------
Steel -- 4.80%
46,600 Essar Gujarat................................................. 176,118 51,874
300,000 Isibars....................................................... 951,953 550,890
275,000 Jindal Iron & Steel........................................... 2,502,255 994,306
647,500 Jindal Strips................................................. 8,591,032 4,276,726
1,266,300 Kirloskar Ferrous Industries*................................. 1,168,732 591,240
300,000 Mukand........................................................ 3,125,100 1,708,185
</TABLE>
12
<PAGE> 13
SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Shares Security Cost Value
- ----------- -------------------------------------------------------------- ------------- -------------
<S> <C> <C> <C>
Steel (continued)
360,800 Nahar International........................................... $ 693,260 $ 328,187
236,600 Raipur Alloys................................................. 506,785 122,594
400,000 Rajinder Steels............................................... 1,520,004 370,107
1,054,100 Steel Authority of India...................................... 2,150,336 799,766
722,800 Tata Iron & Steel............................................. 5,220,968 4,095,009
------------- -------------
26,606,543 13,888,884
------------- -------------
Steel Products -- 1.17%
261,900 Choksi Tubes.................................................. 570,981 521,936
500,000 Rajinder Pipes*............................................... 720,717 555,160
310,000 SAW Pipes*.................................................... 2,383,953 1,447,402
649,100 Super Forging................................................. 991,359 480,473
148,500 Tata Metaliks*................................................ 189,581 86,669
250,000 Usha Martin Industries........................................ 639,618 291,103
------------- -------------
5,496,209 3,382,743
------------- -------------
Technology -- 5.36%
1,617,800 Digital Equipment (India)*.................................... 3,460,578 3,827,450
200,000 Infosys Technologies.......................................... 3,133,988 2,323,132
1,072,700 NIIT.......................................................... 5,418,492 5,374,952
323,300 Pentafour Software and Exports................................ 1,316,324 1,168,942
849,240 Satyam Computer............................................... 1,776,137 1,000,955
966,500 Silverline Industries......................................... 1,365,216 916,283
705,200 Square D Software............................................. 1,160,741 888,401
------------- -------------
17,631,476 15,500,115
------------- -------------
Telecom -- 0.15%
17,900 Videsh Sanchar Nigam*+........................................ 662,356 422,975
------------- -------------
Telecom Equipment -- 0.78%
1,200 Bhagyanagar Metals............................................ 2,909 999
38,200 Himachal Futuristic Communications*........................... 103,285 55,465
175,000 MSL Industries*............................................... 728,726 518,149
200,000 Punjab Wireless............................................... 2,306,295 962,278
413,400 Telephone Cables.............................................. 1,916,912 350,728
96,900 Vindhya Tele-Links............................................ 1,104,418 372,427
------------- -------------
6,162,545 2,260,046
------------- -------------
Textiles-Cotton -- 1.51%
4,400 Arvind Mills.................................................. 30,021 15,283
250,000 Arvind Mills GDR*............................................. 854,500 1,062,500
187,550 Coats Viyella India........................................... 1,163,472 619,382
200,000 Delta Industries.............................................. 960,956 411,388
138,000 HP Cotton Textile Mills+...................................... 335,284 137,509
350,000 Midland Industries............................................ 305,138 115,587
301,050 Morarjee Goculdas Spinning & Weaving.......................... 1,862,964 1,397,043
145,800 Suryavanshi Spinning Mills.................................... 373,620 168,111
122,700 Vardhaman Spinning & General Mills............................ 758,519 455,868
------------- -------------
6,644,474 4,382,671
------------- -------------
</TABLE>
13
<PAGE> 14
SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Shares Security Cost Value
- ----------- -------------------------------------------------------------- ------------- -------------
<S> <C> <C> <C>
Textiles -- Synthetic -- 5.41%
300,000 Bombay Dyeing GDR............................................. $ 3,949,483 $ 2,850,000
1,932,000 DCL Polyesters................................................ 3,838,802 1,100,071
250,800 Ester Industries*............................................. 267,470 196,356
366,300 Haryana Petrochemicals*....................................... 433,857 109,499
942,500 JCT*.......................................................... 1,827,065 594,345
3,600 Rajashree Polyfil*............................................ 1,498 1,414
1,624,700 Reliance Industries........................................... 17,810,378 9,470,671
667,300 Sanghi Polyesters*............................................ 1,689,623 432,201
100,000 Sanghi Polyesters GDR*........................................ 485,000 325,000
228,700 Shree Rajasthan Syntex*....................................... 972,237 249,047
200,000 Shriram Fibres................................................ 541,080 334,520
------------- -------------
31,816,493 15,663,124
------------- -------------
Transport -- 1.06%
1,732,300 Modiluft*..................................................... 3,208,898 1,260,079
118,700 NEPC Micon.................................................... 249,602 147,002
1,374,000 NEPC Micon GDR*............................................... 4,062,820 1,545,750
120,000 Skypak Couriers............................................... 199,783 114,448
------------- -------------
7,721,103 3,067,279
------------- -------------
Vehicles -- 9.16%
422,700 Bajaj Auto.................................................... 8,607,315 8,580,359
81,900 Hindustan Motors*............................................. 105,786 68,201
368,500 Mahindra & Mahindra........................................... 2,273,856 2,182,149
138,800 Majestic Auto................................................. 1,399,718 284,515
500 Premier Automobile............................................ 849 686
423,050 Punjab Tractors............................................... 5,482,405 4,758,033
577,460 Tata Engineering & Locomotive................................. 6,607,782 6,234,924
712,050 TVS Suzuki.................................................... 3,872,991 4,403,054
------------- -------------
28,350,702 26,511,921
------------- -------------
Vehicle Components -- 3.53%
120,000 Amtek Auto.................................................... 395,409 243,929
160,075 Antifriction Bearings Corp.................................... 642,531 331,543
231,650 Auto Corp of Goa.............................................. 1,194,182 758,427
224,025 FAG Precision Bearings*....................................... 621,197 433,700
90,400 Gleitlager (India)............................................ 86,829 33,458
451,000 Goetze India.................................................. 1,951,924 1,413,026
348,500 Kirloskar Oil Engines*........................................ 1,652,136 1,241,206
3,600 Laser Lamps (Haryana)*........................................ 5,069 1,804
151,000 Lumax Industries*............................................. 608,136 526,619
4,390 Motor Industries Co........................................... 615,662 741,144
30,000 Munjal Showa*................................................. 142,520 203,274
950,000 Patheja Forgings & Auto Parts*................................ 2,747,362 2,055,516
15,995 SKF Bearings India............................................ 1,606,946 1,172,587
187,500 Wartsila Diesel India......................................... 668,316 1,043,327
------------- -------------
12,938,219 10,199,560
------------- -------------
</TABLE>
14
<PAGE> 15
SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Shares Security Cost Value
- ----------- -------------------------------------------------------------- ------------- -------------
<S> <C> <C> <C>
Water -- 0.09%
130,000 EPC Irrigation*............................................... $ 376,972 $ 123,986
1,387 ION Exchange (India).......................................... 2,221 5,094
190,000 Pasumai Irrigation............................................ 121,663 132,527
------------- -------------
500,856 261,607
------------- -------------
TOTAL COMMON STOCKS........................................... 379,825,470 240,577,835
------------- -------------
<CAPTION>
Par
(000)
- -----------
<S> <C> <C> <C>
CONVERTIBLE BONDS -- 3.63%
Cement -- 1.18%
$ 2,550 Cement Gujarat Ambuja Cement 3.5%, 06/30/99................... 3,422,140 3,404,250
------------- -------------
Construction & Building Materials -- 0.02%
3,000 INR Bharat Earth Movers NCD 12.5%, 02/26/02+...................... 96,065 60,897
------------- -------------
Diversified Industrials -- 0.09%
4,250 INR DCM Shriram NCD 13%, 11/6/01+................................. 136,222 85,580
4,125 INR DCM Shriram NCD 13%, 11/6/02+................................. 132,216 83,064
4,125 INR DCM Shriram NCD 13%, 11/6/03+................................. 132,216 83,064
------------- -------------
400,654 251,708
------------- -------------
Packaging -- 0.00%
57 INR Flex Inds NCD 13.5%, 11/23/99+................................ 1,826 1,247
------------- -------------
Pulp & Paper -- 0.78%
$2,500 Ballarpur Industries 4%, 04/01/99............................. 2,794,543 2,268,750
------------- -------------
Steel -- 0.81%
$2,500 Jindal Strips 4.25%, 03/31/99................................. 2,849,639 2,343,750
------------- -------------
Technology -- 0.05%
6,992 INR Satyam Computer FCD 12%, 08/24/96+............................ 223,801 132,715
------------- -------------
Textiles -- Synthetic -- 0.70%
$2,000 Reliance Industries 3.5%, 11/03/99............................ 2,724,640 2,026,000
------------- -------------
Water -- 0.00%
30 INR ION Exchange FCD 0%, 06/15/96+................................ 972 1,017
------------- -------------
TOTAL CONVERTIBLE BONDS....................................... 12,514,280 10,490,334
------------- -------------
TOTAL INDIA................................................... 392,339,750 251,068,169
------------- -------------
</TABLE>
15
<PAGE> 16
SCHEDULE OF INVESTMENTS THE INDIA FUND, INC.
DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Par
(000)
- -----------
<S> <C> <C> <C>
SHORT TERM OBLIGATIONS -- 13.21%
$ 8,000 Bank Of Montreal Fixed Deposit 5.75% 01/18/96................. $ 8,000,000 $ 8,000,000
15,000 RaboBank Fixed Deposit 5.6875% 01/08/96....................... 15,000,000 15,000,000
15,220 Bank Of New York Call Deposit 5.9%............................ 15,220,830 15,220,830
------------- -------------
TOTAL SHORT TERM OBLIGATIONS.................................. 38,220,830 38,220,830
------------- -------------
TOTAL INVESTMENTS** -- 100.00%................................ $ 430,560,580 $ 289,288,999
============= =============
</TABLE>
- ---------------
<TABLE>
<S> <C> <C>
+ At fair value as determined under the direction of the
Board of Directors
* Non-income producing security
** 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 $ 2,783,790
Excess of tax cost over value (144,055,371)
-------------
$(141,271,581)
==============
GDR -- Global Depository Receipt
INR -- Indian Rupee
GDS -- Global Depository Security
FCD -- Fully Convertible Debenture
NCD -- Non Convertible Debenture
</TABLE>
See accompanying notes to financial statements.
16
<PAGE> 17
STATEMENT OF ASSETS AND LIABILITIES THE INDIA FUND, INC.
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost $430,560,580)................................... $ 289,288,999
Cash (including Indian Rupees of $2,899,506 with a cost of $2,919,287)...... 17,560,027
Receivables:
Dividends and reclaims................................................. 899,975
Interest............................................................... 433,946
Securities sold........................................................ 2,340,499
Unamortized organization costs.............................................. 203,293
Prepaid expenses............................................................ 126,264
--------------
Total assets...................................................... 310,853,003
--------------
LIABILITIES:
Payable for securities purchased............................................ 6,043,430
Due to investment manager................................................... 281,712
Due to administrator........................................................ 55,720
Accrued expenses............................................................ 532,116
--------------
Total liabilities................................................. 6,912,978
--------------
NET ASSETS (APPLICABLE TO 34,007,133 SHARES OF COMMON STOCK ISSUED AND
OUTSTANDING, 100,000,000 SHARES AUTHORIZED, $.001 PER SHARE).............. $ 303,940,025
==============
NET ASSET VALUE PER SHARE ($303,940,025/34,007,133)......................... $8.94
Net assets consist of: =====
Capital stock............................................................... $ 34,007
Paid-in-capital............................................................. 473,163,884
Accumulated net investment loss............................................. (42,572)
Accumulated net realized loss on investments and foreign
currency transactions..................................................... (27,315,476)
Net unrealized depreciation in value of investments and translation of
assets and liabilities denominated in foreign currency.................... (141,899,818)
--------------
$ 303,940,025
==============
</TABLE>
See accompanying notes to financial statements.
17
<PAGE> 18
STATEMENT OF OPERATIONS THE INDIA FUND, INC.
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of Indian taxes withheld of $767,844)..................... $ 4,633,049
Interest (net of Indian taxes withheld of $16,477)....................... 1,678,210
-------------
Total investment income.................................................. 6,311,259
-------------
EXPENSES:
Management fees............................................... 4,194,905
Custodian fees................................................ 2,017,155
Administration fees........................................... 781,111
Directors' fees............................................... 39,000
Transfer agent fees........................................... 8,918
Insurance..................................................... 214,802
Printing...................................................... 136,603
Audit fees.................................................... 127,002
Legal fees.................................................... 98,603
Amortization of organizational costs.......................... 65,220
NYSE fees..................................................... 32,364
Miscellaneous expenses........................................ 33,808
---------
Total expenses................................................. 7,749,491
-------------
Net investment loss...................................................... (1,438,232)
-------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS, FOREIGN
CURRENCY HOLDINGS AND TRANSLATION OF OTHER ASSETS AND
LIABILITIES DENOMINATED IN FOREIGN CURRENCY:
Net realized loss on:
Security transactions.................................................... (24,900,371)
Foreign currency related transactions.................................... (588,992)
-------------
(25,489,363)
-------------
Net change in unrealized depreciation in value of investments and
translation of assets and liabilities denominated in foreign
currency............................................................... (142,373,403)
-------------
Net realized and unrealized loss on investments, foreign currency
holdings, and translation of other assets and liabilities denominated
in foreign currency.................................................... (167,862,766)
-------------
Net decrease in net assets from operations............................... $(169,300,998)
==============
</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
FOR THE YEAR OF OPERATIONS)
ENDED DECEMBER THROUGH
31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss....................................... $ (1,438,232) $ (242,541)
Net realized (loss) gain on investments and foreign
currency related transactions........................... (25,489,363) 2,073,837
Net change in unrealized (depreciation) appreciation in
value of investments and translation of assets and
liabilities denominated in foreign currency............. (142,373,403) 473,585
----------------- -----------------
Net (decrease) increase in net assets resulting from
operations......................................... (169,300,998) 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......... (169,300,998) 473,141,018
----------------- -----------------
NET ASSETS:
Beginning of period....................................... 473,241,023 100,005
----------------- -----------------
End of period............................................. $ 303,940,025 $ 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, 1994
(COMMENCEMENT
FOR THE YEAR OF OPERATIONS)
ENDED THROUGH
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................. $ 13.92 $ 13.98 1
-------- --------
Net investment loss................................... (0.05) (0.01)
Net realized and unrealized (loss) gain on
investments, foreign currency holdings, and
translation of other assets and liabilities
denominated in foreign currencies.................. (4.93) 0.08
-------- --------
Net (decrease) increase from investment operations.... (4.98) 0.07
-------- --------
Less distributions:
Dividends from net realized capital gains.......... -- (0.13)
-------- --------
Total distributions................................... -- (0.13)
-------- --------
Net asset value, end of period........................ $ 8.94 $ 13.92
======== ========
Per share market value, end of period................... $ 8.875 $ 10.75
======== ========
TOTAL INVESTMENT RETURN BASED ON MARKET VALUE2.......... (17.44)% (23.32)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's).................. $303,940 $473,241
Ratios of expenses to average net assets.............. 2.03% 1.98%3
Ratios of net investment loss to average net assets... 0.38% 0.06%3
Portfolio turnover.................................... 25.28% 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.
DECEMBER 31, 1995
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 December 31, 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 $3,668,509
(1.21% 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 continue 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.
At December 31, 1995 the Fund had a capital loss carryover of approximately
$24,622,097 which will expire in the year ended 2003. To the extent that these
capital loss carryovers are used to offset future net realized gains on
securities transactions, the gains so offset will not be distributed to the
shareholders, to the extent provided by the regulations.
The Fund's capital losses incurred after October 31, 1995 but before
December 31, 1995 are deemed to arise on the first business day of the following
year. The Fund incurred and elected to defer such losses of approximately
$2,693,379.
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS THE INDIA FUND, INC.
DECEMBER 31, 1995 (CONTINUED)
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.
The Fund generally does not isolate the effect of fluctuations in foreign
exchange rates from the effect of fluctuations in the market prices of
securities. However, the Fund does isolate the effect of fluctuations in foreign
currency rates when determining the gain or loss upon the sale of foreign
currency denominated debt obligations pursuant to U.S. Federal income tax
regulations; such amounts are categorized as foreign currency gains or losses
for both financial reporting and federal income tax purposes. The Fund reports
certain foreign exchange 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 after
the utilization of available capital loss carryovers. 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 capital 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.
22
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS THE INDIA FUND, INC.
DECEMBER 31, 1995 (CONTINUED)
During the period ended December 31, 1995, the Fund reclassified $831,533
and $1,395,660 from accumulated net realized loss on investments and foreign
currency transactions and accumulated net investment loss, respectively, to
additional paid-in capital as a result of permanent book and tax differences
relating to net investment loss and realized foreign currency losses during the
year ended December 31, 1995. Net investment income and net assets were not
affected by the reclassifications.
OTHER: Costs of $268,513 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.
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"). BZW 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 Agreement, 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 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 year ended December 31, 1995, fees paid to the
Investment Manager amounted to $4,194,905.
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 year ended December 31, 1995, these fees
amounted to $762,710. 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
year ended December 31, 1995, fees and expenses of the Mauritius Administrator
amounted to $18,401.
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
or 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
23
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS THE INDIA FUND, INC.
DECEMBER 31, 1995 (CONTINUED)
Fund reimburses all directors for travel and out-of-pocket expenses incurred in
connection with Board of Directors meetings.
NOTE C: PORTFOLIO ACTIVITY
Purchases and sales of securities, other than short-term obligations,
aggregated $82,030,520 and $82,178,061, respectively, for the year ended
December 31, 1995.
At December 31, 1995 the Fund owned securities valued at approximately
$18,005,030 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 expects to obtain benefits under the double taxation treaty
between Mauritius and India. To obtain benefits under the double taxation treaty
the Fund must meet certain tests and conditions, including the establishment of
Mauritius tax residence and related requirements. The Fund has obtained a tax
residence certification from the Mauritian authorities and believes such
certification is determinative of its resident status for treaty purposes. A
fund which is a tax resident in Mauritius under the treaty but has no branch or
permanent establishment in India, will not be subject to capital gains tax in
India on the sale of securities but is subject to a 15% withholding tax on
dividends which has been provided for by the Fund. The Fund is subject to and
accrues Indian withholding tax on interest earned on Indian securities at the
rate of 20%.
In Mauritius, the Fund is liable for income tax under the current Mauritian
legislation at the rate of 0%. However, the Fund may, in any year, elect to pay
tax on its net investment income at any rate between 0% and 35%. For the year
ended December 31, 1995, no provision for Mauritius taxes is considered
necessary as a result of net investment losses incurred by the Fund.
The foregoing is based on current interpretation and practice and is
subject to any future changes in Indian or Mauritius tax laws or in the tax
treaty between India and Mauritius.
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 during the period ended December 31, 1994.
24
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS THE INDIA FUND, INC.
DECEMBER 31, 1995 (CONTINUED)
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) $(1.74)
June 30, 1995................... 945 0.03 (1,223) (0.04) (42,561) (1.25) (43,784) (1.29)
September 30, 1995.............. 3,646 0.11 2,022 0.06 (25,645) (0.75) (23,623) (0.70)
December 31, 1995............... 1,474 0.04 (220) (0.01) (42,236) (1.24) (42,456) (1.25)
------ ----- ------- ------ --------- ------ --------- ------
$6,311 $0.19 $(1,438) $(0.05) $(167,863) $(4.93) $(169,301) $(4.98)
====== ===== ======= ====== ========= ====== ========= ======
</TABLE>
- ---------------
* From commencement of operations on February 23, 1994
NOTE G: OTHER
At December 31, 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.
25
<PAGE> 26
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
The India Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The India Fund, Inc. (the "Fund")
at December 31, 1995, the results of its operations for the year then ended, and
the changes in its net assets and the financial highlights for the year then
ended and for the period February 23, 1994 (commencement of operations) through
December 31, 1994, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1995 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 21, 1996
26
<PAGE> 27
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.
27
<PAGE> 28
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.
28
<PAGE> 29
THE INDIA FUND, INC.
INVESTMENT MANAGER:
ADVANTAGE ADVISERS, INC.
INVESTMENT ADVISER: [L O G O]
BZW INVESTMENT MANAGEMENT INC.
COUNTRY ADVISER:
INFRASTRUCTURE LEASING & THE INDIA FUND, INC.
FINANCIAL SERVICES LIMITED
Annual Report
ADMINISTRATOR: December 31, 1995
OPPENHEIMER & CO., INC.
SUB-ADMINISTRATOR:
PFPC INC.
TRANSFER AGENT:
THE BANK OF NEW YORK
CUSTODIAN:
THE BANK OF NEW YORK
ADVANTAGE ADVISERS, INC.
