Advantage Advisers, Inc.
The India Fund, Inc.
Semi-Annual Report
June 30, 2000
The India Fund, Inc.
<PAGE>
The India Fund, Inc.
August 28, 2000
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 the fiscal year beginning
January 1, 2000. The Indian market was volatile during the first half of the
year, as a promising start could not be sustained in the wake of disappointment
over fiscal reform, a period of currency weakness, and the sharp correction in
the Nasdaq market in the U.S.
Reflecting these trends, the Fund's net asset value ("NAV") declined 9.35%
during the six months ended June 30, 2000. The Fund, however, outperformed the
benchmark indices - the Dollex Index of 200 leading Indian stocks dropped 14.18%
and the IFC Index fell 11.68% over the same period. The Fund's common stock
closed on the New York Stock Exchange at $14.19 per share on June 30, 2000,
which represented a 32.6% discount to the $21.04 per share NAV as of that date.
The Fund's Investment Manager believes that the outlook for the second half of
the year is brighter. The Investment Manager anticipates an improving market for
Indian equities in the second half of 2000, led by a rebound in the Information
Technology (IT) related sectors. And, with Indian gross domestic product (GDP)
forecast to grow 7% in the current Indian fiscal year ending March 31, 2001, the
Investment Manager believes the economic backdrop appears conducive to a
healthier stock market.
On behalf of the Board of Directors, thank you for your participation in the
Fund. If you have any questions for us, do not hesitate to call our toll-free
number at (800) 421-4777.
Sincerely,
/s/ Bryan McKigney
Bryan McKigney
Director, President and Secretary
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THE INDIA FUND, INC.
Report of the Investment Manager
For the Six Months Ended June 30, 2000
--------------------------------------------------------------------------------
OVERVIEW OF INDIA'S STOCK MARKET
India's stock market was volatile during the first half of 2000, as a promising
start could not be sustained in the wake of disappointment over fiscal reform, a
period of currency weakness, and the sharp correction in the Nasdaq market in
the U.S. The market peaked in mid-February and fell almost without stop until
mid-May (except for a brief bounce in the first part of April). The Indian
market, however, rebounded from its mid-May lows right through to the end of the
first half. We believe that in view of a positive outlook for the Indian economy
the market outlook for the second half of the year appears more positive.
--------------------------------------------------------------------------------
POLITICS
The political environment in India was relatively peaceful during the first half
of 2000, a welcome change following last year's tumultuous events. Political
analysts point out that the threat to Prime Minister Vajpayee now appears to be
more from within the ruling Bhartiya Janata Party (BJP) itself, rather than from
any outside group, as party members continue to clash over Government policies
and the pace of India's reforms. With that said, since the beginning of the
year, Prime Minister Vajpayee has shown increasing confidence and appears to be
in full control of the Government. That is good news for India's reform agenda.
--------------------------------------------------------------------------------
ECONOMY
The Indian economy continued on a solid growth path during the first half of
2000, with industrial production for the fiscal year ended March 31, 2000
increasing by 8% year-over-year. Together with other positive factors, this
caused the Government's GDP estimate for the fiscal year ended March 31, 2000 to
be revised upward from 5.9% to 6.4%.
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Fund Updates
The Fund's toll-free phone number, (800) 421-4777, provides callers with a
recorded monthly update of the markets in which the Fund invests. It also offers
details about the Fund, its portfolio and performance. The Fund's net asset
value (NAV) is calculated weekly and published in The Wall Street Journal every
Monday under the heading "Closed End Funds." The Fund's NAV is also published in
Barron's on Saturdays and in The New York Times on Sundays. The Fund is listed
on the New York Stock Exchange under the ticker symbol IFN.
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THE INDIA FUND, INC.
The pace of industrial production growth appeared to ease off during the first
two months of the new fiscal year (April-May 2000), registering, however, a
still substantial growth of 5.6% year-over-year. However, the reported rate of
growth has been impacted by two additional, nonrecurring factors. First,
beginning in the new fiscal year, the Government changed the way the index is
calculated, artificially depressing it. Second, in some parts of India, industry
has been impacted by an ongoing drought. With normal monsoon levels forecast for
the rest of the year, we believe that both industrial production and consumer
demand will pick up in the second half of the year.
In April, India's Central Bank reduced the cash reserve requirement by 100 basis
points to 9%, which paved the way for an overall decline in interest rates.
However, one month later, the rupee (Rs) came under pressure in response to a
slowdown in capital flows and an increase in the value of imports, causing
interest rates to reverse course and firm up again. Going forward, we expect
interest rates to stabilize at the current 8-9% levels (90-day Indian Government
securities) for the rest of the year. The inflation outlook remains tame, with
recent annualized inflation rates registering between 5-6%. The Indian Central
Bank has forecast an inflation rate of 4.5% for the fiscal year ending March
2001.
India's future economic success depends critically on how well it tackles such
issues as reducing Government expenditures, improving tax collections, and
privatizing Government-owned assets. Its fiscal deficit-to-GDP ratio continues
to be what we consider to be very high. For the fiscal year ended March 2000,
that ratio almost certainly overshot the Government's 4% target. For the fiscal
year ending March 2001, the Government is already forecasting a fiscal
deficit-to-GDP ratio of 5.1%, although given the Government's recent track
record, the actual result could be higher.
We believe the Government is moving in the right direction, with recent measures
indicating a renewed level of commitment to reforms. Nevertheless, some
investors continue to believe the pace of reform remains too slow. For example,
in the first quarter's budget announcement, the Indian market was disappointed
over the broad range of taxes that were raised, including a doubling of the
dividend tax. However, there were a number of positive developments as well,
including an increase in the limits of investments allowable by foreign
institutional investors, tax concessions for venture capital funds, and attempts
to simplify and rationalize the tax laws.
More recently, the Government has liberalized further in an effort to increase
foreign direct investment in the country. In particular, regulatory reform is
taking place in the telecommunications sector, where a key provision of the
Communications Bill is the establishment of an apex (supreme) regulator, the
Communications Commission of India. The Government has also stepped up its
privatization efforts, with the recent appointment of global advisers to han-
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THE INDIA FUND, INC.
dle privatizations of sixteen public sector enterprises. Although historically
it hasn't paid to be over-optimistic about the Government's deregulation
efforts, recently even skeptics have admitted surprise regarding the quickening
of activity.
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PERFORMANCE
The net asset value ("NAV") of The India Fund, Inc. (the "Fund") declined 9.35%
during the first six months of 2000. The Fund, however, outperformed the market
indices, as the Dollex Index of 200 leading Indian stocks dropped 14.18% and the
IFC Index fell 11.68% over the same period.
--------------------------------------------------------------------------------
PORTFOLIO STRATEGY
During the first half of 2000, the Fund essentially maintained its strategy of
overweighting the Information Technology (IT)-related sectors -- Computer
Software & Programming and Computer Training -- although there was some
selective profit-taking. Overall, we remain optimistic on the long-term outlook
for India's globally competitive software industry.
During the same period, the Fund maintained its underweight position in
cyclicals and heavy industry due to overweighting of IT-related sectors, while
adding to positions in media, pharmaceuticals, and consumer non-durables. One
sector about which the Fund's investment manager has grown increasingly more
optimistic is telecommunications equipment manufacturers. This sector became
attractive in the second half of 1999, following the Government's renewed
deregulation efforts, which are expected to lay the groundwork for increased
capital expenditures within the sector.
--------------------------------------------------------------------------------
KEY SECTOR HOLDINGS
<TABLE>
<CAPTION>
% of Total Holdings
Sector June 30, 2000 Top Holdings in Sector
------------------------------- ------------------- -----------------------------------
<S> <C> <C>
Computer Software & Programming 33.2% Infosys Technologies,
Satyam Computers Services
Consumer Non-Durables 10.4% Hindustan Lever, ITC
Pharmaceuticals 9.3% Dr Reddy's Laboratories
Computer Training 8.6% NIIT, SSI
Telecommunications Equipment 7.7% Himichal Futuristic Communications
Textiles (Synthetic) 5.4% Reliance Industries
</TABLE>
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THE INDIA FUND, INC.
COMPUTER SOFTWARE & PROGRAMMING; COMPUTER TRAINING
Computer Software & Programming continued to be the Fund's highest-weighted
sectors in the first half of 2000, while Computer Training also stayed near the
top of the list. Despite the correction in the Nasdaq market in the U.S. during
the first half, three of the Fund's top four technology holdings sharply
outperformed the major market indices. NIIT was the exception; despite its
earnings gain, its stock price did not rise. We believe that the fundamental
outlook for the entire sector remains positive as key companies in the sector
added both new customers and new employees while expanding aggressively.
However, as technology stock valuations remain high, there is continuing concern
about the potential for a downturn in these sectors. Although we expect to
maintain an overweight position in these technology-related sectors, we expect
to coninue to trim large positions from time to time when holdings become, in
our opinion, overvalued or the Fund becomes too concentrated in
technology-related sectors.
Infosys Technologies continues to be the top holding in the Computer Software &
Programming sector, as well as in the entire Fund. Infosys announced stellar
March-quarter earnings (the company has a March fiscal year-end), with reported
net profits doubling to Rs 1.26 billion from Rs 606 million in the March quarter
of 1999. Revenue rose 108% to Rs 3.5 billion from Rs 1.68 billion in the
year-ago quarter, bolstered by new customers.
Satyam Computers had similar excellent results, with its reported first-quarter
profits surging 95% to 504 million rupees from 258 million rupees in the first
quarter of 1999.
NIIT, India's largest computer training company, also recently posted very
respectable results, with its third fiscal quarter profit (the company has a
September fiscal year-end) rising 28% to Rs 780 million from Rs 609 million in
the April-to-June 1999 period. Finally, a more recent addition to the Fund, SSI
Ltd., is expected to post solid earnings for its full fiscal year, which ended
June 30, 2000. In the January-to-March 2000 quarter, net profit jumped 150% to
Rs 105 million from Rs 42 million in January-to-March 1999.
CONSUMER NON-DURABLES
The Investment Manager continues to be positive on the Consumer Non-Durables
sector, largely through Fund holdings in Hindustan Lever and ITC Ltd.
Hindustan Lever, 51% owned by Unilever, continues to ride on strong demand from
India's almost 1 billion people for consumer products such as toothpaste,
shampoos, and hair oils. In its most recent earnings announcement, first quarter
2000 net profit rose 23% to Rs 2.62 billion from Rs 2.13 billion in the three
months ended March 1999. Margin expansion helped propel the result, driven by
lower interest and production costs.
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THE INDIA FUND, INC.
ITC Ltd., which is 38% owned by BAT Industries Plc, recently announced that its
net profit in its fiscal year ended March 31, 2000 rose 27% to Rs 7.92 billion,
up from Rs 6.23 billion in the previous year. That growth was accomplished
through a more modest sales growth for the year of 8.5% to Rs 38.2 billion from
Rs 35.2 billion, as more consumers traded up to the company's premium brands
with higher margins.
PHARMACEUTICALS
The Fund maintained a relatively overweight position in Pharmaceuticals during
the first half of 2000, as we continue to be very bullish on the industry's
prospects. India's pharmaceuticals industry, in our opinion, is expected to
exhibit accelerated growth as traditionally strong chemical engineering skills
are increasingly being put to use in research and development.
Dr. Reddy's Laboratories remains a key holding. June-quarter revenues rose 10%
to Rs 1.38 billion from Rs 1.25 billion in the year-ago quarter (the company has
a March fiscal year-end). The company's international finished-dosages business
surged by 81% in the most recent quarter, to Rs 233 million from Rs 128 million
a year earlier.
TELECOMMUNICATIONS EQUIPMENT
We continue to be optimistic about the Telecommunications Equipment industry.
This industry should be a key beneficiary of the new National Telecom Policy,
which is expected to pave the way for restructuring/reform measures of the
Department of Telecom.
Himichal Futuristic announced March-quarter earnings that tripled to Rs 307
million in the three months ended March 2000 from only Rs 102.6 million in the
same period a year earlier. More recently, the company stated it had orders
worth US$600 million to be filled over the next two years. The phone equipment
manufacturer is expanding capacity aggressively, with its capacity to make
fiber-optic cable slated to rise three-fold in the next 1-2 years.
TEXTILES (SYNTHETIC)
The Fund's position in the Synthetic Textiles sector consists largely of one
stock, Reliance Industries. The stock was one of the best-performing stocks in
India during the first six months of 2000, rising 45% year-over-year. For the
fiscal year ended March 2000, earnings rose 41% to Rs 24 billion from Rs 17
billion in the previous fiscal year. Reliance has shown its core competence to
be that of executing large, world-class infrastructure projects quickly and
efficiently, which is no easy task in a developing country such as India.
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THE INDIA FUND, INC.
--------------------------------------------------------------------------------
OUTLOOK
We anticipate an improving market for Indian equities in the second half of
2000, hopefully led by a rebound in the IT-related sectors. IT-related companies
recently kicked off the second quarter reporting season with stunning
year-over-year earnings growth, surpassing even the market's high expectations.
Overall, the Institutional Broker Estimate System consensus forecast for
earnings growth over the next 12 months is 31%, which puts the market on only a
15x price-to-forward earnings basis.
With Indian GDP forecast to grow 7% in the current fiscal year on the back of a
benign inflation/interest rate outlook, the economic backdrop appears conducive
to a healthier stock market. Moreover, we believe that several of the issues
that undermined sentiment in the first half of 2000, in hindsight, appear to be
one-time events that are not likely to be repeated. Following months of drought
in several areas of India, the monsoons appear to have normalized, meaning we
anticipate a great deal of much-needed rain. Finally, the shift in country
weightings in the MSCI Asia Free ex-Japan Index, which brought India's weighting
down from 14.2% to 11.2% (as of May 31, 2000), is also not likely to be
repeated.
Despite the generally positive cyclical outlook, the Indian market has continued
to struggle into the second half of the year. We believe that the market
requires a broader-based participation as the current shortage of investors has
led to extreme volatility. We are encouraged by signs of increased Indian
domestic mutual fund participation, which will hopefully continue. Strong
corporate earnings and progress on the reform front should help to fuel this
trend, especially the potential speed-up in the privatization of public sector
units. Although investor sentiment may remain dampened over the short term, we
remain positive on the market's longer-term outlook.
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THE INDIA FUND, INC.
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Share Repurchase Program
The Board of Directors of the Fund previously authorized the Fund to repurchase
from time to time in the open market up to 2,000,000 shares of the Fund's common
stock. The Fund's Board directed management to repurchase the Fund's shares at
such times and in such amounts as management believes will enhance shareholder
value, subject to review by the Fund's Board of Directors. During the six months
ended June 30, 2000, the Fund repurchased a total of 979,500 shares of its
common stock. Supplementally, in May 2000, the Board of Directors authorized the
Fund to repurchase up to an additional 1,000,000 shares of the Fund's common
stock, bringing to 3,000,000 the aggregate number of shares authorized for
repurchase. (For details regarding shares repurchased by the Fund, see note E to
the financial statements.)
In accordance with the Board's directions, the Fund may from time to time
repurchase additional shares of its common stock in the open market.
Amendment of Bylaws
During May 2000, the Board of Directors of the Fund reviewed and approved
certain amendments to the Fund's bylaws that have been receommended by Maryland
counsel to the Fund. For example, the provisions relating to timely notice for
proposals to be brought before an annual meeting of stockholders (other than a
proposal under Rule 14a-8 of the Securities Exchange Act of 1934 to be included
in the Fund's proxy statement) have been amended. As amended, a stockholder's
notice generally must be delivered to the Fund not less than 90 days nor more
than 120 days prior to the first anniversary of the preceding year's annual
meeting. In addition, upon recommendation of the Fund's Maryland counsel, other
changes to certain bylaw provisions were made to conform to the bylaw provisions
of more recently incorporated Maryland corporations.
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THE INDIA FUND, INC.
Schedule of Investments
INDIA (100% of holdings)
COMMON STOCKS (99.95% of holdings)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cement 1.38%
508,127 Associated Cement Companies Ltd................. $ 1,053,288 $ 1,342,297
985,266 Gujarat Ambuja Cements Ltd...................... 4,338,440 4,302,953
90,000 Gujarat Ambuja Cements Ltd GDR.................. 396,000 380,250
1,462,700 India Cements Ltd............................... 2,340,844 1,397,182
15,762 Madras Cements Ltd ............................. 1,748,155 1,418,792
47,840 Panyam Cements and Mineral Industries Ltd+...... 481,082 126,431
443,630 Shree Cement Ltd+............................... 947,396 253,361
-------------- -------------
11,305,205 9,221,266
-------------- -------------
Chemicals 0.17%
48 Atul Products Ltd+.............................. 93 13
22,919 Bayer (India) Ltd............................... 838,579 348,533
846,600 BOC Ltd+........................................ 1,072,264 439,891
870 Hind Lever Chemicals Ltd........................ 9,431 5,284
200,300 United Phosphorous Ltd.......................... 757,471 330,843
-------------- -------------
2,677,838 1,124,564
-------------- -------------
Computer Hardware 0.20%
85,400 Digital Equipment (India) Ltd 500,912 1,372,520
-------------- -------------
500,912 1,372,520
-------------- -------------
Computer Software & Programming 33.17%
258,900 DSQ Software Ltd 677,330 5,510,540
671,804 Infosys Technologies Ltd........................ 1,366,796 125,165,436
80,200 Leading Edge Systems Ltd........................ 760,364 1,585,589
400 Mastek Ltd...................................... 1,006 14,462
141,500 Rolta India Ltd................................. 422,420 1,068,460
1,318,865 Satyam Computers Services Ltd................... 1,587,041 88,090,730
500 Silverline Technologies Ltd+.................... 712 4,869
-------------- -------------
4,815,669 221,440,086
-------------- -------------
</TABLE>
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THE INDIA FUND, INC.
Schedule of Investments (continued) June 30, 2000
(Unaudited)
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computer Training 8.57%
820,500 NIIT Ltd........................................ $ 3,881,309 $ 40,617,966
260,400 SSI Ltd......................................... 1,905,041 16,588,325
-------------- -------------
5,786,350 57,206,291
-------------- -------------
Consumer Miscellaneous 2.45%
849,088 Bata India Ltd.................................. 3,914,352 1,276,009
196,800 Timex Watches Ltd+.............................. 140,800 43,856
1,496,700 Zee Telefilms Ltd............................... 7,854,455 15,018,957
-------------- -------------
11,909,607 16,338,822
-------------- -------------
Consumer Non-Durable 10.38%
143,431 Godfrey Philips India Ltd....................... 2,699,010 1,284,936
728,111 Hindustan Lever Ltd............................. 23,627,709 46,252,579
1,224,684 ITC Ltd......................................... 20,677,901 21,796,084
-------------- -------------
47,004,620 69,333,599
-------------- -------------
Diversified Industries 1.16%
825,502 Grasim Industries Ltd........................... 6,940,522 5,291,347
175 HMG Industries Ltd+............................. 359 5
1,744 Indian Rayon and Industries Ltd................. 6,451 2,330
130,000 Sterlite Industries (India) Ltd................. 2,043,680 2,426,036
-------------- -------------
8,991,012 7,719,718
-------------- -------------
Electricity 0.44%
529,571 BSES Ltd........................................ 3,418,725 2,911,751
54 CESC Ltd+....................................... 342 30
150 Tata Power Company Ltd.......................... 797 276
-------------- -------------
3,419,864 2,912,057
-------------- -------------
Electronics & Electrical Equipment 1.53%
478,483 ABB Alstom Power India Ltd+..................... 1,169,493 385,787
352,983 Asea Brown Boveri Ltd........................... 4,793,167 1,628,544
2,426,965 Bharat Heavy Electricals Ltd.................... 12,593,915 7,253,717
1,096,550 Crompton Greaves Ltd+........................... 5,784,838 585,727
703,943 KEC International Ltd........................... 1,681,056 363,402
49 Siemens India Ltd+.............................. 1,083 334
-------------- -------------
26,023,552 10,217,511
-------------- -------------
</TABLE>
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THE INDIA FUND, INC.
Schedule of Investments (continued) June 30, 2000
(Unaudited)
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Engineering 1.91%
2 Lakshmi Machine Works Ltd....................... $ 393 $ 54
2,026,631 Larsen & Toubro Ltd............................. 13,289,272 11,197,533
140,800 Larsen & Toubro Ltd GDR......................... 1,307,501 1,566,400
-------------- -------------
14,597,166 12,763,987
-------------- -------------
Extractive Industries 2.01%
493,155 Hindalco Industries Ltd......................... 9,191,864 8,721,609
7,019,900 Hindustan Zinc Ltd.............................. 2,880,632 1,414,986
200 Indian Aluminium Company Ltd.................... 1,144 564
2,773,050 National Aluminium Company Ltd.................. 3,515,181 3,288,533
600 Sesa Goa Ltd.................................... 4,568 730
-------------- -------------
15,593,389 13,426,422
-------------- -------------
Fertilizers 0.11%
135,400 Aventis Cropscience India Ltd................... 2,074,205 767,216
7,700 Chambal Fertilizers and Chemicals Ltd........... 5,977 1,949
1,750 Nagarjuna Fertilizers and Chemicals Ltd......... 1,911 439
50 Southern Petrochemicals Industries Corporation Ltd 43 17
-------------- -------------
2,082,136 769,621
-------------- -------------
Finance 0.00%
100 Bank of Baroda.................................. 190 95
50 ICICI Ltd++..................................... 105 141
2,300 Oriental Bank of Commerce....................... 2,099 1,702
-------------- -------------
2,394 1,938
-------------- -------------
Food 0.90%
62,500 Britannia Industries Ltd........................ 840,045 887,108
174,826 Cadbury India Ltd .............................. 2,202,969 2,248,266
123,590 International Bestfoods Ltd+.................... 966,508 584,042
200,388 Nestle India Ltd................................ 2,165,699 1,676,258
250,000 Rahul Dairy and Allied Product+*................ 79,643 6,999
50 Tata Tea Ltd.................................... 539 372
553,300 United Breweries Ltd............................ 3,044,238 596,672
-------------- -------------
9,299,641 5,999,717
-------------- -------------
</TABLE>
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THE INDIA FUND, INC.
Schedule of Investments (continued) June 30, 2000
(Unaudited)
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Hotels & Leisure 0.00%
121 Indian Hotels Company Ltd....................... $ 1,976 $ 584
-------------- -------------
1,976 584
-------------- -------------
Household Appliances 0.00%
100 IFB Industries Ltd+............................. 97 7
500 Phil Corporation Ltd............................ 1,366 177
200 Samtel Color Ltd................................ 395 199
450 Videocon Appliances Ltd......................... 2,629 143
519 Videocon International Ltd...................... 951 548
250 Voltas Ltd...................................... 507 210
-------------- -------------
5,945 1,284
-------------- -------------
Media 1.08%
194,100 Pentamedia Graphics Ltd......................... 1,975,841 2,560,251
550,000 Pritish Nandy Communications Ltd+*.............. 2,152,749 1,884,658
68,150 SRI Adhikari Brothers Television Network Ltd.... 1,393,650 878,624
124,300 Television Eighteen India Ltd+.................. 3,301,937 1,691,621
250,000 Vans Information and Investor Services Ltd+..... 573,394 196,249
-------------- -------------
9,397,571 7,211,403
-------------- -------------
Packaging 0.01%
282,630 Flex Industries Ltd+............................ 347,596 80,706
500 Universal Prime Aluminium+*..................... 789 23
-------------- -------------
348,385 80,729
-------------- -------------
Petroleum Related 1.15%
1,719,326 Chennai Petroleum Corporation Ltd............... 3,202,971 1,357,363
2,312,850 Hindustan Petroleum Corporation Ltd............. 17,045,112 6,358,395
820 Indian Petrochemicals Corporation Ltd........... 1,741 1,129
-------------- -------------
20,249,824 7,716,887
-------------- -------------
Pharmaceuticals 9.30%
310,000 Cadila Healthcare Ltd........................... 1,777,523 1,128,914
409,850 Cipla Ltd....................................... 3,009,145 7,930,345
184,000 Dabur India Ltd................................. 1,409,963 2,690,150
586,822 Dr. Reddy's Laboratories Ltd.................... 4,833,761 17,162,408
475,070 E. Merck (India) Ltd............................ 3,047,363 3,400,501
4,550 Glaxo (India) Ltd............................... 72,501 43,844
</TABLE>
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THE INDIA FUND, INC.
Schedule of Investments (continued) June 30, 2000
(Unaudited)
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
231,101 Hoechst Marion Roussel Ltd...................... $ 2,295,575 $ 2,478,966
1,600 IPCA Laboratories Ltd........................... 4,950 4,175
165,000 Morepen Laboratories Ltd........................ 2,460,709 2,198,583
56,500 Novartis India Ltd.............................. 1,038,422 1,029,401
200 Orchid Chemicals and Pharmaceuticals Ltd........ 677 655
50 Parke-Davis (India) Ltd......................... 506 298
1,129,397 Ranbaxy Laboratories Ltd........................ 12,206,633 14,584,777
212,800 Rhone-Poulenc (India) Ltd....................... 2,958,132 3,603,064
423,300 Sun Pharmaceutical Industries Ltd............... 967,042 5,088,132
146,023 Torrent Pharmaceuticals Ltd..................... 1,359,468 719,486
-------------- -------------
37,442,370 62,063,699
-------------- -------------
Steel 1.28%
6,010 Essar Steel Ltd+................................ 23,144 956
3,223,326 Tata Iron and Steel Company Ltd................. 13,771,711 8,532,970
-------------- -------------
13,794,855 8,533,926
-------------- -------------
Steel Products 0.27%
487,650 Bharat Forge Ltd................................ 2,078,001 1,783,499
-------------- -------------
2,078,001 1,783,499
-------------- -------------
Telecommunication 4.23%
3,189,500 Mahanagar Telephone Nigam Ltd................... 17,777,191 15,326,030
272,880 Videsh Sanchar Nigam Ltd........................ 5,757,872 7,393,734
348,800 Videsh Sanchar Nigam Ltd GDR.................... 6,219,228 5,493,600
-------------- -------------
29,754,291 28,213,364
-------------- -------------
Telecommunication Equipment 7.67%
300 Bhagyanagar Metals Ltd.......................... 724 396
493,758 Global Tele-Systems Ltd......................... 19,650,250 14,802,788
876,653 Himachal Futuristic Communications Ltd.......... 7,850,090 27,878,154
1,416,600 Shyam Telecom Ltd+.............................. 9,167,775 8,548,777
-------------- -------------
36,668,839 51,230,115
-------------- -------------
</TABLE>
14
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THE INDIA FUND, INC.
Schedule of Investments (continued) June 30, 2000
(Unaudited)
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Textiles - Cotton 0.02%
36 Arvind Mills Ltd+............................... $ 133 $ 9
100 H.P. Cotton Textile Mills Ltd+.................. 233 8
500,000 Pantaloon Fashions (India)+..................... 495,392 134,938
-------------- -------------
495,758 134,955
-------------- -------------
Textiles - Synthetic 5.40%
300 Haryana Petrochemicals Ltd+*.................... 343 7
4,719,077 Reliance Industries Ltd......................... 19,973,395 36,029,862
5,800 SRF Ltd......................................... 15,613 4,540
-------------- -------------
19,989,351 36,034,409
-------------- -------------
Transportation 0.07%
175,000 Peerless Shipping Oilfield+..................... 1,132,781 489,922
-------------- -------------
1,132,781 489,922
-------------- -------------
Vehicle Components 0.36%
145,001 Cummins India Ltd B............................. 1,735,433 1,458,616
125 FAG Bearings (India) Ltd........................ 334 109
100 Gleitlager (India) Ltd+......................... 96 6
118,000 Swaraj Engines Ltd.............................. 1,298,970 932,107
-------------- -------------
3,034,833 2,390,838
-------------- -------------
Vehicles 4.73%
1,790,462 Ashok Leyland Ltd............................... 4,432,899 2,397,976
175,125 Bajaj Auto Ltd.................................. 2,359,601 1,396,685
278,587 Hero Honda Motors Ltd 'B'....................... 4,559,599 6,161,359
600 Hindustan Motors Ltd+........................... 467 101
100 LML Ltd+........................................ 178 67
1,096,689 Mahindra and Mahindra Ltd....................... 9,983,576 5,196,071
75,000 Mahindra and Mahindra Ltd GDR................... 988,250 346,875
920,950 Punjab Tractors Ltd............................. 6,441,601 14,010,197
550 Tata Engineering and Locomotive Company Ltd..... 3,364 1,519
363,700 TVS Suzuki Ltd*................................. 2,766,232 2,064,089
-------------- -------------
31,535,767 31,574,939
-------------- -------------
TOTAL COMMON STOCKS 369,939,902 667,308,672
-------------- -------------
</TABLE>
15
<PAGE>
THE INDIA FUND, INC.
Schedule of Investments (continued) June 30, 2000
(Unaudited)
BONDS (0.05% of holdings)
<TABLE>
<CAPTION>
Number Percent of
of Shares Security Holdings Cost Value
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
India
Bonds 0.05%
Diversified Industries 0.05%
INR 4,220 DCM Shriram Consolidated NCD 13.00%, 11/6/01* $ 134,584 $ 105,163
INR 4,096 DCM Shriram Consolidated NCD 13.00%, 11/6/02* 130,627 102,069
INR 4,096 DCM Shriram Consolidated NCD 13.00%, 11/6/03* 130,627 102,069
-------------- -------------
395,838 309,301
-------------- -------------
TOTAL BONDS..................................... 395,838 309,301
-------------- -------------
TOTAL INDIA..................................... 370,335,740 667,617,973
-------------- -------------
TOTAL INVESTMENTS**..................... 100.00% $ 370,335,740 $ 667,617,973
============== =============
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
THE INDIA FUND, INC.
Schedule of Investments (concluded) June 30, 2000
(Unaudited)
Footnotes and Abbreviations
GDR - Global Depository Receipt
INR - Indian Rupee
NCD - Non Convertible Debenture
+ Non-income producing security
++ Passive Foreign Investment Company
* At fair value as determined under the supervision of the Board of
Directors
** Aggregate cost for Federal income tax purposes is $370,437,165
The aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:
Excess of value over tax cost $374,499,528
Excess of tax cost over value (77,318,720)
------------
$297,180,808
============
See accompanying notes to financial statements.
17
<PAGE>
THE INDIA FUND, INC.
Statement of Assets and Liabilities June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost $370,335,740) .................................... $ 667,617,973
Cash (including Indian Rupees of $3,764,220 with a cost of $3,761,100) ........ 3,310,352
Receivables:
Dividends and reclaims of excess taxes withheld ....................... 3,296,439
Interest (net of withholding tax of $2,280) .......................... 18,209
Securities sold ....................................................... 5,047,249
Prepaid expenses ............................................................ 59,524
-------------
Total Assets ................................................... 679,349,746
-------------
LIABILITIES
Payable for securities purchased .............................................. 1,150,712
Payable for Fund share repurchased ............................................ 281,000
Due to Investment Manager ..................................................... 600,895
Due to Administrator .......................................................... 114,019
Accrued expenses .............................................................. 762,180
-------------
Total Liabilities .............................................. 2,908,806
-------------
Net Assets ..................................................... $ 676,440,940
=============
NET ASSET VALUE PER SHARE ($676,440,940/32,155,233
shares issued and outstanding) ................................. $ 21.04
=============
NET ASSETS CONSIST OF:
Capital stock, $0.001 par value; 34,007,133 shares issued
(100,000,000 shares authorized) ....................................... $ 34,007
Paid-in capital ............................................................... 466,440,960
Cost of 1,851,900 shares repurchased .......................................... (24,590,296)
Accumulated net investment loss ............................................... (1,787,371)
Accumulated net realized loss on investments .................................. (60,767,656)
Net unrealized appreciation in value of investments, foreign currency
holdings and on translation of other assets and liabilities denominated
in foreign currency ................................................... 297,111,296
-------------
Net Assets ..................................................... $ 676,440,940
=============
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
THE INDIA FUND, INC.
Statement of Operations June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
Investment Income
Dividends .............................................................................. $ 4,310,834
Interest (net of Indian taxes withheld of $3,834) ...................................... 25,440
-------------
Total investment income ................................................. 4,336,274
-------------
Expenses
Management fees ........................................................................ 4,293,920
Administration fees .................................................................... 792,546
Custodian fees ......................................................................... 584,361
Legal fees ............................................................................. 146,255
Audit fees ............................................................................. 77,830
Insurance .............................................................................. 54,924
Directors' fees ........................................................................ 25,986
Transfer agent fees .................................................................... 37,894
NYSE fees .............................................................................. 16,082
Printing ............................................................................... 8,426
Miscellaneous expenses ................................................................. 12,907
-------------
Total expenses .......................................................... 6,051,131
-------------
Net investment loss ..................................................... (1,714,857)
-------------
Net Realized and Unrealized Gain (Loss) on Investments, Foreign Currency Holdings
and Translation of Other Assets and Liabilities Denominated in Foreign Currency:
Net realized gain (loss) on:
Security transactions .......................................................... 79,286,586
Foreign currency related transactions .......................................... (272,622)
-------------
79,013,964
Net change in unrealized depreciation in value of investments, foreign currency holdings
and translation of other assets and liabilities denominated in foreign currency (154,741,858)
-------------
Net realized and unrealized loss on investments, foreign currency holdings and
translation of other assets and liabilities denominated in foreign currency .... (75,727,894)
-------------
Net decrease in net assets resulting from operations ................................... ($ 77,442,751)
=============
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
THE INDIA FUND, INC.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six Months
Ended For the Year
June 30, 2000 Ended
(Unaudited) December 31, 1999
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment loss ................................................ ($1,714,857) ($3,284,703)
Net realized gain on investments and foreign currency
related transactions .......................................... 79,013,964 42,168,620
Net change in unrealized appreciation (depreciation) in value of
investments, foreign currency holdings and translation of other
assets and liabilities denominated in foreign currency ........ (154,741,858) 438,817,690
------------- -------------
Net increase (decrease) in net assets resulting from operations .... (77,442,751) 477,701,607
------------- -------------
Capital Share Transactions
Shares repurchased under Stock Repurchase Plan
(979,500 shares and 830,700 shares respectively) .............. (15,064,122) (9,276,977)
------------- -------------
Net decrease in net assets resulting from capital share
transactions .................................................. (15,064,122) (9,276,977)
------------- -------------
Total increase (decrease) in net assets ............................ (92,506,873) 468,424,630
------------- -------------
NET ASSETS
Beginning of period ................................................ 768,947,813 300,523,183
------------- -------------
End of period ...................................................... $ 676,440,940 $ 768,947,813
============= =============
</TABLE>
See accompanying notes to financial statements.
20
<PAGE>
THE INDIA FUND, INC.
Financial Highlights
For a Share Outstanding throughout Each Period
<TABLE>
<CAPTION>
For the Six
Months Ended For the For the For the For the For the
June 30, 2000 Year Ended Year Ended Year Ended Year Ended Year Ended
(Unaudited) Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1996 Dec. 31,1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period .. $ 23.21 $ 8.85 $ 8.11 $ 7.56 $ 8.94 $ 13.92
---------- ---------- ---------- ---------- ---------- ----------
Net investment income (loss) .......... (0.05) (0.10) (0.03) (0.03) 0.02 (0.05)
Net realized and unrealized gain (loss)
on investments, foreign currency
holdings, and translation of other
assets and liabilities denominated
in foreign currency ................ (2.35) 14.36 0.77 0.58 (1.39) (4.93)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations .............. (2.40) 14.26 0.74 0.55 (1.37) (4.98)
---------- ---------- ---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment
income ............................. -- -- -- -- (0.01) --
---------- ---------- ---------- ---------- ---------- ----------
Total dividends and distributions ..... -- -- -- -- (0.01) --
---------- ---------- ---------- ---------- ---------- ----------
Capital share transactions
Anti-dilutive effect of Share
Repurchase Program ................. 0.23 0.10 -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total capital share transactions ...... 0.23 0.10 -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period ........ $ 21.04 $ 23.21 $ 8.85 $ 8.11 $ 7.56 $ 8.94
========== ========== ========== ========== ========== ==========
Per share market value, end of period . $ 14.1875 $ 16.7500 $ 6.3125 $ 7.3750 $ 7.6250 $ 8.8750
Total Investment Return Based on
Market Value* ...................... (15.30)% 165.35% (14.41)% (3.28)% (14.08)% (17.44)%
Ratios/Supplemental Data
Net assets, end of period (in 000s) ... $ 676,441 $ 768,948 $ 300,523 $ 275,814 $ 257,156 $ 303,940
Ratios of expenses to average
net assets ......................... 1.55%** 1.84% 2.03% 1.98% 2.03%+ 2.03%
Ratios of net investment income (loss)
to average net assets .............. (0.44)%** (0.68)% (0.34)% (0.37)% 0.22%+ (0.38)%
Portfolio turnover .................... 13.18% 18.65% 28.85% 42.61% 33.57% 25.28%
</TABLE>
See page 22 for footnotes.
21
<PAGE>
Financial Highlights (concluded)
For a Share Outstanding throughout Each Period
THE INDIA FUND, INC.
* 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 each period reported. 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.
** Annualized
+ Includes expense waivers by the Custodian. If such expenses had not been
waived, the ratio of expenses to average net assets and the ratio of net
investment income to average net assets would have been 2.12% and 0.13%,
respectively, for the year ended December 31, 1996.
See accompanying notes to financial statements.
22
<PAGE>
THE INDIA FUND, INC.
Notes to Financial Statements June 30, 2000
(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 operates through 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.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
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.
Securities for which sales prices and bid and asked quotations are not available
on the date of determination may be valued at the most recently available prices
or quotations under policies adopted by the Board of Directors. 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 $4,265,077 (0.63% of net
assets) as of June 30, 2000, 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 reporting purposes. Interest income is recorded on the accrual basis;
dividend income is recorded on the ex-dividend date or, using reasonable
diligence, when known. The collectibility of income receivable from Indian
securities is evaluated peri-
23
<PAGE>
THE INDIA FUND, INC.
Notes to Financial Statements (continued) June 30, 2000
(Unaudited)
odically, 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 that will be
sufficient to relieve it from all or substantially all Federal income and excise
taxes.
At December 31, 1999, the Fund had a capital loss carryover of $139,474,324
which is available to offset future net realized gains on securities
transactions to the extent provided for in the Internal Revenue Code. Of the
aggregate capital losses, $47,709,534 will expire in the year 2004, $56,935,932
will expire in 2005 and $34,828,858 will expire in 2006. During the year ended
December 31, 1999, the Fund utilized $42,331,872 of capital loss carried forward
from prior periods.
The Fund's foreign exchange losses incurred after October 31, 1999, but before
December 31, 1999, are deemed to arise on the first business day of the
following year. The Fund incurred and elected to defer such foreign exchange
losses of approximately $72,514.
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.
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 federal income tax purposes. The Fund reports certain realized foreign
exchange gains and losses as components of realized gains and losses for
financial reporting purposes, whereas such amounts are treated as ordinary
income for Federal income tax reporting purposes.
Securities denominated in currencies other than U.S. dollars are subject to
changes in value due to fluctuations in foreign exchange. Foreign security and
currency transactions may involve certain
24
<PAGE>
THE INDIA FUND, INC.
Notes to Financial Statements (continued) June 30, 2000
(Unaudited)
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.
During the period ended December 31, 1999, the Fund reclassified $143,940 from
accumulated net realized gain on investments to accumulated net investment loss
as a result of permanent book and tax differences relating primarily to realized
foreign currency losses and reclassified $3,416,169 from accumulated net
investment loss to paid-in capital as a result of permanent tax differences
relating to net operating loss for the year ended December 31, 1999. Net
investment loss and net assets were not affected by the reclassifications.
NOTE B: MANAGEMENT, INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES
Advantage Advisers, Inc. ("Advantage"), a subsidiary of CIBC World Markets Corp.
("CIBC WM"), serves as the Fund's Investment Manager (the "Investment Manager")
under the terms of a management agreement (the "Management Agreement").
Infrastructure Leasing & Financial Services Limited ("ILFS") serves as the
Fund's Country Adviser (the "Country Adviser") under the terms of an advisory
agreement (the "Country Advisory Agreement"). Pursuant to the Management
Agreement, the Investment Manager supervises the Fund's investment program and
is responsible
25
<PAGE>
THE INDIA FUND, INC.
Notes to Financial Statements (continued) June 30, 2000
(Unaudited)
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 furnishes advice and makes recommendations to the Investment
Manager regarding the purchase, sale or holding of particular Indian securities,
provides research and statistical data to the Fund and assists in the
implementation and execution of investment decisions. For its services, the
Investment Manager received monthly fees at an annual rate of 1.10% of the
Fund's average weekly net assets and the Country Adviser received from the
Investment Manager monthly fees at an annual rate of 0.20% of the Fund's average
weekly net assets. For the six months ended June 30, 2000, fees earned by the
Investment Manager amounted to $4,293,920, of which the Investment Manager
informed the Fund it paid $780,713 to ILFS.
CIBC WM, an indirect wholly-owned subsidiary of Canadian Imperial Bank of
Commerce, serves as the Fund's Administrator (the "Administrator"). The
Administrator provides certain administrative services to the Fund. 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, 2000,
these fees amounted to $780,713. 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, 2000, fees and expenses of the
Mauritius Administrator amounted to $11,833. At June 30, 2000, CIBC WM owned
7,133 shares of the Fund's common stock.
The Fund pays each of its directors who is not a director, officer or employee
of the Investment Manager, the Country Adviser or the 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 Board of Directors
meetings.
NOTE C: PORTFOLIO ACTIVITY
Purchases and sales of securities, other than short-term obligations, aggregated
$98,621,118 and $119,088,962 respectively, for the six months ended June 30,
2000.
At June 30, 2000, the Fund owned securities valued at approximately $6,792,397
which were in the process of being registered in the name of the Fund or being
dematerialized. Significant delays are common in registering the transfer of
securities in India, and such transfers can take a year or
26
<PAGE>
THE INDIA FUND, INC.
Notes to Financial Statements (continued) June 30, 2000
(Unaudited)
longer. Indian securities regulations normally preclude the Fund from selling
such securities until the completion of the registration or the
dematerialization process, as applicable.
NOTE D: FOREIGN INCOME TAX
The Fund conducts its investment activities in India as a tax resident of
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 certificate from the Mauritian authorities that it is a resident of
Mauritius under the double taxation treaty between Mauritius and India. Under
current regulations, 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 was subject
to a 15% withholding tax on dividends declared, distributed or paid by an Indian
company prior to June 1, 1997. Effective June 1, 1997, dividend income from
domestic companies is exempt from Indian income tax. The Fund is subject to and
accrues Indian withholding tax on interest earned on Indian securities at the
rate of 20%.
The Fund will, in any year that it has taxable income for Mauritius tax
purposes, elect to pay tax on its net income for Mauritius tax purposes at any
rate between 0% and 35%. For the six months ended June 30, 2000, no provision
for Mauritius taxes is considered necessary as a result of the net investment
loss incurred by the Fund. Moreover, to the extent that it is later determined
that the Fund would be unable to obtain the benefits of the treaty, the Fund
would be subject to tax on capital gains in India on the sale of securities,
which is at the rates of 10% on long-term and 30% on short-term capital gains,
and could be subject to the applicable tax on dividends declared, distributed or
paid prior to June 1, 1997, which was at the rate of 20%.
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: CAPITAL STOCK
During the six months ended June 30, 2000, the Fund purchased 979,500 shares of
capital stock on the open market at a total cost of $15,064,122. The weighted
average discount of these purchases, comparing the purchase price to the net
asset value at the time of purchase, was 33.80%. These shares were purchased
pursuant to the Fund's Stock Repurchase Plan previously approved by the Fund's
Board of Directors authorizing the Fund to purchase up to 2,000,000 shares of
its capital stock. In addition, in May 2000, the Fund's Board of Directors
authorized the Fund to purchase
27
<PAGE>
THE INDIA FUND, INC.
Notes to Financial Statements (concluded) June 30, 2000
(Unaudited)
an additional 1,000,000 shares of its capital stock, bringing to 3,000,000 the
aggregate number of shares authorized for repurchase.
During the year ended December 31, 1999, the Fund purchased 830,700 shares of
capital stock in the open market at a total cost of $9,276,977 and at a weighted
average discount of 27.07%.
Subsequent to June 30, 2000, the Fund made additional purchases aggregating
180,000 shares of capital stock in the open market at a total cost of
$2,453,313. The weighted average discount of these purchases was 31.85%.
NOTE F: CONCENTRATION OF RISKS
At June 30, 2000, 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 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. At June 30, 2000, the Fund has a concentration of
its investments in computer and technology-related industries. The values of
such investments may be affected by changes in such industry sectors.
28
<PAGE>
THE INDIA FUND, INC.
Results of the Annual Shareholders Meeting
The Fund held its annual shareholders meeting on April 28, 2000. At this
meeting, shareholders elected each of the nominees proposed for election to the
Fund's Board of Directors and ratified the selection and approval of
PricewaterhouseCoopers LLP as the independent accountants of the Fund for the
fiscal year ending December 31, 2000. The following tables provide information
concerning the matters voted on at the meeting:
I. Election of Directors
<TABLE>
<CAPTION>
Nominee Votes For Votes Abstained Total Voting Shares
------------------- ----------- --------------- -------------------
<S> <C> <C> <C>
Charles F. Barber 13,403,403 3,757,521 17,160,924
Luis Rubio 13,380,653 3,780,271 17,160,924
Jeswald W. Salacuse 13,411,788 3,749,136 17,160,924
</TABLE>
At June 30, 2000, in addition to Charles F. Barber, Luis Rubio and Jeswald W.
Salacuse, the other directors of the Fund were as follows:
Leslie H. Gelb
Sir Rene Maingard
Gabriel Seeyave
II. Ratification of PricewaterhouseCoopers LLP as the Independent Accountants of
the Fund
<TABLE>
<CAPTION>
Votes For Votes Against Votes Abstained Total Voting Shares
----------- ------------- --------------- -------------------
<S> <C> <C> <C>
17,045,717 48,461 66,746 17,160,924
</TABLE>
29
<PAGE>
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<PAGE>
(This page intentionally left blank.)
<PAGE>
THE INDIA FUND, INC.
Investment Manager:
Advantage Advisers, Inc., a wholly
owned subsidiary of CIBC World
Markets Corp.
Administrator:
CIBC World Markets Corp.
Sub-Administrator:
PFPC, Inc.
Transfer Agent:
The Bank of New York
Custodian:
The Bank of New York
