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JARDINE FLEMING
INDIA FUND, INC.
[JARDINE FLEMING LOGO]
ANNUAL REPORT
NOVEMBER 30, 1995
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[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
<TABLE>
<CAPTION>
Contents
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Page
<S> <C>
Objective 2
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Management 2
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Market Information 2
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Directors and Administration 3
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Highlights 4
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Investment Review 5
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Major Holdings 9
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Investment Portfolio 11
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Statement of Assets and Liabilities 17
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Statement of Operations 18
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Statement of Changes in Net Assets 19
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Financial Highlights 20
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Notes to Financial Statements 21
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Report of Independent Accountants 27
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Dividend Reinvestment Plan 28
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Other Information 30
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[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Objective
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Jardine Fleming India Fund, Inc. (the "Fund") seeks to achieve long-term capital
appreciation through investments primarily in equity securities of Indian
companies. The Fund may also invest up to 10% of its assets in aggregate in
equity securities of companies in Pakistan, Sri Lanka and Bangladesh.
The Fund provides investors with an opportunity to participate in the emerging
economies of India and its neighbors. The Indian government introduced a
structural reform program in 1991 which led to the adoption of more liberal and
free market economic policies. Liberalization of investment restrictions has
enabled foreign institutional investors such as the Fund to have access to the
increasing investment opportunities created by India's reforms.
Management
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Jardine Fleming International Management Inc. ("JFIM") is the investment
management company appointed to advise and manage the Fund's portfolio. JFIM is
part of the Jardine Fleming group, which has a team of investment managers in
the Asia Pacific region managing funds in excess of US$21 billion for both
institutional and private clients. Jonathan Boyer is the portfolio manager of
the Fund. Mr. Boyer has worked in the Asia Pacific region for nine years. He is
a portfolio manager for a number of the Jardine Fleming group's funds which
invest in Indian regional securities. As a director of Jardine Fleming Holdings
Limited, Mr. Boyer has been involved in the day-to-day management of the Fund's
portfolio since its inception.
Market Information
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THE JARDINE FLEMING INDIA FUND, INC. IS LISTED ON THE NEW YORK STOCK EXCHANGE
(SYMBOL "JFI") AND THE MARKET PRICE IN US DOLLARS IS PUBLISHED IN:
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- - The Wall Street Journal (daily)
- - The Asian Wall Street Journal (daily)
- - Reuters (page JFID)
- - The New York Times (daily)
- - Barron's (each Saturday)
THE NET ASSET VALUE PER SHARE IS CALCULATED WEEKLY AND PUBLISHED IN US DOLLARS
IN:
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- - The Wall Street Journal (under "Publicly Traded Funds" each Monday)
- - The Asian Wall Street Journal (under "Publicly Traded Funds" each Monday)
- - Reuters (page JFID)
- - South China Morning Post in Hong Kong (first Thursday of every month)
- - The New York Times (each Sunday)
- - Barron's (each Saturday)
Additional information (including updated net asset value and market price) may
be obtained through the Fund's dedicated, toll-free number, 800-757-0590.
To receive a copy of the Fund's most recent financial report or Dividend
Reinvestment Plan brochure, please call 800-426-5523.
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[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Directors and Administration
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OFFICERS AND DIRECTORS Julian M.I. Reid - Director and President
Sir Satcam Boolell - Director
Jean Jocelyn de Chasteauneuf - Director
Ashok V. Desai - Director
Timothy R.H. Kimber - Director
William J. Tootill - Treasurer and Secretary
Brian S. Shlissel - Assistant Treasurer
INVESTMENT ADVISER Jardine Fleming International Management Inc.
P.O. Box 3151
Road Town, Tortola
British Virgin Islands
ADMINISTRATOR Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, NY 10019
USA
MAURITIUS ADMINISTRATOR Multiconsult Ltd.
P.O. Box 799
Les Jamalacs
Vieux Conseil Street
Port Louis
Mauritius
CUSTODIAN Citibank, N.A.
New York:
Citicorp Center
153 East 53rd Street
New York, NY 10043
USA
India:
First Floor, Sakhar Bhawan
Nariman Point
230 Backbay Reclamation
Bombay 400 021
India
INDEPENDENT ACCOUNTANTS Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
USA
LEGAL COUNSEL Cleary, Gottlieb, Steen & Hamilton
New York:
1 Liberty Plaza
New York, NY 10006
USA
Hong Kong:
56/F, Bank of China Tower
1 Garden Road
Hong Kong
REGISTRAR, TRANSFER AGENT & State Street Bank & Trust Company
DIVIDEND PAYING AGENT P.O. Box 8200
Boston, MA 02266-8200
USA
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[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
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<CAPTION>
Highlights
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AT AT
NOVEMBER 30, 1995 NOVEMBER 30, 1994
US $ US $
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<S> <C> <C>
Net Assets 87,479,188 174,284,782
Net Asset Value 7.74 15.41
MARKET DATA
Market Price on New York Stock Exchange 9.00 13.75
Premium/Discount to Net Asset Value 16.28% -10.77%
TOTAL RETURN
Net Asset Value -49.0%(1) 11.3%(2)
Market Price -33.5%(1) -1.4%(2)(3)
Bombay Stock Exchange ("BSE") -34.7%(1) 2.8%(2)
Sensitive Index
</TABLE>
NET ASSET VALUE AND MARKET PRICE VS. BSE SENSITIVE INDEX (4)
<TABLE>
<CAPTION>
NAV SHARE P S. INDEX
<S> <C> <C> <C>
Mar 94 100 100 100
Apr 94 102.67 104.69 97.5
May 94 98.48 94.8 93.39
Jun 94 105.7 111.91 101.88
Jul 94 108.23 100.22 103.54
Aug 94 113 104.69 107.31
Sep 94 123.97 111.91 112.91
Oct 94 119.71 113.72 110.46
Nov 94 115.02 111.05 106.38
Dec 94 109.39 104.69 101.7
Jan 95 102.49 92.5 93.94
Feb 95 93.79 87.89 89.8
Mar 95 91.23 83.35 87.16
Apr 95 92.33 87.89 86.79
May 95 82.61 83.35 77.33
Jun 95 87.87 92.5 84.96
Jul 95 79.39 85.18 78.85
Aug 95 84.51 87.89 84.02
Sep 95 79.11 77.94 81.48
Oct 95 76.11 75.16 82.26
Nov 95 77.5 65.99 78.69
</TABLE>
(1) For the year ended November 30, 1995.
(2) From March 3, 1994 (commencement of operations) to November 30, 1994.
(3) Initial market price net of underwriting discount of $1.05 per share.
(4) Based on initial net asset value and market price of $13.85 and $15.00,
respectively.
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[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Investment Review
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Dear Fellow Shareholders:
Despite encouraging economic fundamentals, the Indian equity market has not, I
regret to report, reflected this situation over the past year. In local currency
terms, the narrowly-based Bombay Stock Exchange Sensitive Index ("BSE") has
fallen by 34.7% from its peak in September 1994. The broadly constituted indices
have fallen by approximately 40%, reflecting the weaker performance of a wide
range of smaller companies. Breadth indicators, such as the advance-decline
ratio, have continually declined during the past 15 months. For foreign
investors, the pain has been even more acute as the Indian rupee has depreciated
by over 10% since the end of July. Having staged a narrow recovery from the May
low to the end of October, the equity market has once again fallen back sharply,
with the broader indices decisively breaching the lows set earlier in the year.
In last year's annual report, we highlighted the vigor with which the Indian
economy had begun to emerge from the restructuring-related recession of the
early 1990s and painted an optimistic picture for a protracted cyclical upturn.
In this regard, India's performance has been encouraging. Gross Domestic Product
("GDP") growth for the year ending March 1996 is expected to exceed 6%,
following the increase of 5.6% for the previous year, with a healthy mixture of
expansion in consumption, capital investment and trade. Core industrial output
(coal, cement, steel, petroleum and electricity) in the first half of this
fiscal year was especially robust, up 10.4%. While GDP growth is likely to
moderate in the second half of the year in response to higher interest rates,
such growth for the year should exceed 9%.
The last time India experienced strong demand growth was under Rajiv Gandhi's
administration in the late 1980s. At that time, a consumer boom led to an
inflationary upsurge, an escalation in the national debt and eventually the
depletion of foreign reserves, which precipitated India's embrace of the
IMF-sponsored reform program. Chastened by that experience, India's policymakers
have been much more cautious in their management of monetary conditions this
time around, resulting in a steady tightening of credit conditions over the past
twelve months.
The underlying problem has been that the Indian private sector's demand for
credit has outpaced its savings growth at a time when government expenditure has
also accelerated. Normally, such a shortfall would need to be met by increased
foreign capital inflow, fiscal retrenchment or higher cost of credit. In a large
and unwieldy democracy like India, reductions in government spending are
difficult in the best of times, and in an election year, they are out of the
question. Despite greater than expected tax receipts (up 24% in the first half
of the year), the fiscal deficit has risen, leading to a "crowding out" effect
as the Reserve Bank of India's ("RBI") credit to the government has escalated.
Unfortunately, the government's efforts to encourage inward investment flows
have yet to achieve tangible results. Prospective investors in key
infrastructure areas, such as power and telecommunications, have been put off by
the renegotiation of the Enron project and by the difficulties surrounding the
telecom license bidding process. As a result, foreign direct investment ("FDI")
inflows may barely exceed $1 billion this year which is a lower figure than was
expected, but still above 1994's figure. Meanwhile portfolio investors, who have
been net buyers of Indian equities for most of this year, have been alarmed by
the extent of the rupee's depreciation and have become more cautious. In
allowing
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[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Investment Review (continued)
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the rupee to slide, the authorities had aimed to boost exports and halt an
incipient deterioration in the current account. However, what initially appeared
to be managed depreciation, turned into more of a rout. The RBI was forced to
intervene with large dollar sales, which in turn drained liquidity from the
financial system and drove interest rates up to critical levels. In response to
rising funding costs and increased demand from borrowers, banks raised their
prime lending rates by 100 basis points to 16.5% in early November.
The extent of RBI intervention led to sharp contractions in the monetary
aggregates, with both M3 and reserve money falling below the 15% year-on-year
growth target, well down from the expansion of over 20% in the year ended March
1995. Inflation has remained relatively subdued for the past six months, with
wholesale price increases confined to the 8% to 9% range. This should provide
scope for the Central Bank to ease domestic liquidity during the next several
months, most probably through further reductions in the cash reserve requirement
for the banking sector. This appears to have been the RBI's approach in recent
weeks, as it has worked to restore a degree of stability to both the exchange
rate and call money markets.
PROSPECTS
In the short term, an easing of monetary conditions by the RBI should enable the
equity market to recoup some of its recent losses. Over the medium term, though,
much will depend upon the outcome of the impending general election which is due
by June 1996. The political landscape has been confused for much of the past
year since the Congress party suffered heavy defeats in a series of state
elections at the hands of the Bharatiya Janata Party ("BJP") and other
opposition parties. At a time when funding constraints are threatening to erode
the momentum of growth and fiscal discipline is sorely needed, a stable
political environment would be very much appreciated. Prospects for the equity
market depend as much upon the election producing a workable government as all
other factors combined.
Nevertheless, it is important to remember that India's funding problems are not
intractable. This funding squeeze should take the form of a bout of hiccups
rather than a Mexican-style heart attack. Higher deposit rates should boost
savings growth for the second half of the year. According to a recent report
from the Center for Monitoring the Indian Economy, private sector investment
demand is cooling as lending rates rise. The trade deficit has already
contracted sharply from the first quarter peak.
There are concerted moves to widen the tax net and to standardize corporate tax
rates, which should lead to a big increase in revenues over the medium term.
Despite the negative publicity of the past few months, the FDI is set to take
off from this point (comparing India's FDI inflows of $1 billion with China's
$50 billion this year). India's foreign exchange reserves still exceed $17
billion, equivalent to over 6 months of imports, despite heavy intervention in
recent weeks. This year's fiscal deficit will exceed the government's target and
could range between 6.5% and 7% well below the levels of 5 years ago. In short,
India needs to muddle through the next 6 to 12 months before it can count on a
more reliable flow of funds. In the meantime, the government needs to ensure
that the reform process is pursued in order to provide the basis for a less
hostile post election credit situation.
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[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Investment Review (continued)
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In sharp contrast to the government's tribulations at the macro level, corporate
performance has continued to be impressive. The results reported so far for the
April-to-September period indicate that sales, operating profits and net
profits have risen by 29%, 36% and 44%, respectively. The quality of profits has
improved with non-operating income now accounting for less than 20% of total
income, down from 35% in financial year 1994. Most large companies took
advantage of the period of low interest rates between 1991 and 1994 to
deleverage their balance sheets (top industrial companies like Tata Iron & Steel
Co. Ltd., Tata Engineering and Locomotive Co. Ltd., Bajaj Auto Ltd. and Grasim
Industries Ltd. have reduced their gearing ratios to 50% or less from levels 3
or 4 times that of a few years before) and have not been too badly troubled by
the recent rise in interest rates. The dilution overhang from heavy equity
issuance over the past few years indicates that earning per share growth in
1995-1996 should be approximately 25%.
Prospects for earnings growth will be critically dependent upon the extent to
which the current resource crunch persists and the slowdown in private demand
that may ensue. Over the past 18 months, the corporate sector has started to
invest much more heavily in capital stock and therefore, would suffer a squeeze
in margins if demand growth should fall below expectations.
Stock market participants have fared less well as the liquidity situation has
deteriorated. Domestic mutual fund companies, most notably Unit Trust of India,
have suffered constant redemptions as companies have sought to raise cash. This
trend has accelerated as the last of the tax wash privileges for corporates
investing in mutual funds was removed in the most recent budget. Recent
instructions to Public Sector Unit ("PSU") companies to divest their holdings
will only serve to exacerbate an already difficult position. Equity supply
remained high in the first half of the year despite the downturn in the market,
but dwindling cash levels have resulted in a buyer's strike in the second half.
Cash held by the domestic mutual funds will no doubt be held back for the next
round of PSU divestments, which is likely to take place in the first quarter of
1996. Meanwhile the order of asset preference is likely to be cash, bonds, then
equities.
Should the RBI choose to ease in the next couple of months, it should provide
much needed relief to the equity market. If it does not ease, the risk of
another downleg will remain. Concerns about fiscal indiscipline, inflation and
interest rates are likely to persist ahead of the general election. However, the
stock market has moved swiftly to discount these worries and valuations have
retreated to extremely low levels. Our own earnings estimates place the market
at just over 12 times price-to-earnings for March 1996 and around 10 times March
1997. Foreign investors are under-invested in India relative to their weightings
in the Asian and "emerging markets" universes, partly attributable to concerns
regarding the cumbersome paper settlement system. Custody facilities in India
have improved significantly over the past year as competition has intensified
and new capacities have been installed. Moreover, when the new central
depository system becomes effective, India's settlement process should be
smoother.
PORTFOLIO STRATEGY
For the past year, we have concentrated the portfolio in larger, more
financially secure companies and have looked to divest from smaller stocks. We
have also endeavored to reduce the Fund's exposure to sectors sensitive to the
commodity cycle such as steel,
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[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Investment Review (continued)
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cement and chemicals. We now feel that the divergence between large and small
companies and between cyclicals and non-cyclicals has gone far enough. Rather
than a general shift out of these areas, we have recently concentrated on
accumulating companies -- large or small -- capable of producing above average
earnings growth for the next 2 to 3 years without recourse to equity funding.
Judgment of management integrity has become a more important investment criteria
for us than pure valuation ratios. We have adopted a somewhat more defensive
posture during the past couple of months and are likely to maintain this stance
over the coming weeks as the RBI's monetary policy becomes more apparent.
However, having suffered from the downturn of the past 15 months, we do not wish
to be in an overly defensive position when market sentiment improves. Once the
election is over and assuming that the new government is a relatively stable
coalition, it may be as difficult to buy the market as, in the past year, it has
been to sell it.
Respectfully submitted,
/s/ Julian M.I. Reid
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Julian M.I. Reid
President
December 20, 1995
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INDIA FUND, INC.
<TABLE>
<CAPTION>
Major Holdings
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AT NOVEMBER 30, 1995
% of
Company Net Assets
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<S> <C>
MAHANAGAR TELEPHONE NIGAM LTD. 5.7
A provider of basic telephone services in Bombay and Delhi where the majority of
higher revenue business calls are concentrated. Expected tariff revisions and a
new agreement on revenue sharing with the Department of Telecommunications are
expected to benefit the company's future earnings stream.
HOUSING DEVELOPMENT FINANCE CORP. 5.6
India's largest provider of mortgage loans. A middle class population of over
150 million, a housing shortage estimated to be in excess of 10 million units,
and increasing urbanization provide the company with opportunities for new
business.
TATA IRON & STEEL CO. LTD. 5.4
The second largest steel manufacturer in India and the largest private sector
integrated steel plant with an approximately 15% market share. Commercialization
of a one million tons per annum ("tpa") hot rolled coil facility should result
in a value-added product mix.
HINDALCO INDUSTRIES LTD. 4.5
India's largest private sector integrated aluminum producer. With captive power
generation and bauxite mines, the company is one of the lowest cost producers in
the world. The shares are currently trading at 10x projected March 1996 earnings
and 8x projected March 1997 earnings.
STATE BANK OF INDIA 4.4
India's largest bank with over 8,000 branches and over 20% of national deposits.
The bank is implementing a restructuring program to streamline decision making.
Measured by return on assets and price-to-earnings, the company appears very
undervalued.
</TABLE>
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INDIA FUND, INC.
<TABLE>
<CAPTION>
Major Holdings (continued)
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AT NOVEMBER 30, 1995
% of
Company Net Assets
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<S> <C>
TATA ENGINEERING AND LOCOMOTIVE CO. LTD. 3.6
The dominant producer of commercial vehicles with a nationwide dealership
network. It recently entered utility and passenger car segments and has also
established a joint venture with Daimler Benz to produce Mercedes Benz
automobiles for the domestic and export markets.
PAKISTAN TELECOMMUNICATIONS 3.5
A recently privatized monopoly, providing domestic and international
telecommunication services in Pakistan. The diffusion of telephone lines in
Pakistan is among the lowest in the world, at less than one per 1,000.
RELIANCE INDUSTRIES LTD. 3.4
One of the world's largest integrated textile manufacturers with capacities
established from basic naphtha to quality fabrics. A significant player in
product lines such as purified terephthalic acid, polyester filament yarn,
polyester staple fibre, monoethylene glycol, linear alkyl benzene, high-density
polyethylene and linear low-density polyethylene.
BAJAJ AUTO LTD. 3.2
Manufacturer of the ubiquitous Indian three-wheeler auto rickshaw and a dominant
figure in the range of two-wheeler products such as scooters and motorcycles.
The company enjoys strong brand recognition especially in rural areas where it
has an unrivaled distribution network.
ASSOCIATED CEMENT COMPANIES LTD. 3.0
With an approximately 15% share of the Indian cement market and capacity
expansion from 8 million tpa to 10 million tpa through fiscal year 1995, the
company is positioned to benefit from demand growth in the cement industry.
</TABLE>
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INDIA FUND, INC.
<TABLE>
<CAPTION>
Investment Portfolio
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AT NOVEMBER 30, 1995
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% of
Value Net
Description Shares US $ Assets
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EQUITIES (97.8%)
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INDIA (91.9%)
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<S> <C> <C> <C>
AUTOS & TRANSPORT EQUIPMENT (9.5%)
Bajaj Auto Ltd. 'A' 150,000 2,840,746 3.2
Hero Honda Ltd. 'B' 100,000 585,366 0.7
Mahindra & Mahindra Ltd. 'A' 160,000 1,450,789 1.6
Majestic Auto Ltd. 'B' 150,000 355,093 0.4
* Tata Engineering and Locomotive Co. Ltd. -
Call Warrants expiring March 8, 1996 200,000 775,000 0.9
Tata Engineering and Locomotive Co. Ltd. GDR 60,000 735,000 0.8
Tata Engineering and Locomotive Co. Ltd. - Unit (a) 100,000 1,612,500 1.9
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8,354,494 9.5
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BANKING & FINANCIAL SERVICES (13.3%)
Federal Bank Ltd. 'B' 142,600 740,620 0.9
Housing Development Finance Corp. 'A' 71,190 4,882,184 5.6
Karur Vysya Bank Ltd. 'B' 73,000 439,885 0.5
State Bank of India 'A' 800,000 3,833,572 4.4
20th Century Finance Corporation Ltd. 'B' 135,250 182,403 0.2
Vysya Bank Ltd. 'B' 30,700 1,519,584 1.7
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11,598,248 13.3
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BASIC MATERIALS (4.5%)
Hindalco Industries Ltd. 45,000 1,125,968 1.3
* Hindalco Industries Ltd. GDR 100,000 2,775,000 3.2
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3,900,968 4.5
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BUILDING MATERIALS/CEMENT (5.2%)
Associated Cement Companies Ltd. 'A' 35,000 2,596,126 3.0
Jaiprakash Industries Ltd. 'A' 1,750,000 1,631,994 1.8
Kajaria Ceramics Ltd. 'B' 1,100 3,946 0.0
Madras Cement Ltd. 'B' 1,500 335,725 0.4
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4,567,791 5.2
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</TABLE>
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INDIA FUND, INC.
<TABLE>
<CAPTION>
Investment Portfolio (continued)
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AT NOVEMBER 30, 1995
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% of
Value Net
Description Shares US $ Assets
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<S> <C> <C> <C>
BUSINESS & INDUSTRY SERVICES (0.7%)
* Datapro Information Technology Ltd. 'B' 600,000 193,687 0.2
Infosys Technologies Ltd. 'B' 40,000 418,938 0.5
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612,625 0.7
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CHEMICALS (8.0%)
BOC Ltd. 323,900 831,824 1.0
Finolex Industries Ltd. 'A' 939,000 774,641 0.9
Indian Petrochemical GDR 255,000 2,422,500 2.8
Indo Gulf Fertilizers & Chemicals Corp. Ltd. 'A' 55,400 69,151 0.1
Mardia Chemical Ltd. 'B' 192,400 303,644 0.3
SVC Superchemicals Ltd. 'B' 6,650,500 2,576,234 2.9
United Phosphorus Ltd. 'B' 2,020 15,940 0.0
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6,993,934 8.0
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CONSUMER PRODUCTS (0.5%)
Godrej Soaps Ltd. 'B' 157,000 400,947 0.5
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ELECTRONICS & COMPONENTS (1.6%)
IFB Industries Ltd. 'B' 210,000 879,770 1.0
Samtel Colour Ltd. 'B' 37,200 40,029 0.1
Unitech Ltd. 'B' 150,000 439,024 0.5
Videocon International Ltd. 'A' 5,200 10,967 0.0
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1,369,790 1.6
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ENERGY (6.6%)
Bharat Petroleum Corp. Ltd. 'B' 350,000 2,289,813 2.6
Calcutta Electric Supply Company Ltd. 'B' 599,992 1,609,735 1.8
Hindustan Petroleum Ltd. 'A' 187,600 1,528,792 1.8
NEPC Micon Ltd. 'B' 300,100 378,892 0.4
Western Paques India Ltd. 'B' 400 976 0.0
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5,808,208 6.6
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FINANCE & SECURITIES (0.4%)
Autoriders Finance Ltd. 'B' 200,000 381,636 0.4
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</TABLE>
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INDIA FUND, INC.
<TABLE>
<CAPTION>
Investment Portfolio (continued)
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AT NOVEMBER 30, 1995
- ---------------------------------------------------------------------------------------------
Shares/ % of
Principal Value Net
Description Amount US $ Assets
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOOD & BEVERAGE (0.8%)
Cadbury India Ltd. 'A' 20,769 178,786 0.2
Dhampur Sugar Mills Ltd. 'B' 3,700 10,192 0.0
* Dhampur Sugar Mills Ltd. - Rights 1,233 0 0.0
* Fishing Falcons Ltd. 'B' 545,000 62,554 0.1
Parry Agro Industries Ltd. 'B' 90,000 322,812 0.4
The Simbhaoli Sugar Mills Ltd. - PCD 175,000 123,027 0.1
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697,371 0.8
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HOTELS & TOURISM (2.9%)
Bharat Hotels Ltd. 'B' 81,500 376,514 0.4
East Indian Hotels Ltd. 'A' 129,978 1,834,984 2.1
Indian Hotels Co. Ltd. 'A' 20,050 312,976 0.4
- ---------------------------------------------------------------------------------------------
2,524,474 2.9
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MECHANICAL ENGINEERING (1.3%)
ATV Projects India Ltd. 'B' 1,000,000 674,319 0.8
Kirloskar Cummins Ltd. 'B' 58,800 489,297 0.5
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1,163,616 1.3
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MEDIA (2.3%)
* New Delhi Television Ltd. 'B' (b) 64,867 1,256,391 1.4
* Shivalik Projects Ltd. 'B' (b) 555,000 0 0.0
Zee Telefilms Ltd. 'B' 217,400 792,247 0.9
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2,048,638 2.3
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MISCELLANEOUS INDUSTRIALS (4.0%)
Grasim Industries Ltd. 'A' 125,000 1,814,921 2.1
Larsen & Toubro Ltd. 'A' 146,500 994,182 1.1
Namaste Exports Ltd. 'B' 200 218 0.0
Satyam Computer Ltd. 290,262 349,814 0.4
Satyam Computer Ltd.
Fully Convertible Debentures
12.00%, 6/01/99 (Part B) Rs 17,415,720 349,813 0.4
- ---------------------------------------------------------------------------------------------
3,508,948 4.0
- ---------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 15
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
<TABLE>
<CAPTION>
Investment Portfolio (continued)
- ---------------------------------------------------------------------------------------------
AT NOVEMBER 30, 1995
- ---------------------------------------------------------------------------------------------
% of
Value Net
Description Shares US $ Assets
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PAPER & PACKAGING (0.3%)
Transpek Industry Ltd. 'B' 81,000 269,613 0.3
- ---------------------------------------------------------------------------------------------
PHARMACEUTICALS (0.0%)
Paam Pharmaceuticals Delhi Ltd.'B' 750 823 0.0
- ---------------------------------------------------------------------------------------------
SHIPPING/MARINE (2.1%)
Great Eastern Shipping Co. Ltd. 'A' 1,332,384 1,796,902 2.1
- ---------------------------------------------------------------------------------------------
STEEL (8.3%)
Essar Gujarat Ltd. 'A' 20,683 22,701 0.0
* Hindustan Development Corp. Ltd. - Call Warrants 600,000 18,000 0.0
Jindal Iron & Steel Co. Ltd. 'A' 340,000 1,121,951 1.3
* Jindal Iron & Steel Co. Ltd. - Warrants (b) 83,950 84,311 0.1
Saw Pipes Ltd. 'B' 280,000 1,245,337 1.5
Tata Iron & Steel Co. Ltd. 'A' 800,000 4,741,463 5.4
- ---------------------------------------------------------------------------------------------
7,233,763 8.3
- ---------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (8.0%)
Bharti Telecom Ltd. 'B' 200 479 0.0
Finolex Cables Ltd. 'B' 865 5,113 0.0
Mahanagar Telephone Nigam Ltd. 'A' 1,250,000 5,021,521 5.7
Sterlite Industries India Ltd. 'A' 380 3,108 0.0
Usha Beltron Ltd. 'B' 218,000 844,476 1.0
Videsh Sanchar 'B' 50,000 1,133,429 1.3
- ---------------------------------------------------------------------------------------------
7,008,126 8.0
- ---------------------------------------------------------------------------------------------
TEXTILES (9.3%)
Arvind Mills Ltd. 'A' 100,968 310,002 0.4
Arvind Mills Ltd. GDS 225,000 900,000 1.0
* Bombay Dyeing and Manufacturing Co. Ltd. -
Warrants 300,000 45,000 0.1
Century Textiles & Industries Ltd. 'A' 1,707 226,784 0.3
Century Textiles & Industries Ltd. GDR 18,000 2,205,000 2.5
Orkay Industries Ltd. 'A' 60,000 26,255 0.0
* Orton Synthetics Ltd. 'B' 1,648,100 189,165 0.2
</TABLE>
14
<PAGE> 16
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
<TABLE>
<CAPTION>
Investment Portfolio (continued)
- ---------------------------------------------------------------------------------------------
AT NOVEMBER 30, 1995
- ---------------------------------------------------------------------------------------------
% of
Value Net
Description Shares US $ Assets
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TEXTILES (continued)
Parasrampuria Synthetics Ltd. - Cum. Conv. Pfd. 45,000 104,591 0.1
Reliance Industries Ltd. 'A' 200,000 1,228,121 1.4
Reliance Industries Ltd. GDR 125,000 1,765,625 2.0
South India Viscose Ltd. - Unit (c) 120,000 1,080,000 1.2
* South India Viscose Ltd. - Warrants 500,000 65,000 0.1
- ---------------------------------------------------------------------------------------------
8,145,543 9.3
- ---------------------------------------------------------------------------------------------
TRANSPORT, UTILITIES, SERVICES (2.3%)
Modi Luft Ltd. 'B' 3,135,600 1,732,003 2.0
SAI Service Station Ltd. 'B' 137,000 243,730 0.3
- ---------------------------------------------------------------------------------------------
1,975,733 2.3
- ---------------------------------------------------------------------------------------------
TOTAL INDIA (cost $126,725,243) 80,362,191 91.9
- ---------------------------------------------------------------------------------------------
PAKISTAN (3.5%)
- ---------------------------------------------------------------------------------------------
BUILDING MATERIALS/CEMENT (0.0%)
DG Khan Cement 900 843 0.0
- ---------------------------------------------------------------------------------------------
CHEMICALS (0.0%)
Fauji Fertilizer 100 149 0.0
- ---------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (3.5%)
* Pakistan Telecommunications GDR 40,000 3,120,000 3.5
- ---------------------------------------------------------------------------------------------
TOTAL PAKISTAN (cost $5,007,503) 3,120,992 3.5
- ---------------------------------------------------------------------------------------------
SRI LANKA (2.4%)
- ---------------------------------------------------------------------------------------------
BANKING & FINANCIAL SERVICES (1.2%)
Development Finance Corp. of Ceylon 53,200 285,375 0.3
National Development Bank 200,000 790,514 0.9
- ---------------------------------------------------------------------------------------------
1,075,889 1.2
- ---------------------------------------------------------------------------------------------
</TABLE>
-15-
<PAGE> 17
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
<TABLE>
<CAPTION>
Investment Portfolio (continued)
- ---------------------------------------------------------------------------------------------
AT NOVEMBER 30, 1995
- ---------------------------------------------------------------------------------------------
Shares/ % of
Principal Value Net
Description Amount US $ Assets
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONGLOMERATES (1.2%)
John Keells GDR 175,000 1,006,250 1.2
- ---------------------------------------------------------------------------------------------
TOTAL SRI LANKA (cost $2,452,372) 2,082,139 2.4
- ---------------------------------------------------------------------------------------------
TOTAL EQUITIES (cost $134,185,118) 85,565,322 97.8
=============================================================================================
BONDS (1.4%)
- ---------------------------------------------------------------------------------------------
INDIA (1.4%)
- ---------------------------------------------------------------------------------------------
STEEL (1.4%)
Jindal Iron and Steel Co. Ltd., 'B'
Non-Convertible Debentures,
Secured Redeemable
10.50%, 1/14/03 (b) Rs 41,975,000 1,204,448 1.4
- ---------------------------------------------------------------------------------------------
TOTAL BONDS (cost $1,338,702) 1,204,448 1.4
=============================================================================================
TOTAL INVESTMENTS (99.2%)
(cost $135,523,820) (d) 86,769,770 99.2
=============================================================================================
OTHER ASSETS LESS LIABILITIES (0.8%) 709,418 0.8
- ---------------------------------------------------------------------------------------------
NET ASSETS (100.0%) 87,479,188 100.0
=============================================================================================
</TABLE>
GDR -- Global Depositary Receipt
GDS -- Global Depositary Security
PCD -- Partly Convertible Debentures
Rs -- Indian Rupees
*Non-income producing security
(a) Each unit represents 1 GDR and 1 warrant.
(b) Fair valued security. At November 30, 1995, these securities totaled
$2,545,150 or 2.9% of net assets (See Note 2).
(c) Each unit represents 3 GDS and 1 warrant.
(d) Aggregate cost for federal income tax purposes is $136,291,619.
The aggregate unrealized appreciation (depreciation) for all securities is
as follows:
<TABLE>
<CAPTION>
US $
- -------------------------------------------------------------------------------
<S> <C>
Excess of market value over tax cost 1,356,171
Excess of tax cost over market value (50,878,020)
- -------------------------------------------------------------------------------
Net unrealized depreciation (49,521,849)
===============================================================================
</TABLE>
See accompanying notes to financial statements
-16-
<PAGE> 18
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
- ---------------------------------------------------------------------------------------------
AT NOVEMBER 30, 1995
- ---------------------------------------------------------------------------------------------
US $
- ---------------------------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------------------------
<S> <C>
Investments at value (cost $135,523,820) (Note 2) 86,769,770
Cash (including Indian Rupees with a value of
$1,804,075 and a cost of $1,812,566) 3,556,877
Receivable for investment securities sold 4,101,414
Dividends and interest receivable 1,065,365
Deferred organizational costs (Note 1) 69,656
Prepaid expenses 18,662
- ---------------------------------------------------------------------------------------------
TOTAL ASSETS 95,581,744
- ---------------------------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------------------------
Loan payable (Note 7) 6,288,627
Payable for investment securities purchased 1,363,168
Accrued expenses 257,227
Payable to Investment Adviser (Note 3) 110,121
Interest payable (Note 7) 64,642
Payable to Administrators (Note 3) 18,771
- ---------------------------------------------------------------------------------------------
TOTAL LIABILITIES 8,102,556
- ---------------------------------------------------------------------------------------------
NET ASSETS 87,479,188
- ---------------------------------------------------------------------------------------------
Net assets consist of:
Common stock, $0.001 par value (100,000,000 shares authorized;
11,307,169 shares issued and outstanding) (Note 1) 11,307
Additional paid-in capital 154,653,929
Accumulated net realized loss and distributions in excess
of net realized gain (Note 2) (18,305,018)
Net unrealized depreciation on investments and other assets
and liabilities denominated in foreign currencies (48,881,030)
- ---------------------------------------------------------------------------------------------
NET ASSETS 87,479,188
=============================================================================================
NET ASSET VALUE PER SHARE ($87,479,188 divided by 11,307,169) 7.74
=============================================================================================
</TABLE>
See accompanying notes to financial statements
- 17-
<PAGE> 19
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
<TABLE>
<CAPTION>
Statement of Operations
- ---------------------------------------------------------------------------------------------
FOR THE YEAR ENDED NOVEMBER 30, 1995
- ---------------------------------------------------------------------------------------------
US $
- ---------------------------------------------------------------------------------------------
INVESTMENT INCOME
- ---------------------------------------------------------------------------------------------
<S> <C>
Dividends (net of withholding taxes of $275,106) (Notes 2,6) 1,709,310
Interest (net of withholding taxes of $68,804) (Notes 2,6) 316,280
- ---------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 2,025,590
- ---------------------------------------------------------------------------------------------
EXPENSES
- ---------------------------------------------------------------------------------------------
Investment advisory fees (Note 3) 1,795,187
Interest (Note 7) 734,016
Custodian and accounting fees 602,823
Administration fees and expenses (Note 3) 226,458
Audit and tax services fees 92,225
Legal fees 88,863
Directors' fees and expenses 83,360
Reports and notices to shareholders 72,865
Amortization of organizational costs (Note 1) 36,853
Insurance expense 36,364
New York Stock Exchange listing fee 26,185
Transfer agent fees 16,425
Miscellaneous expenses 41,150
- ---------------------------------------------------------------------------------------------
TOTAL EXPENSES 3,852,774
- ---------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (1,827,184)
=============================================================================================
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS (Note 2)
- ---------------------------------------------------------------------------------------------
NET REALIZED LOSS ON:
Investments (17,548,701)
Foreign currency transactions (144,676)
NET CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON:
Investments (64,935,355)
Other assets and liabilities denominated in foreign currency (215,050)
- ---------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS (82,843,782)
=============================================================================================
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (84,670,966)
=============================================================================================
</TABLE>
See accompanying notes to financial statements
-18-
<PAGE> 20
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- ---------------------------------------------------------------------------------------------
FOR THE PERIOD
FOR THE YEAR MARCH 3, 1994*
ENDED THROUGH
NOVEMBER 30, 1995 NOVEMBER 30, 1994
US $ US $
- ---------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment loss (1,827,184) (943,103)
Net realized gain (loss) on investments
and foreign currency transactions (17,693,377) 2,298,502
Net change in unrealized appreciation/
depreciation on investments and other
assets and liabilities denominated in
foreign currency (65,150,405) 16,269,375
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (84,670,966) 17,624,774
- ---------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS: (Note 10)
From net realized gain on investments (1,355,399) --
In excess of net realized gain
on investments (792,963) --
- ---------------------------------------------------------------------------------------------
Total distributions (2,148,362) --
- ---------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS: (Notes 1,9)
Common stock issued -- 157,635,000
Offering costs charged and adjustment
to additional paid-in capital 13,734 (1,075,000)
- ---------------------------------------------------------------------------------------------
Net increase in capital share transactions 13,734 156,560,000
- ---------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (86,805,594) 174,184,774
Net Assets:
Beginning of period 174,284,782 100,008
- ---------------------------------------------------------------------------------------------
End of period 87,479,188 174,284,782
=============================================================================================
</TABLE>
* Commencement of operations.
See accompanying notes to financial statements
-19-
<PAGE> 21
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
<TABLE>
<CAPTION>
Financial Highlights
- ---------------------------------------------------------------------------------------------
Selected data for a share of common stock outstanding throughout each period is
presented below.
FOR THE PERIOD
FOR THE YEAR MARCH 3, 1994*
ENDED THROUGH
NOVEMBER 30, 1995 NOVEMBER 30, 1994
US $ US $
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period 15.41 13.95**
Offering costs charged to additional
paid-in capital -- (0.10)
- ---------------------------------------------------------------------------------------------
15.41 13.85
- ---------------------------------------------------------------------------------------------
Net investment loss (0.16) (0.08)
Net realized and unrealized gain (loss) on
investments and other assets and liabilities
denominated in foreign currency (7.32) 1.64
- ---------------------------------------------------------------------------------------------
Total from investment operations (7.48) 1.56
- ---------------------------------------------------------------------------------------------
Distributions to Shareholders: (Note 10)
From net realized gain on investments (0.12) --
In excess of net realized gain on investments (0.07) --
- ---------------------------------------------------------------------------------------------
Total distributions (0.19) --
- ---------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD 7.74 15.41
=============================================================================================
MARKET PRICE, END OF PERIOD 9.00 13.75
=============================================================================================
TOTAL INVESTMENT RETURN BASED ON: (a) (b)
Net asset value (48.96)% 11.26%
Market price (33.48)% (1.43)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period $87,479,188 $174,284,782
Ratio of expenses to average net assets 2.90% 2.29%+
Ratio of expenses to average net assets, 2.35% --
excluding interest expense
Ratio of net investment loss to average net assets (1.38)% (0.75)%+
Portfolio turnover rate 49% 32%
</TABLE>
____________________
* Commencement of operations.
** Initial public offering price of $15.00 per share net of underwriting
discount of $1.05 per share.
+ Annualized.
(a) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of 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 sales charges or brokerage commissions.
Generally, total investment return based on net asset value will be higher
than total investment return based on market price in periods where there
is an increase in the discount or a decrease in the premium of the market
price to the net asset value from the beginning to the end of such periods.
Conversely, total investment return based on net asset value will be lower
than total investment return based on market value in periods where there
is a decrease in the discount or an increase in the premium of the market
value to the net asset value from the beginning to the end of such periods.
(b) Total investment return for a period of less than one year is not
annualized.
See accompanying notes to financial statements
20
<PAGE> 22
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Notes to Financial Statements
- --------------------------------------------------------------------------------
AT NOVEMBER 30, 1995
1. ORGANIZATION AND CAPITAL
Jardine Fleming India Fund, Inc. (the "Fund") was incorporated in the
State of Maryland on January 5, 1994 after the sale of 7,169 shares to
Jardine Fleming International Management Inc. (the "Adviser") and is
registered as a non-diversified, closed-end management investment company
under the Investment Company Act of 1940. The Fund commenced operations on
March 3, 1994 after issuing 10,750,000 shares of common stock in its
initial public offering. An additional 550,000 shares were issued in
connection with the exercise of the underwriters' over-allotment option.
Offering costs of $1,061,266 have been charged to additional paid-in
capital. Organizational costs of $135,644 have been deferred and are being
amortized on a straight-line basis over a 60-month period from the date
the Fund commenced operations.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund, which are in conformity with generally accepted accounting
principles.
I) SECURITY VALUATION
Net asset value is calculated at the close of business on Thursday of
each week or the preceding business day if the Bombay Stock Exchange
is not open for trading. All securities for which market quotations
are readily available are valued at the last sales price prior to the
time of determination, or, if no sales price is available at that
time, at the mean between the last current bid and asked prices.
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, or by amortizing their value on the 61st
day prior to maturity if their term to maturity from the date of
purchase is greater than 60 days. All other securities and assets are
valued at fair value as determined in good faith by or under the
direction of the Board of Directors.
II) FOREIGN CURRENCY TRANSLATION
The books and records of the Fund are maintained in US dollars.
Foreign currency amounts are translated into US dollars as follows:
o investments and other assets and liabilities denominated in
foreign currency at the prevailing rates of exchange on the
valuation date;
o purchases and sales of investments and income and expenses at
the prevailing rates of exchange on the respective dates of
such transactions.
The resulting net foreign currency gain or loss is included in the
Statement of Operations.
-21-
<PAGE> 23
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Although the net assets of the Fund are presented at the foreign
exchange rates and market values at the close of the fiscal year, the
Fund does not isolate that portion of the results of operations
arising as a result of changes in the foreign exchange rates from the
fluctuations arising from changes in the market prices of the
securities. Accordingly, such net realized and unrealized foreign
currency gain (loss) is included in net realized and unrealized loss
on investments. However, the Fund does isolate the effect of
fluctuations in foreign currency rates when determining the gain
(loss) upon the sale or maturity of foreign currency denominated debt
obligations pursuant to US federal income tax regulations.
Net foreign currency gain (loss) from valuing foreign currency
denominated assets and liabilities at year end exchange rates are
reflected as a component of net unrealized depreciation on
investments and other assets and liabilities denominated in foreign
currency.
Net realized foreign currency losses of $144,676 represent foreign
currency gains and losses from holdings of foreign currencies, sales
and maturities of foreign debt securities, transactions in foreign
currencies, currency gains or losses realized between the trade and
settlement dates on security transactions, and the difference between
the amounts of interest and dividends recorded on the Fund's books
and the US dollar equivalent of the amounts actually received or
paid.
III) INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the date the securities
are purchased or sold. Realized gains and losses on the sale of
investments are determined on the identified cost basis. Interest
income is recorded on the accrual basis. Dividend income and other
distributions are recorded on the ex-dividend date, except for
certain dividends which are recorded as soon after the ex-dividend
date as the Fund becomes aware of such dividends.
IV) DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the
ex-dividend date. The amount of dividends and distributions from net
investment income and net realized capital 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 capital
gains for tax purposes, they are reported as distributions of
additional paid-in capital. As a result of permanent book/tax
-22-
<PAGE> 24
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
differences primarily attributable to net investment loss, $2,008,506
has been reclassified to additional paid-in capital. Net assets were
not affected by this reclassification.
3. INVESTMENT ADVISER AND ADMINISTRATORS
I) The Adviser provides investment advisory services to the Fund under
the terms of an Investment Advisory Agreement. Under the Investment
Advisory Agreement, the Adviser is paid a monthly advisory fee at an
annual rate of 1.35% of the value of the Fund's average weekly net
assets.
II) Mitchell Hutchins Asset Management Inc. (the "Administrator"), a
wholly-owned subsidiary of PaineWebber Incorporated ("PaineWebber"),
provides administrative services to the Fund under an Administrative
Services Agreement. The Fund pays the Administrator a monthly fee at
an annual rate of 0.15% of the value of the Fund's average weekly net
assets up to $200 million and 0.10% of the value of such net assets
in excess of $200 million, with a minimum annual fee of $200,000.
Multiconsult Ltd. (the "Mauritius Administrator") provides certain
administrative services relating to the operation and maintenance of
the Fund's Mauritius branch. The Mauritius Administrator is paid a
monthly fee of $1,500, a quarterly fee of $1,000, and receives
reimbursement for certain out-of-pocket expenses.
4. PORTFOLIO TRANSACTIONS
For the year ended November 30, 1995, total purchases and sales of
portfolio securities, excluding short-term securities, were $66,292,522
and $67,026,916, respectively.
At November 30, 1995, the Fund owned securities valued at approximately
$17,446,000 which were in the process of being registered in the name of
the Fund. Indian securities regulations normally preclude the Fund from
selling such securities until the completion of the registration process.
5. US FEDERAL INCOME TAXES
It is the Fund's intention to qualify as a regulated investment company
and to distribute, at least annually, substantially all of its net
investment income and any net capital gains. Accordingly, no provision for
US federal income taxes is required. In addition, by distributing during
each calendar year substantially all of its net investment income, capital
gains and certain other amounts, if any, the Fund intends not to be
subject to US federal excise tax.
At November 30, 1995, the Fund had a capital loss carryforward of
$17,537,219 available as a reduction, to the extent provided in the
regulations of any future net capital gains realized before the end of
fiscal year 2003. To the extent that these losses are used to offset
future capital gains, such gains will not be distributed to shareholders.
-23-
<PAGE> 25
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
6. FOREIGN INCOME TAXES
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 in the accounts. The Fund is subject to and accrues
Indian withholding tax on interest earned on Indian securities at the rate
of 20%.
The Fund will pay tax in Mauritius on income distributions received from
the Fund's investments in India at rates which, when offset by the credit
available in respect of tax withheld in India on payment of income to the
Fund, will result in a net payment in Mauritius in respect of such
distributions at an effective rate of approximately 1%. For the year ended
November 30, 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 and in the
tax treaty between India and Mauritius.
7. TRANSACTIONS WITH AFFILIATES
Jardine Fleming International Inc. and Robert Fleming, Inc., affiliates of
the Adviser, participated in the underwriting group as managers in the
offering of the Fund's common stock. Jardine Fleming International Inc.
informed the Fund that it received $714,411 in underwriting and management
fees, and $1,117,305 in selling concessions for the sale of 2,590,700
shares. Robert Fleming, Inc. informed the Fund that it received $295,286
in underwriting and management fees and $134,294 in selling concessions
for the sale of 422,367 shares. PaineWebber also participated in the
underwriting group as managers in the offering of the Fund's common stock.
PaineWebber informed the Fund that it received $1,009,697 in underwriting
and management fees and $2,654,321 in selling concessions for the sale of
5,171,067 shares.
The Adviser, out of its advisory fee, pays PaineWebber a fee in an amount
equal to 0.10% of the Fund's average weekly net assets in consideration
for certain consulting and support services (not including advice or
recommendations regarding the purchase or sale of investment securities).
For the year ended November 30, 1995, $132,977 was paid or accrued by the
Adviser to PaineWebber for such services. For the year ended November 30,
1995, the Administrator, which is an affiliate of PaineWebber, earned
$200,000 in administration fees from the Fund.
-24-
<PAGE> 26
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
For the year ended November 30, 1995, the Fund paid $141,889 in brokerage
commissions to Jardine Fleming India Broking, (Pvt) Ltd., an affiliate of
the Adviser.
The Fund has entered into a multi-currency Revolving Credit Agreement (the
"Agreement"), payable on demand, with Jardine Fleming Bank Limited (the
"Lender"), an affiliate of the Adviser. The maximum credit available under
the Agreement is the lower of $15,000,000 or 20% of the Fund's total
assets. Interest payments on borrowings are based on 1.75% per annum over
the Lender's cost of funds. For the year ended November 30, 1995, the
weighted average interest rate paid by the Fund was 6.44% and the maximum
and average amount of the loan outstanding during the year was $14,784,482
and $11,390,987, respectively. For the year ended November 30, 1995,
$734,016 was paid or accrued by the Fund to the Lender for interest under
the Agreement. At November 30, 1995, $6,288,627 was outstanding pursuant
to the Agreement.
8. CONCENTRATION OF RISK
Investments in India may involve certain considerations and risks not
typically associated with investments in the US as a result of, among
others, the possibility of future political and economic conditions of
developing countries and the level of Indian governmental supervision and
regulation of its securities markets. The ability of the issuers of the
debt securities held by the Fund to meet their obligations may be affected
by economic and political developments in a specific industry or region.
9. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR MARCH 3, 1994*
ENDED THROUGH
NOVEMBER 30, 1995 NOVEMBER 30, 1994
-------------------------------------------------------------------
Shares Amount Shares Amount
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, beginning
of period 11,307,169 $156,660,008 7,169 $ 100,008
Net shares/proceeds
from the initial offering -- -- 10,750,000 149,962,500
Net shares/proceeds
from the exercise of
the underwriters' over-
allotment option -- -- 550,000 7,672,500
Offering costs charged
and adjustment/
reclassifications to
additional paid-in
capital (Note 2) -- (1,994,772) -- (1,075,000)
-------------------------------------------------------------------
Balance, end of period 11,307,169 $154,665,236 11,307,169 $156,660,008
===================================================================
</TABLE>
* Commencement of operations.
-25-
<PAGE> 27
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
10. SHORT-TERM CAPITAL GAIN DISTRIBUTIONS
On December 20, 1994, the Board of Directors of the Fund declared a
short-term capital gain distribution of $0.178 per share, which was paid
on January 19, 1995 to shareholders of record on December 30, 1994.
On August 14, 1995, the Board of Directors of the Fund declared an
additional short-term capital gain distribution of $0.012 per share, which
was paid on September 14, 1995 to shareholders of record on August 24,
1995.
11. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
NET REALIZED
AND UNREALIZED NET
GAIN (LOSS) ON INCREASE (DECREASE)
NET INVESTMENTS AND IN NET ASSETS
INVESTMENT FOREIGN CURRENCY RESULTING FROM MARKET PRICE
LOSS TRANSACTIONS OPERATIONS ON NYSE
---------------------------------------------------------------------------------------------------
Per Per Per
Total Share Total Share Total Share High Low
QUARTER ENDED (000) US $ (000) US $ (000) US $ US $ US $
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
February 28, 1995 (800) (.07) (33,376) (2.95) (34,176) (3.02) 14.875 10.625
May 31, 1995 (657) (.06) (3,367) (0.30) (4,024) (0.36) 12.500 10.000
August 31, 1995 (172) (.01) (9,305) (0.82) (9,477) (0.83) 12.750 10.375
November 30, 1995 (198) (.02) (36,796) (3.25) (36,994) (3.27) 10.750 8.250
---------------------------------------------------------------------------------------------------
(1,827) (.16) (82,844) (7.32) (84,671) (7.48)
---------------------------------------------------------------------------------------------------
May 31, 1994* (266) (.02) 6,999 0.62 6,733 0.60 16.500 13.000
August 31, 1994 (490) (.04) 30,767 2.72 30,277 2.68 16.375 13.500
November 30, 1994 (187) (.02) (19,198) (1.70) (19,385) (1.72) 15.375 13.500
---------------------------------------------------------------------------------------------------
(943) (.08) 18,568 1.64 17,625 1.56
===================================================================================================
</TABLE>
* For the period March 3, 1994 (commencement of operations) through May
31, 1994.
-26-
<PAGE> 28
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
Jardine Fleming India Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, 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 Jardine Fleming India Fund, Inc.
(the "Fund") at November 30, 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 March 3, 1994 (commencement of
operations) through November 30, 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 November 30, 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
January 22, 1996
-27-
<PAGE> 29
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Dividend Reinvestment Plan
- --------------------------------------------------------------------------------
The Fund operates an optional Dividend Reinvestment Plan (the "Plan") whereby:
a) shareholders may elect to receive income dividends and capital gain
distributions (collectively referred to as "distributions") in the form of
additional shares of the Fund (the "Share Distribution Plan").
b) shareholders who do not participate in the Plan will receive all
distributions in cash paid by check in dollars mailed directly to the
shareholder by State Street Bank & Trust Company (the "Plan Agent"), as
dividend paying agent.
The following should be noted with respect to the Plan:
1) The Share Distribution Plan allows you to reinvest your distributions into
newly issued shares of the Fund with no brokerage charge or, if the market
price of the shares on the distribution date is below their net asset
value, have the Plan Agent purchase shares on your behalf in the open
market at a pro rata share of the brokerage commission. Such
distributions, if any, would be declared in December and paid and
reinvested in January. Shareholders do not pay a service charge to
participate in this program.
2) Under the Share Distribution Plan, whenever the Board of Directors of the
Fund declares a distribution, you will automatically receive your
distribution in newly issued shares (cash will be paid in lieu of
fractional shares), if the market price of the shares on the date of the
distribution is at or above the net asset value ("NAV") of the shares. The
number of shares to be issued to you by the Fund will be determined by
dividing the amount of the cash distribution to which you are entitled
(net of any applicable withholding taxes) by the greater of the NAV per
share on such date or 95% of the market price of a share on such date. If
the market price of the shares on such a distribution date is below the
NAV, the Plan Agent will, as agent for the participants, purchase shares
on the open market, on the New York Stock Exchange or elsewhere, for the
participant's account on, or after, the payment date.
3) For U.S. federal income tax purposes, shareholders electing to receive
newly issued shares pursuant to the Share Distribution Plan will be
treated as receiving income or capital gains in an amount equal to the
fair market value (determined as of the distribution date) of the shares
received and will have a cost basis equal to such fair market value.
Shareholders receiving a distribution in the form of shares purchased in
the open market pursuant to the Share Distribution Plan will be treated as
receiving a distribution of the cash distribution that such shareholder
would have received had the shareholder not elected to have such
distribution reinvested and will have a cost basis in such shares equal to
the amount of such distribution.
4) There will be no brokerage charge to participants for shares issued
directly by the Fund under the Share Distribution Plan. Each participant
will pay a pro rata share of brokerage commissions incurred with respect
to the Plan Agent's open market purchases of shares in connection with the
Share Distribution Plan. The Fund will pay fees of the Plan Agent for
handling the Share Distribution Plan.
-28-
<PAGE> 30
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Dividend Reinvestment Plan (continued)
- --------------------------------------------------------------------------------
5) You may terminate your account under the Share Distribution Plan by
notifying the Plan Agent in writing. The Plan may be terminated by the
Plan Agent or the Fund with notice to you at least 30 days prior to any
record date for the payment of any distribution by the Fund. Upon any
termination, the Plan Agent will deliver a certificate or certificates for
the full shares held for you under the Plan and a cash adjustment for any
fractional shares.
This information is only a summary. To receive a copy of the Dividend
Reinvestment Plan brochure describing the full terms and conditions of the Plan,
please contact:
State Street Bank & Trust Company
P.O. Box 8200
Boston, MA 02266-8200
USA
-29-
<PAGE> 31
[JARDINE FLEMING LOGO]
JARDINE FLEMING
INDIA FUND, INC.
Other Information
- --------------------------------------------------------------------------------
Since November 30,1994 there have been (i) no material changes in the Fund's
investment objectives or policies, (ii) no changes in the Fund's charter or
by-laws, (iii) no material changes in the principal risk factors associated with
investment in the Fund, and (iv) no change in the person primarily responsible
for the day-to-day management of the Fund's portfolio, who is Jonathan Boyer,
the portfolio manager.
ANNUAL SHAREHOLDERS MEETING
The Fund's annual meeting of shareholders was held on May 11, 1995. Shareholders
voted to elect Julian M.I. Reid, Jean Jocelyn de Chasteauneuf, Sir Satcam
Boolell and Timothy R.H. Kimber as Directors, ratified the appointment of Price
Waterhouse LLP as the Fund's independent accountant, and approved the Investment
Advisory Agreement dated March 2, 1994. The resulting vote count for each
proposal is listed below:
1. Election of Directors:
Julian M.I. Reid For: 5,466,400
Withheld Authority: 1,003,060
Jean Jocelyn de Chasteauneuf For: 5,466,500
Withheld Authority: 1,002,960
Sir Satcam Boolell For: 5,465,500
Withheld Authority: 1,003,960
Timothy R.H. Kimber For: 5,467,400
Withheld Authority: 1,002,060
2. Ratification of Appointment of Price Waterhouse LLP as the Fund's
Independent Accountant:
For: 5,113,864
Against: 10,142
Abstain: 1,345,454
3. Approval of the Investment Advisory Agreement:
For: 4,677,397
Against: 1 4,527
Abstain: 1,777,536
-30-
<PAGE> 32
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that from time to time the Fund may purchase at
market prices shares of its common stock in the open market.
This report, including the financial statements herein, is sent to the
shareholders of the Fund for their information. It is not a prospectus, circular
or representation intended for use in the purchase or sales of shares of the
Fund or of any securities mentioned in this report.
<PAGE> 33
JFI
LISTED
NYSE
MITCHELL HUTCHINS ASSET MANAGEMENT INC.
Administrator for Jardine Fleming India Fund, Inc.
1285 Avenue of the Americas
New York, N.Y. 10019
Telephone 212-713-2848
