Annual Financial Report

RNS Number : 9925H

Aberdeen New India Invest Trust PLC

14 June 2017

 

ABERDEEN NEW INDIA INVESTMENT TRUST PLC

ANNUAL FINANCIAL REPORT

For the year ended 31 March 2017

FINANCIAL HIGHLIGHTS

Share price total return{A}			Net asset value total return{A}
2017	+40.9%		2017	+34.7%
2016	-11.0%		2016	-6.1%
Benchmark total return{A}
2017	+36.1%
2016	-10.3%
{A}Total return represents capital return plus dividends reinvested

OVERVIEW

Aberdeen New India Investment Trust PLC (the "Company") is an investment trust with its Ordinary shares listed on the premium segment of the London Stock Exchange. The Company is an approved investment trust and aims to provide shareholders with long-term capital appreciation by investment in companies which are incorporated in India, or which derive significant revenue or profit from India, with dividend yield from the Company being of secondary importance.

The Company is governed by a board of directors, all of whom are independent, and has no employees. Like other investment companies, it outsources its investment management and administration to an investment management group, the Aberdeen Asset Management group of companies, and other third party providers.

The Company does not have a fixed life but an Ordinary resolution to continue the Company is put to shareholders at each Annual General Meeting ("AGM").

Management

The Company has appointed Aberdeen Fund Managers Limited ("AFML", " Manager", or "AIFM") as its alternative investment fund manager, which has in turn delegated certain responsibilities, including investment management, to Aberdeen Asset Management Asia Limited ("AAMAL" or "Investment Manager").

Financial Calendar

5 September 2017	Annual General Meeting (12.30pm), Bow Bells House, 1 Bread Street, London, EC4M 9HH
November 2017	Announcement of Half-Yearly Financial Report for the six months ending 30 September 2017

CHAIRMAN'S STATEMENT

Dear Shareholder,

For the year ended 31 March 2017, your Company's net asset value ("NAV") per share rose by 34.7% to reach 487.9p. The ordinary share price rose by 40.9% to 441.5p. This reflected a narrowing of the discount to net asset value from 13.5% to 9.5% as at 31 March 2017. By comparison, the benchmark MSCI India Index (Sterling-adjusted total return) rose by 36.1%. Over the five years ended 31 March 2017, the NAV per share and benchmark total return increased by 100.0% and 73.1%, respectively.

Indian equities made sizeable gains in the year under review, despite some periods of short-term stress. Investors were encouraged by the increased pace of reforms enacted by Prime Minister Narendra Modi's government, and positive economic data that pointed to an exceptional rate of growth. Domestic stocks remained fairly resilient, and largely insulated from the twin external shocks of Brexit and Donald Trump's election victory, as well as the Federal Reserve's two well-flagged interest rate hikes.

The passing of the goods and services (GST) bill, ten years in the making, was perhaps the high point in terms of policy reforms for Mr Modi during the year. New legislation will consolidate a taxation system, fragmented by state, into a more unified national regime. This should make inter-state trade less cumbersome for businesses and improve efficiencies and cost controls. Although logistical challenges remain ahead of the GST's nation-wide roll-out, the long-term benefits are apparent.

Mr Modi's surprise decision to demonetise high-denomination Rupee notes as part of a crackdown on corruption dented sentiment in the immediate aftermath. In the ensuing chaos, India's cash-reliant masses endured long queues at banks, and corporates had to contend with supply-chain disruption and more subdued consumer spending, particularly in the discretionary segment. However, the portfolio of underlying stocks that your Company holds appear to have weathered the storm well. Many posted resilient December-quarter earnings, demonstrating skill in adjusting to the challenges posed by the liquidity squeeze. While poorly executed in the initial stages, the cash crunch began to recede within months. The BJP government appeared to have been vindicated when it won key state elections, including in the crucial state of Uttar Pradesh. This should give Mr Modi more leeway to continue pushing forward with his reform agenda.

The 2017 Union budget seemed to satisfy most quarters. Fiscally conservative, it bolstered support for key sectors such as agriculture and infrastructure. Foreign investors were pleased that a previously-suspended long-term capital gains tax proposal was not revived. Meanwhile, economic news over the review period was mixed - India's development continued to outpace most of the world and the 'Make in India' campaign had some success in attracting foreign investment and lifting manufacturing output. However, demonetisation took a toll on consumption and credit risks continued to plague the country's public-sector banks. Inflation slowed to more manageable levels, and the monetary policy committee (MPC) of the Reserve Bank of India, formed to increase transparency and improve decision-making during the year, took markets by surprise with a rate cut to 6.5%. It later moved from an accommodative stance to a more neutral one, anticipating that growth may accelerate in 2018. This followed a smooth transition at the RBI with well-regarded Governor Raghuram Rajan handing over to Urjit Patel, who appears set to maintain the policies of his predecessor.

Continuation of the Company

Your Board considers that the Company's investment objective remains relevant and appropriate and therefore recommends that Shareholders vote in favour of Ordinary resolution 9 at the Annual General Meeting ("AGM"), to allow the Company to continue as an investment trust until the AGM in 2018.

Change of Company's name

The Board considered that the addition of the "Aberdeen" prefix would enhance opportunities for promotion of the Company with the aim of improving the liquidity and rating of the Company's shares over the longer term. Accordingly, the Board decided that the Company would be renamed "Aberdeen New India Investment Trust PLC" with effect from 3 January 2017.

Board

I was delighted to welcome Michael Hughes as a Director in September 2016 after a recruitment exercise undertaken by an independent search consultancy. Michael's wide-ranging investment experience will be of considerable benefit to the Board.

Manager

Your Board has carefully considered the continued appointment of your Manager.  The Manager's recent performance and long-term track record, as well as their expertise and tested investment style, makes the case for their continued appointment.

The Board notes the proposed recommended merger between Aberdeen and Standard Life. This is subject to shareholder and regulatory approvals. Both companies are setting up a highly experienced and dedicated integration team, leaving investment professionals free to concentrate on investment management. The Board intends to ensure that our Manager remains focused on the best interests of the Company and its shareholders.

Annual General Meeting

The AGM, which will be held at Bow Bells House, 1 Bread Street, London EC4M 9HH on Tuesday 5 September 2017 at 12.30pm, provides shareholders with an opportunity to ask any questions that they may have of either the Board or the Manager. I look forward to meeting as many of you as possible over refreshments which will follow the AGM.

Outlook

India remains a domestically-focused economy, and this insulates it from much of the global volatility that affects other emerging markets. However, it is not completely immune to the shifting patterns of world trade, a revival in US protectionism or changes in commodity prices. In fact, a higher oil price is a key risk for Indian corporates, as it could aggravate costs and put pressure on margins, while visa restrictions could adversely hit outsourcing companies in the IT sector.

At home, from Aadhaar (a nation-wide identity card) to a new bankruptcy code, from GST to the now-institutionalised MPC, the Modi government continues to make good on some of its pledges to liberalise the Indian economy and ease the cost of doing business. Demonetisation has been a significant long-term positive for the country despite the short-term pain. It has created an opportunity to clamp down on corruption, widen the tax net, bringing the informal sector into the fold, and adding momentum to becoming a cashless society. There may be some disruption when GST is first implemented, but most businesses seem optimistic that it will help improve logistics and cut costs in the long term. However, both consumer spending and capital investment remain muted and some structural reforms such as bank recapitalisation have not been addressed as yet. Nevertheless, the overall economic outlook is positive and should present investors with periodic opportunities to add to their current positions.

Hasan Askari

Chairman

13 June 2017

STRATEGIC REPORT - OVERVIEW OF STRATEGY

Business Model

The business of the Company is that of an investment company which seeks to qualify as an investment trust for UK capital gains tax purposes. The Directors do not envisage any change either to this model or to the Company's activities in the foreseeable future.

Investment Objective

The Company aims to provide shareholders with long-term capital appreciation by investment in companies which are incorporated in India, or which derive significant revenue or profit from India, with dividend yield from the Company being of secondary importance.

Investment Policy

The Company primarily invests in Indian equity securities.

Risk Diversification

Delivering the Investment Policy

The Company's investment policy is flexible, enabling it to invest in all types of securities, including equities, debt and convertible securities in companies listed on the Indian stock exchanges or which are listed on other international exchanges and which derive significant revenue or profit from India. The Company may also, where appropriate, invest in open-ended collective investment schemes and closed-end funds which invest in India and are listed on the Indian stock exchanges. The Company is free to invest in any particular market segment or geographical region of India or in small, mid or large capitalisation companies.

The Company's portfolio will typically comprise in the region of 25 to 50 holdings but with due consideration given to spreading investment risk.

Gearing

The Company is permitted to borrow up to 25% of its net assets (measured when new borrowings are incurred). It is intended that this power should be used to leverage the Company's portfolio in order to enhance returns when and to the extent that it is considered appropriate to do so. Gearing will be used in relation to specific opportunities or circumstances. The Directors will take care to ensure that borrowing covenants would permit flexibility of investment policy. As at 31 March 2017, the Company had no borrowing facility in place.

Currency and Hedging Policy

The Company's financial statements are maintained in Sterling while, because of its investment focus, many of the Company's investments are denominated and quoted in currencies other than Sterling, including in particular, the Indian Rupee. Although it is not the Company's present intention to do so, the Company may, where appropriate and economic to do so, employ a policy of hedging against fluctuations in the rate of exchange between Sterling and other currencies in which its investments are denominated. Cash balances are held in such currency or currencies as the Manager considers appropriate, although it is expected that this would primarily be Sterling.

Investment Restrictions

It is the investment policy of the Company to invest no more than 15% of its gross assets in other listed investment companies (including listed investment trusts). The Company does not have any investments in other listed investment companies as at 31 March 2017.

Benchmark

The Company's benchmark is the MSCI India Index (Sterling-adjusted).

Key Performance Indicators

At each Board meeting, the Directors consider a number of performance measures to assess the Company's success in achieving its objective.  The main Key Performance Indicators ("KPIs") identified by the Board in relation to the Company, which are considered at each Board meeting, are as follows:

KPI	Description
Performance of the Net Asset Value ("NAV") and share price compared to the MSCI India Index return (Sterling-adjusted)	The Board considers the Company's NAV return and share price return, relative to the MSCI India Index (Sterling-adjusted), to be the best indicator of performance over time. The figures for this year and for the past three and five years and a graph showing NAV total return performance against the MSCI India Index over the past five years are included in the Annual Report.
Discount to NAV	The discount at which the Company's share price trades relative to the NAV per share is monitored by the Board. A graph showing the discount over the last five years is shown in the Annual Report.
Ongoing charges	The Board regularly monitors the operating costs of the Company and the Ongoing charges for this year and the previous year are disclosed in Results.

Principal Risks and Uncertainties

There are a number of risks which, if realised, could have a material adverse effect on the Company and its financial position, performance and prospects. The Board has carried out a robust assessment of these risks, which include those that would threaten its business model, future performance and solvency. The principal risks associated with an investment in the Company's shares are published monthly in the Company's factsheet or they can be found in the pre-investment disclosure document ("PIDD") published by the AIFM, both of which are available from the Company's website: aberdeen-newindia.co.uk.

The principal risks and uncertainties faced by the Company are reviewed annually by the Audit Committee in the form of a detailed risk matrix and heat map and they are described in the table below, together with any mitigating actions.

Some of these risks can be mitigated or managed to a greater or lesser extent by the actions of the Board in appointing competent investment managers and depositaries. In addition, the Board seeks to put in place, through its contractual arrangements and through various monitoring processes, controls which should avert (but do not guarantee the avoidance of) what might be regarded as operational mistakes. However, investment tends to involve both risk and opportunity regarding future prospects, and the Board cannot avoid either in the Company's search for returns.

Description	Mitigating Action
Market risk - falls in the prices of securities issued by Indian companies, which may themselves be determined by local and international economic, political and financial factors and management actions;	The Investment Manager seeks to diversify market risk by investing in a wide variety of companies with strong balance sheets and the earnings power to pay increasing dividends. In addition, investments are made in diversified sectors in order to reduce the risk of a single large exposure; at present the Investment Manager may not invest more than 10% of the Company's net assets in any single stock (measured when the investment is made) unless a specific waiver is sought from the Board. The Investment Manager believes that diversification should be looked at in absolute terms rather than relative to the MSCI India Index. The performance of the portfolio relative to the MSCI India Index and the underlying stock weightings in the portfolio against their index weightings are monitored closely by the Board.
Foreign exchange - adverse movements in the exchange rate between Sterling and the Rupee, as well as between other currencies, affecting the overall value of the portfolio;	The Board monitors the Rupee/Sterling exchange rate and reviews the currency impacts on both capital and income at each meeting although the Company did not hedge its foreign currency exposure during the year.
Discount - factors which affect the discount to net asset value ("NAV") at which the Ordinary shares of the Company trade. These may include the popularity of the investment objective of the Company, the popularity of investment trust shares in general and the ease with which the Company's Ordinary shares can be traded on the London Stock Exchange;	The Board keeps under review the discount and may consider selective buyback of shares where to do so would be in the best interests of shareholders, balanced against reducing overall size of the Company. Any shares bought back would be either cancelled or held in treasury.
Depositary risk - insolvency of the depositary or custodian or sub-custodian, or a shortfall in the assets held by that depositary, custodian or sub-custodian arising from fraud, operational errors or settlement difficulties resulting in a loss of assets owned by the Company; and	The depositary, BNP Paribas, presents to the Board at least annually on the Company's compliance with AIFMD. The Manager separately monitors the activities of the depositary and reports to the Board on any exceptions arising.
Regulatory risk -  changes in or breaches of the complicated set of statutory, tax and regulatory rules within which the Company seeks to conduct its business.	The Board is responsible for ensuring the Company's compliance with applicable regulations. Monitoring of this compliance, and regular reporting to the Board thereon, has been delegated to the Manager. In particular, the Board receives reports from the Manager covering investment movements, the level and type of forecast income and expenditure and the amount of proposed dividends with a view to ensuring that the Company continues to qualify as an investment trust under Chapter 4 of Part 24 of the Corporation Tax Act 2010. A breach of these regulations would mean that the Company is no longer exempt from capital gains tax on profits realised from the sale of its investments. The Board receives updates from the Manager and AIC briefings concerning industry changes. From time to time, the Company also employs external professionals to advise on any specific areas of compliance. The Company may be liable to Indian short-term capital gains tax of 15% although this is likely to be partly mitigated through the Manager's investment process with its emphasis on buy-and-hold.

Other financial risks are detailed in note 15 to the financial statements.

Promoting the Company

The Board recognises the importance of promoting the Company to prospective investors both for improving liquidity and enhancing the value and rating of the Company's shares. The Board believes an effective way to achieve this is through subscription to, and participation in, the promotional programme run by the Aberdeen Group on behalf of a number of investment companies under its management. The Company's financial contribution to the programme is matched by the Aberdeen Group.  The Aberdeen Group Head of Brand reports quarterly to the Board giving analysis of the promotional activities as well as updates on the shareholder register and any changes in the composition of that register.

The purpose of the programme is both to communicate effectively with existing shareholders and to gain new shareholders with the aim of improving liquidity and enhancing the value and rating of the Company's shares. Communicating the long-term attractions of the Company is key and therefore the Company also supports the Aberdeen Group's investor relations programme which involves regional roadshows, promotional and public relations campaigns. 

Board Diversity

The Board recognises the importance of having a range of skilled, experienced individuals with the right knowledge in order to allow the Board to fulfill its obligations.  At 31 March 2017, there were three male Directors and one female Director.

Environmental, Social and Human Rights Issues

The Company has no employees as it is managed by Aberdeen Fund Managers Limited and there are therefore no disclosures to be made in respect of employees. The Company's socially and environmentally responsible investment policy is outlined in the Annual Report.

Due to the nature of the Company's business, being a company that does not offer goods and services to customers, the Board considers that it is not within the scope of the Modern Slavery Act 2015 because it has no turnover. The Company is therefore not required to make a slavery and human trafficking statement. Notwithstanding this, the Board considers the Company's supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

Global Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

Duration

The Company does not have a fixed life, but an Ordinary resolution to continue the Company is put to shareholders at each AGM.

Likely Future Developments

The Board expects the Company to continue to pursue its investment objective and accepts that this may involve divergence from the benchmark. The companies which make up the investment portfolio are considered by the Investment Manager to demonstrate resilience and to offer opportunities for investors to benefit from the development of the broader Indian economy. Further information on the outlook and future developments of the Company may be found in the Chairman's Statement and Investment Manager's Report.

Hasan Askari

Chairman

13 June 2017

STRATEGIC REPORT - INVESTMENT MANAGER'S REPORT

Portfolio Overview

The Company's net asset value ("NAV") grew by 34.7% in Sterling terms in the year ended 31 March 2017, while the share price rose by 40.9%, versus the benchmark MSCI India Index's (the "Index") total return of 36.1%. The health-care and IT sectors were the key drivers of the market's performance.  The small under-performance of the Company's NAV against the Index was due to the overweight in consumer and material companies whose activities were most affected, temporarily, by demonetisation.

Piramal Enterprises, was the single biggest contributor to relative performance. Although categorised as a health-care stock, it has a fast-growing financial services arm and news of plans to split the company into two separate entities propelled its share price upwards. The move should unlock value for the conglomerate by spinning off its unrelated businesses. Biocon rallied on optimism over the filing of four new generic drugs in the EU and US over the next year. The portfolio benefited further from not holding Dr Reddy's Laboratories, seemingly embroiled in a US price collusion probe. The gains, however, were pared by the small position in GlaxoSmithKline Pharmaceutical, as its share price succumbed to disappointing results, US regulatory and pricing pressures, as well as domestic drug price controls.

Also aiding performance was the underweight to the IT sector, which was a relative laggard. The operating environment turned more unpredictable as Western clients cut back on their IT spending and US President Trump threatened to clamp down on foreign talent. The underweight to Infosys, which fared less well, also contributed positively. Infosys posted lacklustre results and downgraded its outlook, owing to unexpected setbacks in discretionary spending on consulting services, package implementation and project ramp-ups.

In the consumer staples sector, stock selection was positive. Cigarette maker ITC posted decent quarterly results and benefited from the GST council's decision to leave rates unchanged for tobacco, while Godrej Consumer Products' share price was underpinned by continued healthy growth both domestically and overseas. However, the reverse was true for the consumer discretionary sector, as stock selection detracted. This sector was hurt disproportionately by demonetisation, as consumers delayed buying big-ticket items like two- and four-wheelers. Hero MotoCorp underperformed, with sales volumes declining by 15% in November, largely in line with its peers.

Among financial holdings, HDFC Bank and Kotak Mahindra Bank both gained from demonetisation, posting solid income growth driven largely by net interest income. Similarly, Gruh Finance's earnings were driven by higher net interest income and a tighter rein on operating expenses, despite higher provisions. Not holding Axis Bank was also positive, after the lender's bad loan provisions increased sharply.

The overweight to materials buoyed performance, as the sector rebounded on stable prices and a recovery in volumes.  This, however, was overshadowed by the underlying cement and paints holdings, as demonetisation hurt the supply chains of the two largely cash-based sectors in the short term. Ambuja Cements, ACC and Asian Paints underperformed, although benign raw material costs helped boost the bottom lines of Grasim Industries and Kansai Nerolac Paints.

Elsewhere, utility company Gujarat Gas was a key contributor. It was aided by a pick-up in volumes, as gas is competitively priced with other alternatives, and by effective cost management.

In contrast, stock selection in the industrials sector dragged down performance. Container Corporation faced an anaemic trade environment and tariff pressures from Indian Railways, while power and automation equipment maker ABB India has yet to see significant earnings growth that would support its relatively high valuations, although it continues to benefit from lower raw material and financing costs.

The underweight to energy detracted, as the sector was buoyed by stabilising commodity prices. Not holding energy heavyweights Reliance Industries and Vedanta also hurt the fund.

Economic News

Indian equities posted impressive returns over the review period. Oil prices stabilised and the global economy appeared to be on the mend, offsetting unexpected political outcomes including Brexit and Donald Trump's US presidential election win. Also, the US Federal Reserve started a slow but steady tightening cycle with two interest rate hikes. Domestically, Prime Minister Narendra Modi scored key reform and political successes, even as he caused short-term upheaval through demonetisation, with the impact falling unevenly across different sectors.

Your Chairman has highlighted the key themes in his Statement, which we will use to illustrate how your Company's holdings are responding or could benefit from them. First, GST is set to be rolled out on 1 July, with scope for cost-savings particularly for cement producers, such as Ultratech. Aside from lower taxes, they will be able to sell cement freely across state boundaries and reduce their depots significantly, as deliveries will go directly to distributors. Similarly, fast-moving consumer goods companies could also reap savings in logistics and distribution costs. Hindustan Unilever, for example, is already working with customers, suppliers and distributors to overhaul its procurement and distribution network.

Next, demonetisation appeared to have caused some initial disruption to earnings, but the worst seems to be over. Admittedly, sluggish demand could continue to weigh on earnings for another quarter or so, but the latest results season showed most of the portfolio holdings were resilient. In the cement sector, for example, volumes fell after demonetisation but the businesses were quick to adjust by using cashless payments. These companies are also anticipating a more sustained recovery over the new few years, given increased government spending on infrastructure and affordable housing.

Meanwhile, recent company visits showed an upbeat mood across the underlying holdings, although they see rising oil prices as a key inflation risk. More broadly, we have yet to see an improvement in revenue growth, while a recovery in private-sector capital expenditure remains elusive, given excess capacity and funding concerns.

Finally, we thought that the 2017 union budget was a sensible one, sticking to fiscal targets and helping rural consumers and small to medium enterprises cushion the short-term impact of demonetisation. A greater commitment to spending on infrastructure and the rural economy should benefit companies in the materials sector. Separately, the cigarette tax hike was lower than expected, while the tax net was cast wider to draw in companies that produced bidi (a local tobacco product), both of which would benefit ITC. 

Sector Views

Information Technology

The sector is undergoing a transition. Demand dynamics are changing fast, driven by changes in automation and digital encompassing social, mobility, analytics and cloud. Your Company's holdings are preparing for this in their own way. Tata Consultancy Services (TCS) is committed to "back-end" services. Infosys aims to offer more along the entire value chain of IT services, via consulting work and investment in platforms and products. US-listed Cognizant Technology Solutions is focusing on its proven consulting capabilities and domain expertise in health care.

Infosys and TCS reported results that met our expectations. Both companies have yet to see changes in their clients' spending ahead of potential visa- or regulatory-related changes in the US after Donald Trump's win. We are mindful that any overhaul of the H1B visa scheme could raise costs for Indian IT firms, but the legislative process could be protracted, giving them time to increase local hires and automation to mitigate the impact. 

Meanwhile, growing concerns about a potential lapse in corporate governance standards at Infosys spilled into the public arena following an inflammatory interview with one of the founders in the local press. As a significant minority shareholder in Infosys, we had been aware of the allegations for some time and had been working behind the scenes to decipher fact from fiction. We accelerated this work during the first three months of 2017, engaging with the senior management, board and founders to ensure our interests remained protected and that the matter was being dealt with appropriately.

We also engaged with the board and management of Tata Consultancy Services (TCS) and two independent directors regarding the extraordinary general meeting to remove Cyrus Mistry as a company director, following the public fallout between Tata Sons' Ratan Tata and Mistry. We voted in favour of the resolution to remove Mistry, hoping that as far as TCS is concerned the issue was resolved promptly and a line was drawn under the controversy allowing the company to focus on its business and executing its strategy. Subsequently, TCS chief executive N. Chandrasekaran ("Chandra") was appointed chairman of the parent, Tata Sons, handing over the reins to Rajesh Gopinath, the chief financial officer. Chandra will become TCS chairman, thus ensuring some continuity, while Gopinath is regarded as a safe pair of hands, having been with TCS for 15 years and a familiar face to us and the broader investment community.

Capital management was a key focus among your Company's holdings. Cognizant responded to activist investor Elliott Management with a detailed plan to expand margins, allocate capital and rejuvenate the board. It will return US$3.4 billion in capital over the next two years. Both TCS and Mphasis announced share buybacks of 2.8% and 8% of issued capital respectively. Infosys is seeking shareholder approval to amend its articles of association to include a buyback provision of US$2.5 billion.

Energy

We remain sceptical about state-owned energy companies, which are subject to policy risks, and about Reliance Industries, which has a history of aggressive expansion in upstream resource exploration and telecommunications - sectors that often require extensive capital outlay in areas where the company has neither a proven track record nor obvious competitive advantage.

The portfolio's only exposure is through Aegis Logistics, an oil and gas logistics provider that has a first-mover advantage in establishing a network of terminals, handling bulk liquids and liquefied petroleum gas, near its customers. It reported solid earnings for the December quarter, buoyed by robust throughput volumes.

Financials

The sector is dominated by poorly run and undercapitalised state banks, which are losing market share to more efficient and better managed private-sector peers. We expect the private lenders to gain more ground, as they have capital for growth, cleaner balance sheets and more nimble management. Your Company has exposure to the HDFC group of companies, including HDFC, HDFC Bank and Gruh Finance; Kotak Mahindra Bank; and ICICI Bank.

Perhaps the only beneficiary of demonetisation, the sector has seen an increase in both current and savings account deposits. Loan growth remains in double digits. Asset quality has been kept in check. The exception is ICICI, which reported higher non-performing loans and expects this to stay elevated in the next few quarters.

Consumer Discretionary

We prefer the two-wheeler segment, which has less competition and more economies of scale than the auto market. It is also more resilient as motorcycles are more affordable and functional, often seen as a necessity rather than a luxury item.

As such, your Company holds Hero MotoCorp, which was hurt by demonetisation as its volumes fell by 15-16% year-on-year in the last two months of 2016. While Hero is benefiting from a decline in the steel price and cost controls, its management anticipates some pressure on margins from rising raw material costs and taxes over the coming months. Another portfolio holding, Bosch Industries, posted lower profits owing to one-off costs in ramping up a project and restructuring expenses. 

Consumer Staples

The fast-moving consumer goods landscape is competitive, with home-grown brands, such as Godrej Consumer Products, Jyothy Laboratories and Emami, competing against the likes of Hindustan Unilever, Nestle and Proctor & Gamble. Companies like Godrej cater to local taste and regional preferences, while the multinational companies ("MNCs") have well-known brands and more aspirational products. We choose the best from both worlds: Hindustan Unilever has the widest portfolio of household and personal products; ITC is dominant in tobacco; Godrej is a leader in household and personal products in India and the emerging markets; and Emami is known for its herbal and ayurvedic products. 

Consumer stocks fared pretty well in the latest quarter, although how fast they recovered from demonetisation depended on how efficiently each company reacted to changes in consumer spending. Companies like Unilever and Jyothy widened their direct distributor coverage in areas where wholesalers had previously served customers looking to reduce their average shopping basket and shop more frequently. Emami and Unilever's investments in trade and e-commerce channels have been more resilient than the wholesale groceries in rural areas.

Materials

The portfolio has a big exposure to this sector but eschews the metals and mining companies, which are cyclical and highly leveraged, backed by aggressive promoters and subject to regulatory and political risks. Instead, we find the most attractive companies in the cement and paint sub-segments. We complement positions in Grasim Industries and its cement subsidiary, Ultratech Cement, with European group LafargeHolcim's subsidiaries, Ambuja Cements and ACC. Your Company is also invested in well run and financially strong MNC subsidiaries that excel in their fields, including paint manufacturers Kansai Nerolac and Asian Paints as well as lubricants maker Castrol India.

Demonetisation dented cement volumes less severely than expected. Ultratech's December-quarter output, for example, contracted 2%, versus analyst forecasts of a 10% drop. While Ambuja and ACC's volumes fell by around 10%, this has since recovered, aided by efforts towards cashless payment collection. Demand and pricing are set to improve as the government focuses on housing and infrastructure development, although costs are likely to rise, too. Castrol was resilient, as quarterly volumes rose 2% despite an 8-10% drop in November. While Asian Paints and Kansai Nerolac fared better than expected, the latter reported a stronger recovery in volumes because it was quicker to extend credit to keep its sales channels open.

Healthcare

India is the largest provider of generic drugs globally. Although the key US market is turning more competitive and regulatory uncertainty has increased under the Trump administration, the portfolio's two large pharmaceutical holdings - Sun and Lupin - are well positioned with their focus on higher-value specialty and branded generics. We have supplemented this exposure with a small holding in Biocon that, along with its partner Mylan, has the potential to tap opportunities in biosimilars, as well as positions in multinationals GlaxoSmithKline India and Sanofi India, which channel their drug pipelines into the Indian market. Piramal Enterprises also offers health-care exposure through its contract research and manufacturing operations, inhalation anaesthesia portfolio and health-care data analytics division. It will be split from the financial services business in about 12 to 18 months. 

Sun Pharmaceutical suffered rising costs and a weaker US business because of pricing pressures and delays to the resolution of US regulatory concerns over its Halol plant in Gujarat. It continued to invest in its specialty pharmaceutical platform, which is hurting margins but has yet to boost revenues. Sun expects benefits from its Ranbaxy acquisition by financial year 2018. Biocon's earnings beat expectations, as two biosimilars in its pipeline received approvals for filing.

Industrials

The sector remains challenged by the slowdown in industrial activity, infrastructure bottlenecks, regulatory uncertainty and high leverage. Portfolio exposure is limited to ABB India, which makes and sells power and automation equipment; Container Corporation, a rail freight operator; and, more recently, Thermax, a provider of energy and environment engineering solutions.

ABB India's results showed a recovery in demand, driven by investments in the renewables and railway sectors, while lower costs and taxes lifted its bottom line. Orders continued to rise, especially new ones for ultra-high voltage direct current transmission projects. Thermax's results were lower than we expected, as demonetisation affected its domestic supply chain. Despite weaker revenues, its cost-cutting paid off, with net profits still 9% higher year to date. Management remains confident of margin expansion, supported by design improvements and cost reductions. Although Container Corp posted weak earnings, margins at its export-import segment improved quarter on quarter, due to higher double-stacking volumes at its Khatuwas terminal in Rajasthan.  

Utilities

This sector, made up of power and gas utilities, has been hamstrung by supply shortages of gas and coal as well as regulatory uncertainty. The government is tackling reform of power distributors, given the declining losses at state electricity boards. But more needs to be done to adjust tariffs, reduce losses and ensure timely subsidy payments by the states. Such restructuring will attract more investments to the sector. Your Company's exposure is limited to Gujarat Gas, the largest domestic city gas distributor.

Gujarat Gas' nine-month profits doubled year on year. Despite the demonetisation impact, its volumes picked up after lower LNG prices meant that gas is now at a discount to all alternative fuels.   

Telecommunication Services

The market is one of the most competitive globally, and the large players, including Bharti Airtel, Vodafone and Idea Cellular, continue to battle hard for market share, especially with Reliance Jio's recent entry. Over the longer term, the industry could benefit from the exit of weaker operators and growth of data services.

The telco operators, including Bharti Airtel, posted lacklustre December-quarter earnings, as demonetisation and intense competition from Reliance Jio hampered their mobile businesses. More recently, M&A news has hogged the spotlight. Idea and Vodafone are in merger talks, while Bharti Airtel is acquiring Telenor India. We are finally seeing industry consolidation. While this bodes well for Bharti Airtel, the dominant player that should gain from reduced competitive pressures, Bharti Infratel could see a decline in incremental tower tenancies over time.

Strategy

Globally, we are seeing signs of a recovery in trade and exports, although geopolitical risks remain a key concern for financial markets. On the domestic front, leading indicators paint a rosier economic picture. The impact of demonetisation is fast waning. Manufacturing appears to be turning around, though private investment remains sluggish. Inflation risks mainly revolve around a potentially poor monsoon and the one-off effects from GST, but easing crude prices could alleviate cost pressures. Encouragingly, Prime Minister Modi is making great strides in improving the regulatory framework and facilitating the ease of doing business, backed by a stronger political mandate. Such reform commitment is positive for the long-term growth of the country, albeit there are still structural challenges, particularly resolving stressed assets and weak balance sheets in the banking sector. Against such a backdrop, India remains one of the best places for stock pickers like us. It offers a diverse range of companies with good fundamentals that can take advantage of the untapped growth potential of a vast market. This is reflected in our portfolio, which has a good mix of well-managed local companies and multinational companies.

Portfolio changes

During the year, we diversified the portfolio's exposure to the IT software sector by initiating a position in Cognizant Technology Solutions. We also introduced energy and environment engineering company Thermax, which makes boilers, heaters and chillers as well as offers water treatment and air pollution control services. Its management is conservative and has demonstrated good financial discipline. The company also offers exposure to a recovery in the domestic capital goods sector. Another new holding was Aegis Logistics, which handles bulk liquids and LPG. Aegis has successfully utilised its first-mover advantage to establish a strategic network of terminals close to clients. The company has solid operations, a robust balance sheet and good growth potential. We also took the opportunity to initiate a position in Asian Paints, the domestic leader in decorative paints, when the market corrected on demonetisation fears.

In addition, we continued to build positions in Sun Pharmaceutical, which is well-managed and an industry leader but has experienced recent price softness, and Jyothy Laboratories, given its solid portfolio of household products, potential for nationwide expansion and the ability of management to follow through on its plans.

We also switched partially from ICICI Bank to Kotak Mahindra Bank which appears better-placed to gain from a domestic economic recovery. We further trimmed the position in ICICI Bank at the end of the review period, taking profits as we rebalanced the portfolio to selectively position for a credit recovery while reducing the risk of exposure to stress in the banking system. There was also a partial switch from Bharti Airtel to Bharti Infratel, which appears more poised to benefit from increased competition from new players entering the telecommunications sector.

Against this, we sold Linde India, following a solid rally, and Tata Power, which continued to face regulatory uncertainties and made acquisitions despite its weak balance sheet. We also divested Jammu & Kashmir Bank, given the deterioration of its asset quality and balance sheet.

We reduced the portfolio's lower conviction holdings in ACC India and Lupin, while we took profits from Piramal on relative share price strength and trimmed Godrej Consumer Products as well.

Aberdeen Asset Management Asia Limited

Investment Manager

13 June 2017

STRATEGIC REPORT - RESULTS

Financial Highlights

	31 March 2017	31 March 2016	% change
Total equity shareholders' funds (net assets)	£288,190,000	£213,874,000	+34.7
Market capitalisation	£260,794,668	£185,037,214	+40.9
Share price (mid market)	441.50p	313.25p	+40.9
Net asset value per share	487.88p	362.07p	+34.7
Discount to net asset value	9.5%	13.5%
Total return/(loss) per share	125.81p	(23.42p)
Revenue loss per share	(0.28p)	(1.06p)
Revenue reserves per share	(0.80p)	(0.52p)
Prospective gross portfolio yield{A}	1.1%	1.4%
MSCI India portfolio yield{A}	1.3%	1.7%
Prospective portfolio P/E ratio{B}	26.7x	24.3x
Operating costs
Ongoing charges ratio{C}	1.31%	1.36%
{A}         Source - AAMAL (estimated information)/Factset.
{B}         Consensus broker views.
{C}          Ongoing charges ratio is calculated in accordance with recent guidance issued by the AIC as the total of the investment management fee and administrative expenses of the Company and Subsidiary divided by the average cum income net asset value throughout the year.

Performance (total return)

	1 year	3 year	5 year
	% return	% return	% return
Share price	+40.9	+96.2	+98.9
Net asset value per Ordinary share	+34.7	+85.1	+100.0
MSCI India Index (sterling adjusted)	+36.1	+65.5	+73.1

Ten Year Financial Record

Year to 31 March	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017
Total income (£'000){A}	1,073	1,347	1,335	2,338	2,702	2,414	376	341	374	3,104
	______	______	______	______	______	______	______	______	______	_____
Per share (p)
Net revenue return	(0.89)	0.18	(0.63)	0.15	0.61	0.20	(0.36)	(0.39)	(1.06)	(0.28)
Total return	24.85	(41.03)	139.19	31.71	(24.95)	24.75	(5.16)	121.94	(23.42)	125.81
	______	______	______	______	______	______	______	______	______	_____
Net asset value per share (p)
Basic	177.52	137.45	275.42	268.90	243.96	268.71	263.55	385.49	362.07	487.88
Diluted	161.18	129.36	239.44	n/a	n/a	n/a	n/a	n/a	n/a	n/a
	______	______	______	______	______	______	______	______	______	_____
Shareholders' funds (£'000)	84,968	63,653	129,320	158,842	144,105	158,726	155,680	227,708	213,874	288,190
	______	______	______	______	______	______	______	______	______	_____
{A}           For the years 2008-2013 reflects consolidated amounts of the Company and its Subsidiary, for 2014-2016 reflects amounts relating to the Company only following the application of  IFRS 10 'Consolidated Financial Statements' including the Amendments, 'Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)(Investment Entity Amendments). For 2017 reflects the transfer of securities to the Company from its Subsidiary.

Investment Portfolio - Ten Largest Investments

As at 31 March 2017

		Valuation	Net assets	Valuation
		2017	2017	2016
Company	Sector	£'000	%	£'000
Housing Development Finance Corporation
Domestic mortgage provider with a leading distribution network, cost structure and balance sheet quality.	Financials	25,796	9.0	16,128
Tata Consultancy Services
A global provider of information services, consulting, and digital and business solutions to large enterprises.	Information Technology	19,530	6.8	17,007
Infosys
A leading multinational corporation that provides consulting, technology, outsourcing and next-generation services worldwide	Information Technology	18,579	6.4	17,155
ITC
The leading manufacturer and distributor of cigarettes in India. It supplements this by selling other consumer products through its extensive distribution network. An associate of British American Tobacco.	Consumer Staples	16,147	5.6	10,797
Grasim Industries{A}
A diversified operating company, part of the Aditya Birla group which manufactures a wide range of products including viscose staple fibre, cement, chemicals and textiles.	Materials	13,800	4.8	8,334
Kotak Mahindra Bank
A privately-owned full-service commercial lender in India. The company has a good geographic profile following its merger with Vysya Bank, and is able to cross-sell products across an enlarged branch network.	Financials	12,219	4.2	5,879
Godrej Consumer Products
A manufacturer of personal care, hair care, household care and fabric care products.	Consumer Staples	10,759	3.7	8,734
Piramal Enterprises
The diversified conglomerate is in the process of streamlining operations by splitting its core segments - financial services and pharmaceutical, into two listed companies. This is expected to unlock value and unwind the conglomerate's discount by separating its distinct and unrelated businesses.	Healthcare	10,644	3.7	6,091
Hindustan Unilever
The largest fast-moving consumer goods company (FMCG) in India, with a solid domestic franchise in personal care and home care products.	Consumer Staples	10,553	3.7	7,618
Sun Pharmaceutical Industries
India's largest generic drugmaker by some margin, following its acquisition of Ranbaxy in 2015, and the fifth largest in the world with a solid US presence. Its products span multiple therapeutic and geographic areas. Strategically the company is transitioning from being a generics to a specialty player backed by robust R&D capabilities and a healthy pipeline of new products.	Healthcare	10,343	3.6	3,257
Top ten investments		148,370	51.5
{A} Comprises equity and listed or tradeable GDR holdings.

Investment Portfolio - Other Investments

As at 31 March 2017

		Valuation	Net assets	Valuation
		2017	2017	2016
Company	Sector	£'000	%	£'000
Kansai Nerolac Paints	Materials	10,166	3.5	6,478
Bosch	Consumer Discretionary	10,004	3.5	9,379
Ambuja Cements{A}	Materials	9,795	3.4	8,633
Hero MotoCorp	Consumer Discretionary	9,517	3.3	9,079
HDFC Bank	Financials	8,845	3.1	5,618
Ultratech Cement{A}	Materials	7,923	2.7	6,283
Container Corporation of India	Industrials	7,779	2.7	6,062
Nestlé India	Consumer Staples	7,505	2.6	5,471
MphasiS	Information Technology	6,270	2.2	4,535
Gruh Finance	Financials	5,529	1.9	2,858
Top twenty investments		231,703	80.4
ICICI Bank	Financials	5,377	1.9	11,394
Sanofi India	Healthcare	4,920	1.7	3,571
Gujarat Gas	Utilities	4,912	1.7	4,957
Lupin	Healthcare	4,900	1.7	5,050
ABB India	Industrials	4,371	1.5	3,702
Biocon	Healthcare	3,343	1.2	1,223
Jyothy Laboratories	Consumer Staples	2,876	1.0	605
Castrol India	Materials	2,815	1.0	1,527
ACC	Materials	2,746	1.0	3,388
Emami	Consumer Staples	2,550	0.9	419
Top thirty investments		270,513	94.0
Bharti Infratel	Telecommunication Services	2,526	0.9	1,606
Aegis Logistics	Energy	2,368	0.8	-
GlaxoSmithKline Pharmaceuticals	Healthcare	2,341	0.8	2,758
Cognizant Technology Solutions	Information Technology	2,095	0.7	-
Bharti Airtel	Telecommunication Services	2,022	0.7	2,860
Asian Paints	Materials	1,581	0.5	-
Thermax	Industrials	1,500	0.5	-
Total portfolio investments		284,946	98.9
Other net current assets held in subsidiaries		53	-
Total investments		284,999	98.9
Net current assets		3,191	1.1
Net assets		288,190	100.0
Unless otherwise stated, investments are in common stock. Purchases and/or sales effected during the year will result in 2017 and 2016 values not being directly comparable. Where 2016 valuation is "-" this indicates the company was not held at the previous year-end.
{A}         Comprises equity and listed or tradeable GDR holdings.

DIRECTORS' REPORT

The Directors present their Report and the audited financial statements of the Company for the year ended 31 March 2017, taking account of any events between the year end and the date of approval of this Report.

Results

The Company's results, including its performance for the year against its Key Performance Indicators ("KPIs"), may be found above, in the Results table. The Company is not declaring a dividend for the year ended 31 March 2017 (2016 - nil).

Investment Trust Status and ISA Compliance

The Company is registered as a public limited company in England & Wales under registration number 02902424 and has been accepted by HM Revenue & Customs as an investment trust for accounting periods beginning on or after 1 April 2012, subject to the Company continuing to meet the eligibility conditions of s1158 of the Corporation Tax Act 2010 (as amended) and S.I. 2011/2099. In the opinion of the Directors, the Company's affairs have been conducted in a manner to satisfy these conditions to enable it to continue to qualify as an investment trust for the year ended 31 March 2017. The Company intends to manage its affairs so that its shares will be qualifying investments for the stocks and shares component of an Individual Savings Account ("ISA").

Capital Structure

There have been no changes to the Company's issued share capital during the year. The issued Ordinary share capital at 31 March 2017, and at the date of approval of this Report, consisted of 59,070,140 Ordinary shares of 25p.

Ordinary shareholders are entitled to vote on all resolutions which are proposed at general meetings of the Company. The Ordinary shares carry a right to receive dividends. On a winding up, after meeting the liabilities of the Company, the surplus assets will be paid to Ordinary shareholders in proportion to their shareholdings. There are no restrictions on the transfer of Ordinary shares in the Company other than certain restrictions which may from time to time be imposed by law and regulation (for example, the Market Abuse Regulation).

Manager and Company Secretaries

AFML has been appointed by the Company, under a management agreement ("MA") to provide investment management, risk management, administration and company secretarial services as well as promotional activities.  The Company's portfolio is managed by AAMAL by way of a group delegation agreement in place between AFML and AAMAL.  In addition, AFML has sub-delegated promotional activities to Aberdeen Asset Managers Limited ("AAM") and administrative and secretarial services to Aberdeen Asset Management PLC.

Under the terms of the MA, investment management fees payable to the Manager have been calculated and charged on the following basis throughout the year ended 31 March 2017: a monthly fee, payable in arrears, calculated on an annual rate of 1.0% of total assets less current liabilities, with a rebate to the Company for any fees received in respect of any investments by the Company in investment vehicles managed by the Aberdeen Group. There is no performance fee.

The MA is terminable by either party on not less than 12 months' notice. In the event of termination on less than the agreed notice period, compensation is payable in lieu of the unexpired notice period.

The fees payable to Aberdeen Group companies during the year ended 31 March 2017 are disclosed in Notes 4 and 5 to the financial statements. The investment management fees are chargeable 100% to revenue.

Corporate Governance

The Company is committed to the highest standards of corporate governance. The Board is accountable to the Company's shareholders for good governance and, as required by the Listing Rules of the UK Listing Authority, this statement describes how the Company applies the Main Principles identified in the UK Corporate Governance Code published in September 2014 (the "UK Code") and which is applicable for Company's year ended 31 March 2017. The UK Code is available on the Financial Reporting Council's ("the FRC") website: frc.org.uk.

The Board has also considered the principles and recommendations of the AIC Code of Corporate Governance as published in February 2015 ("the AIC Code") by reference to the AIC Corporate Governance Guide for investment Companies ("the AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to investment trusts. The AIC Code and AIC Guide are available on the AIC's website: theaic.co.uk

The Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Code), will provide better information to shareholders.

The Board confirms that, during the year, the Company complied with the recommendations of the AIC Code and the relevant provisions of the UK Code, except as set out below.

The UK Code includes provisions relating to:

-        the role of the chief executive (A.1.2);

-        executive directors' remuneration (D.1.1 and D.1.2); and

-        the need for an internal audit function (C.3.6).

For the reasons set out in the AIC Guide and UK Code, the Board considers that these provisions are not relevant to the position of the Company, being an externally managed investment company. In particular, all of the Company's day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions. The full text of the Company's Statement of Corporate Governance can be found on its website: aberdeen-newindia.co.uk

Directors

The Board consists of a non-executive Chairman and three non-executive Directors. The Senior Independent Director was Victor Bulmer-Thomas until 6 September 2016 and Rachel Beagles thereafter. Michael Hughes was appointed a Director on 7 September 2016.

The names and biographies of each of the Directors are shown in the Annual Report and indicate their range of experience as well as length of service. Each Director has the requisite high level and range of business and financial experience which enables the Board to provide clear and effective leadership and proper stewardship of the Company.

The Directors attended scheduled Board and Committee meetings during the year ended 31 March 2017 as follows (with their eligibility to attend the relevant meeting in brackets):

Director	Board Meetings	Audit Committee Meetings
H. Askari, Chairman	4 (4)	3 (3)
Professor V. Bulmer-Thomas A	2 (2)	1 (1)
S. White	4 (4)	3 (3)
R. Beagles	4 (4)	3 (3)
M. Hughes B	2 (2)	1 (1)

^A Victor Bulmer-Thomas retired as a Director on 6 September 2016

^B Michael Hughes was appointed a Director on 7 September 2016

The Board has adopted a policy that all Directors will normally retire at each AGM and stand for re-election and, accordingly, all of the Directors will retire at the AGM.

Michael Hughes retires and, being eligible offers himself for election as a Director. Hasan Askari, Rachel Beagles and Stephen White, each being eligible, offer themselves for re-election as Directors of the Company. The Board as a whole believes that each Director remains independent of the AIFM and free of any relationship which could materially interfere with the exercise of his or her independent judgement on issues of strategy, performance, resources and standards of conduct and confirms that, following formal performance evaluations, the individuals' performance continues to be effective and demonstrates commitment to the role. The Board therefore has no hesitation in recommending, at the AGM, the election of Michael Hughes as a Director, and the individual re-elections of Hasan Askari, Rachel Beagles and Stephen White as Directors.

All appointments to the Board of Directors are considered by the Board as a whole. The Board's overriding priority in appointing new Directors to the Board is to identify the candidate with the optimal range of skills and experience to complement the existing Directors. The Board also recognises the benefits, and is supportive, of the principle of diversity in its recruitment of new Directors. The Board engaged an independent consultancy to undertake a search which resulted in Michael Hughes' appointment as a Director of the Company.

Directors' Insurances and Indemnities

The Company maintains insurance in respect of Directors' and Officers' liabilities in relation to their acts on behalf of the Company. Furthermore, each Director of the Company is entitled to be indemnified out of the assets of the Company to the extent permitted by law against all costs, charges, losses, expenses and liabilities incurred by them in the actual or purported execution and/or discharge of their duties and/or the exercise or purported exercise of their powers and/or otherwise in relation to or in connection with their duties, powers or office. These rights are included in the Articles of Association of the Company and the Company has granted indemnities to each Director on this basis.

Management of Conflicts of Interest and Anti-Bribery Policy

The Board has a procedure in place to deal with a situation where a Director has a conflict of interest. As part of this process, the Directors prepare a list of other positions held and all other conflict situations that may need to be authorised either in relation to the Director concerned or his/her connected persons. The Board considers each Director's situation and decides whether to approve any conflict, taking into consideration what is in the best interests of the Company and whether the Director's ability to act in accordance with his/her wider duties is affected. Each Director is required to notify the Company Secretaries of any potential, or actual, conflict situations which will need authorising by the Board. Authorisations given by the Board are reviewed at each Board meeting.

No Director has a service contract with the Company although Directors are issued with letters of appointment upon taking up office. There were no contracts with the Company during, or at the end of the year, in which any Director was interested.

The Board takes a zero tolerance approach to bribery and has adopted appropriate procedures designed to prevent bribery. The Aberdeen Group also takes a zero tolerance approach and has its own detailed policy and procedures in place to prevent bribery and corruption.

Substantial Interests

The Company was aware of the following share interests above 3% in the Company as at 31 March 2017, which were unchanged as at the date of approval of this Report:

Shareholder	Number of shares held	% held
Clients of Aberdeen Asset Management	11,435,044	19.4
Lazard Asset Management	10,862,771	18.4
Clients of Hargreaves Lansdown	4,059,694	6.9
City of London Investment Management	2,781,920	4.7
Aberdeen Investment Trusts - ISA and Share plans	2,621,695	4.4
Charles Stanley	2,138,547	3.6

Board Committees

The Directors have appointed a number of Committees as set out below. Copies of each Committee's terms of reference, which define its responsibilities and duties, are available on the Company's website or from the Company Secretaries, on request.

Audit Committee

The Audit Committee' Report may be found in the Annual Report.

Management Engagement Committee

The Board established a Management Engagement Committee in June 2016, with Rachel Beagles as Chairman, which is responsible for reviewing matters concerning the MA which exists between the Company and AFML. Previously, these matters were the responsibility of the Board.

The terms and conditions of the Manager's appointment, including an evaluation of performance and fees, are reviewed annually and were last considered at the meeting of the Board in March 2017.

In monitoring the performance of the Manager, the Board considers the investment approach and investment record of the Manager over shorter and longer-term periods, taking into account the Company's performance against the benchmark index and peer group funds. The Board also reviews the management processes, risk control mechanisms and promotional activities of the Manager.

The Board considers that the continuing appointment of the Manager, on the terms agreed, to be in the interests of the shareholders because the Aberdeen Group has the investment management, promotional and associated secretarial and administrative skills required for the effective and successful operation of the Company.

Accountability and Audit

The responsibilities of the Directors and the Auditor, in connection with the financial statements, appear in the Annual Report, respectively.

The Directors who held office at the date of this Report each confirm that, so far as he or she is aware, there is no relevant audit information of which the Company's Auditor is unaware, and that he or she has taken all the steps that he or she could reasonably be expected to have taken as a Director in order to make him or her aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.

Additionally, there have been no important events since the year end which warrant disclosure.

The Directors have reviewed the level of non-audit services provided by the Auditor during the year, together with the Auditor's procedures in connection with the provision of such services, and remain satisfied that the Auditor's objectivity and independence is being safeguarded.

Going Concern

In accordance with the Financial Reporting Council's guidance on Going Concern and Liquidity Risk, the Directors have reviewed the Company's ability to continue as a going concern. The Company's assets consist of a diverse portfolio of listed equity shares which in most circumstances are realisable within a short timescale. The Directors are mindful of the principal risks and uncertainties disclosed above, and in Note 15 to the financial statements, and have reviewed cashflow forecasts detailing revenue and liabilities; accordingly, the Directors believe that the Company has adequate financial resources to continue in operational existence for the foreseeable future and for at least 12 months from the date of this Report.

This is also based on the assumption that Ordinary resolution 9, that the Company continues as an investment trust, which will be proposed at the AGM of the Company on 5 September 2017, is passed by shareholders as it has been in the years since it was put in place. The Directors consult annually with major shareholders and, as at the date of approval of this Report, had no reason to believe that this assumption was incorrect.

Viability Statement

The Company does not have a fixed period strategic plan but the Board does formally consider risks and strategy on at least an annual basis. The Board regards the Company, with no fixed life, as a long term investment vehicle, but for the purposes of this viability statement has decided that a period of three years is an appropriate period over which to report. The Board considers that this period reflects a balance between looking out over a medium term horizon and the inherent uncertainties of looking out further than three years.

Accordingly, taking into account the Company's current position and the potential impact of its principal risks and uncertainties, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of three years from the date of this Report.

In forming this expectation, the Directors looked to the following -

-        a significant proportion of the expenses are proportional to the Company's NAV and will reduce if the NAV falls;

-        the Company has a reasonably liquid investment portfolio; and

-        the Company has no borrowings.

In particular the Board recognises that this assessment makes the assumption that the resolution to continue the Company, which is put to shareholders at each Annual General Meeting ("AGM"), is passed at the next AGM on 5 September 2017, and at the two subsequent AGMs, as it has been previously.

In making this assessment, the Board has also considered that matters such as a large economic shock, a period of significant stock market volatility, a significant reduction in the liquidity of the portfolio, or changes in regulations and investor sentiment, could have an impact on its assessment of the Company's prospects and viability in the future.

Stewardship and Proxy Voting

The purpose of the FRC's UK Stewardship Code is to enhance the quality of engagement between institutional investors and companies to help improve long-term returns to shareholders and assist institutional investors with the efficient exercise of their governance responsibilities. The FRC is encouraging institutional investors to make a statement of their commitment to the UK Stewardship Code. 

The Board has delegated responsibility for actively monitoring the activities of portfolio companies to the Manager. The Board has reviewed and accepts the Manager's Corporate Governance Principles (the "Principles"), which may be found on the Manager's website, at: aberdeen-asset.com/doc.nsf/Lit/LegalDocumentationGroupCorporateGovernancePrinciples. These Principles set out the Manager's framework on corporate governance, proxy voting and shareholder engagement in relation to the companies in which the Manager has invested or is considering investing. The Board has also reviewed the Manager's Disclosure Response to the UK Stewardship Code which appears on the Manager's website at the web-address given above.

The Manager is responsible for reviewing, on a regular basis, the annual reports, circulars and other publications issued by the portfolio companies and for attending company meetings. The Manager, in the absence of explicit instruction from the Board, is empowered to use discretion in the exercise of the Company's voting rights.

The Board recognises and supports the Manager's policy of active engagement with investee companies and the voting of all of the shares held by the Company. The Board receives from the Manager regular reports on the exercise by the Manager of the Company's voting rights and discusses with the Manager any issues arising. It is the Board's view that having an active voting policy and a process for the monitoring by the Board of the Manager's exercise of those votes, especially in relation to controversial issues, aids the efficient exercise of the Company's governance responsibilities.

Stewardship and Environmental, Social and Corporate Governance

The Board is aware of its duty to act in the interests of the Company. The Board supports the Manager, a signatory to the United Nations Principles for Responsible Investment ("UNPRI"), in considering holistically the material risks posed by each investment, both from a financial and an environmental, social and corporate governance ("ESG") perspective. The Manager takes into account all the risks and opportunities presented by potential and current holdings as part of its determination of the quality of each investment. The Manager also considers the extent to which investments consider risks and opportunities when setting their targets, remuneration and company strategy. The Manager engages with the Company's holdings on their material risks and opportunities and actively encourages investee companies to adhere to best practice in managing their material issues. The Company's ultimate objective is to deliver superior investment returns for its shareholders and the consideration of key risk and opportunities for Company's holdings is a vital part of the Manager's due diligence and stewardship practice. 

Relations with Shareholders

The Directors place great importance on communication with shareholders. The Annual Report is widely distributed to other parties who have an interest in the Company's performance. Shareholders and investors may obtain up-to-date information on the Company through its website, aberdeen-newindia.co.uk, or via the Aberdeen Group's Customer Services Department. The Company responds to letters from shareholders on a wide range of issues.

The Board's policy is to communicate directly with shareholders and their representative bodies without the involvement of the management group (either the Company Secretaries or the Aberdeen Group) in situations where direct communication is required and representatives from the Board offer to meet with major shareholders on an annual basis in order to gauge their views.

In addition, members of the Board may accompany the Manager when undertaking meetings with institutional shareholders.

The Company Secretaries only act on behalf of the Board, not the Manager, and there is no filtering of communication. At each Board meeting the Board receives full details of any communication from shareholders to which the Chairman responds, as appropriate, on behalf of the Board.

The Notice of AGM included within the Annual Report is normally sent out at least 20 working days in advance of the meeting. All shareholders have the opportunity to put questions to the Board and Manager at the Company's AGM.

Annual General Meeting

The AGM will be held on 5 September 2017 and the AGM Notice and related notes may be found on pages 71 to 74. Resolutions relating to the following items will be proposed at the AGM:-

Continuance of the Company

In accordance with Article 160 of the Articles of Association of the Company adopted on 22 September 2011, the Directors are required to propose an Ordinary resolution at each AGM of the Company that the Company continue as an investment trust. Accordingly, the Directors are proposing, as Ordinary resolution 9, that the Company continues as an investment trust and recommend that shareholders support the continuance of the Company.

Share Repurchases

At the AGM held on 6 September 2016, shareholders approved the renewal of the authority for the Company to repurchase its Ordinary shares, which was unused at the date of approval of this Report.

The principal aim of a share buy-back facility is to enhance shareholder value by acquiring shares at a discount to net asset value as and when the Directors consider this to be appropriate. The purchase of shares, when they are trading at a discount to net asset value per share, should result in an increase in the net asset value per share for the remaining shareholders. This authority, if conferred, will only be exercised if to do so would result in an increase in the net asset value per share for the remaining shareholders, and if it is in the best interests of shareholders generally. Any purchase of shares will be made within guidelines established from time to time by the Board. It is proposed to seek shareholder authority to renew this facility for another year at the AGM. Under the current Listing Rules, the maximum price that may be paid on the exercise of this authority must not exceed the higher of: (i) 105% of the average of the middle market quotations for the shares over the five business days immediately preceding the date of purchase; and (ii) the higher of the last independent trade and the highest current independent bid on the trading venue where the purchase is carried out. The minimum price which may be paid is 25p per share. Shares which are purchased under this authority will either be cancelled or held as treasury shares.

Special resolution 10 in the Notice of AGM will, if passed, renew the authority to purchase in the market a maximum of 14.99% of shares in issue on 13 June 2017, being the nearest practicable date to the approval of this Report (equivalent to approximately 8.8m Ordinary shares). Such authority will expire on the date of the AGM in 2018 or on 30 September 2018, whichever is earlier. This means in effect that the authority will have to be renewed at the next AGM or earlier if the authority has been exhausted.

Issue of Shares

Ordinary resolution 11 in the Notice of AGM will, if passed, renew the authority to allot unissued share capital up to an aggregate nominal amount of £738,376 (equivalent to approximately 3.0 million Ordinary shares, or 5% of the Company's existing issued share capital on 13 June 2017, being the nearest practicable date to the approval of this Report). Such authority will expire on the date of the AGM in 2018 or on 30 September 2018, whichever is earlier, which means that the authority will have to be renewed at the next AGM or, if earlier, if the authority has been exhausted.

When shares are to be allotted for cash, the Companies Act 2006 (the "Act") provides that existing shareholders have pre-emption rights and that the new shares must be offered first to such shareholders in proportion to their existing holding of shares. However, shareholders can, by Special resolution, authorise the Directors to allot shares otherwise than by a pro rata issue to existing shareholders. Special resolution 12 will, if passed, give the Directors power to allot for cash equity securities up to an aggregate nominal amount of £738,376 (equivalent to approximately 2.95 million Ordinary shares, or 5% of the Company's existing issued share capital at 13 June 2017, being the nearest practicable date to the approval of this Report), as if Section 561(1) of the Act did not apply. This is the same nominal amount of share capital which the Directors are seeking the authority to allot pursuant to resolution 11. This authority will expire on the date of the next AGM in 2018 or on 30 September 2018, whichever is earlier, which means that the authority will have to be renewed at the AGM or, if earlier, if the authority has been exhausted. This authority will not be used in connection with a rights issue by the Company.

The Directors intend to use the authorities given by resolutions 11 and 12 to allot shares, or sell shares from treasury, and disapply pre-emption rights only in circumstances where this will be clearly beneficial to shareholders as a whole. The issue proceeds would be available for investment in line with the Company's investment policy. No issue of shares, or sale of shares from treasury, would be made which would effectively alter the control of the Company without the prior approval of shareholders in general meeting.

Under the Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003 (as amended) (the "Treasury Share Regulations") the Company is permitted to buy back and hold shares in treasury and then sell them at a later date for cash, rather than cancelling them. The Treasury Share Regulations require such sale to be on a pre-emptive, pro rata, basis to existing shareholders unless shareholders agree by Special resolution to disapply such pre-emption rights.  Accordingly, in addition to giving the Directors power to allot unissued Ordinary share capital on a non pre-emptive basis, resolution 12, if passed, will give the Directors authority to sell Ordinary shares from treasury on a non pre-emptive basis. No dividends may be paid on any shares held in treasury and no voting rights will attach to such shares.

The benefit of the ability to hold treasury shares is that such shares may be resold. This should give the Company greater flexibility in managing its share capital, and improve liquidity in its shares. The Board would only expect to issue new Ordinary shares or sell Ordinary shares from treasury at a price per Ordinary share which represented a premium to the net asset value per share. It is also the intention of the Board that sales from treasury would only take place when the Board believes that to do so would assist in the provision of liquidity to the market.

Recommendation

The Board considers Resolutions 9,10, 11 and 12 to be in the best interests of the Company and its members as a whole and are likely to promote the success of the Company for the benefit of its members as a whole. Accordingly, the Board unanimously recommends that shareholders should vote in favour of the resolutions to be proposed at the Annual General Meeting, as they intend to do in respect of their own shareholdings, amounting to 30,705 Ordinary shares.

Additional Information

Where not provided elsewhere in the Directors' Report, the following provides the additional information required to be disclosed by The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008.

The Company is not aware of any significant agreements to which it is a party, apart from the MA, that take effect, alter or terminate upon a change of control of the Company following a takeover. Other than the MA with the Manager, the Company is not aware of any contractual or other agreements which are essential to its business which might reasonably be expected to have to been disclosed in the Directors' Report.

Hasan Askari

Chairman

13 June 2017

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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

Company law requires the Directors to prepare financial statements for each financial year.  Under that law they have elected to prepare the financial statements in accordance with IFRSs as adopted by the EU and applicable law.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.  In preparing these financial statements, the Directors are required to: 

-     select suitable accounting policies and then apply them consistently; 

-     make judgements and estimates that are reasonable and prudent; 

-     state whether they have been prepared in accordance with IFRSs as adopted by the EU; and 

-     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006.  They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.  Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.  

Responsibility Statement of the Directors in respect of the Annual Financial Report

We confirm that to the best of our knowledge:

-        the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company taken as a whole; and

-        the Directors' report includes a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties that they face.

We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

For and on behalf of the Board

Hasan Askari

Chairman

13 June 2017

STATEMENT OF COMPREHENSIVE INCOME

		Year ended			Year ended
		31 March 2017			31 March 2016
		Revenue	Capital		Revenue	Capital
		return	return	Total	return	return	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Income
Income from investments and other income	3	3,104	-	3,104	374	-	374
Gains/(losses) on investments held at fair value through profit or loss	9(a)	-	75,183	75,183	-	(12,103)	(12,103)
Currency gains/(losses)		-	54	54	-	(1,107)	(1,107)
		________	_________	________	________	_______	________
		3,104	75,237	78,341	374	(13,210)	(12,836)
		________	_________	________	________	_______	________
Expenses
Investment management fees	4	(2,520)	-	(2,520)	(329)	-	(329)
Administrative expenses	5	(750)	-	(750)	(610)	-	(610)
		________	_________	________	________	_______	________
Profit/(loss) before finance costs and taxation		(166)	75,237	75,071	(565)	(13,210)	(13,775)
Finance costs		-	-	-	(59)	-	(59)
		________	_________	________	________	_______	________
Profit/(loss) before taxation		(166)	75,237	75,071	(624)	(13,210)	(13,834)
Taxation	6	-	(755)	(755)	-	-	-
		________	_________	________	________	_______	________
Profit/(loss) for the year		(166)	74,482	74,316	(624)	(13,210)	(13,834)
		________	_________	________	________	_______	________
Return/(loss) per Ordinary share (pence)	8	(0.28)	126.09	125.81	(1.06)	(22.36)	(23.42)
		________	_________	________	________	_______	________
The Company does not have any income or expense that is not included in "Profit/(loss) for the year", and therefore this represents the "Total comprehensive income for the year", as defined in IAS 1 (revised).
All of the profit/(loss) and total comprehensive income is attributable to the equity holders of the parent company. There are no minority interests.
The total column of this statement represents the Statement of Comprehensive Income of the Company, prepared in accordance with IFRS. The revenue and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies (see Note 2 to the Financial Statements).
All items in the above statement derive from continuing operations.
The accompanying notes are an integral part of these financial statements.

BALANCE SHEET

		As at	As at
		31 March 2017	31 March 2016
	Notes	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss		284,946	212,694
Subsidiary held at fair value through profit or loss		53	902
		_________	________
	9	284,999	213,596
Current assets
Cash at bank		3,425	981
Receivables	10	181	126
		_________	________
Total current assets		3,606	1,107
		_________	________
Current liabilities
Payables	11	(415)	(829)
		_________	________
Total current liabilities		(415)	(829)
		_________	________
Net current assets		3,191	278
		_________	________
Net assets		288,190	213,874
		_________	________
Share capital and reserves
Ordinary share capital	12	14,768	14,768
Share premium account		25,406	25,406
Special reserve	2(k)	15,778	15,778
Capital redemption reserve		4,484	4,484
Capital reserve	13	228,225	153,743
Revenue reserve	2(k)	(471)	(305)
		_________	________
Equity shareholders' funds		288,190	213,874
		_________	________
Net asset value per Ordinary share (pence)	14	487.88	362.07
		_________	________

STATEMENT OF CHANGES IN EQUITY

Year ended 31 March 2017
		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 April 2016	14,768	25,406	15,778	4,484	153,743	(305)	213,874
Net profit/(loss) on ordinary activities after taxation	-	-	-	-	74,482	(166)	74,316
	________	_________	________	________	________	_________	________
Balance at 31 March 2017	14,768	25,406	15,778	4,484	228,225	(471)	288,190
	________	_________	________	________	________	_________	________
Year ended 31 March 2016
		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 April 2015	14,768	25,406	15,778	4,484	166,953	319	227,708
Net loss on ordinary activities after taxation	-	-	-	-	(13,210)	(624)	(13,834)
	________	_________	________	________	________	_________	________
Balance at 31 March 2016	14,768	25,406	15,778	4,484	153,743	(305)	213,874
	________	_________	________	________	________	_________	________
The Special reserve and the Revenue reserve represent the amount of the Company's distributable reserves (see note 2(k)).

CASH FLOW STATEMENT

		Year ended		Year ended
		31 March 2017		31 March 2016
	Notes	£'000	£'000	£'000	£'000
Cash flows from operating activities
Dividend income received			3,020		364
Interest income received			2		4
Investment management fee paid			(2,456)		(158)
Other cash expenses			(740)		(541)
			__________		__________
Cash outflows from operations			(174)		(331)
Cash flows from investing activities
Purchases of investments		(32,720)		(188,282)
Sales of investments		36,039		188,743
Capital Gains Tax on sales		(755)		-
		__________		__________
Net cash inflow from investing activities			2,564		461
Cash flows from financing activities
Drawdown of bank loans			-		189,000
Repayment of bank loans			-		(189,000)
Interest paid			-		(59)
Net cash outflow from financing activities			-		(59)
			__________		__________
Net increase in cash and cash equivalents			2,390		71
Cash and cash equivalents at the start of the year			981		2,017
Effect of foreign exchange rate changes			54		(1,107)
			__________		__________
Cash and cash equivalents at the end of the year	2(h),15		3,425		981
			__________		__________

Notes to the Financial Statements for the year ended 31 March 2017

1.	Principal activity
	The principal activity of the Company is that of an investment trust company within the meaning of Section 1158 of the Corporation Tax Act 2010 ("s1158").
	The principal activity of the active foreign subsidiary, which has not been consolidated, was similar in all relevant respects to that of its United Kingdom parent. The Company has entered into warrant repurchase agreements with the Subsidiary to acquire its equity and securities. The Subsidiary held no investments at the year end. The Subsidiary's registered address is 33 Edith Cavell Street, Port Louis, Mauritius.
	The Company has adopted IFRS10 'Consolidated Financial Statements - Consolidation relief for Investment Entities'; as such the Company has not consolidated the results of its active subsidiary.

2.	Accounting policies
	(a)	Basis of preparation
		The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 March 2017.
		The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union, and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB ("IFRIC"). The financial statements have been prepared on a historical-cost basis, except for financial assets and financial liabilities held at fair value through profit or loss.
		The Company's financial statements are presented in Sterling, which is also the functional currency as it is the basis upon which shareholders operate and expenses are generally paid. All values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.
		Where presentational guidance set out in the Statement of Recommended Practice ("SORP"): 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (November 2014 and updated in January 2017) issued by the Association of Investment Companies ("AIC"), is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.
		Notwithstanding the resolution being proposed at the forthcoming Annual General Meeting to approve the continuation of the Company, the Directors had, at the time of approving the financial statements, a reasonable expectation that the Company had adequate resources to continue in operational existence for the foreseeable future. Thus they have continued to adopt the going concern basis of accounting in preparing the financial statements. Further detail is included in the Directors' Report.
		Significant judgements
		The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates which requires management to exercise its judgement in the process of applying the accounting policies. One of the key areas for consideration has been the application of IFRS 10 'Consolidated Financial Statements' including the Amendments, 'Investment entities (Amendments to IFRS 10, IFRS 12 and IAS 27) (Investment Entity Amendments). The amendments require entities that meet the definition of an investment entity to fair value certain subsidiaries through profit or loss in accordance with IAS 39 Financial Instruments: Recognition and Measurement, rather than consolidate their results. However, entities which are not themselves investment entities and provide investment related services to the Company will continue to be consolidated.
		Assessment as an investment entity
		Entities which meet the definition of an investment entity are required to fair value subsidiaries through profit or loss rather than consolidate them. To determine whether an entity meets the definition of an investment entity it is required to meet the following three criteria:
		(i)	an entity obtains funds from one or more investors for the purpose of providing those investors with investment services; the Company provides investment services and has several investors who pool funds to gain access to these services and investment opportunities which they might not be able to as individuals.
		(ii)	an entity commits to its investors that its business purpose is to invest funds solely from capital appreciation, investment income, or both; the Company's investment objective is to provide shareholders with long-term capital appreciation by investment in companies which are incorporated in India, or which derive significant revenue or profit from India, with dividend yield from the Company being of secondary importance.
		(iii)	an entity measures and evaluates the performance of substantially all of its investments on a fair value basis; the Company has elected to measure and evaluate the performance of all of its investments on a fair value basis. The fair value basis is used to present the Company's performance in its communication with the market and the primary measurement attribute to evaluate performance of all of its investments and to make investment decisions.
		As at 31 March 2016, the Board was of the opinion that the Subsidiary met the definition of an Investment Entity. However, during the year to 31 March 2017, the Subsidiary sold all of its remaining investments to the Company. Consequently the Board is of the opinion that the Subsidiary no longer meets the definition an Investment Entity now that it no longer holds any investments. The Subsidiary no longer provides investment services to the Company and it is the intention of the Board to liquidate the Subsidiary. As the Subsidiary is deemed to be immaterial to the financial position, performance and cash flows of the group, the Subsidiary continues to be held at fair value through profit or loss rather than being consolidated.
		Functional and presentational currency
		The Company's investments are made in Indian Rupee, however the Board considers the Company's functional currency to be Sterling. In arriving at this conclusion, the Board considered that the shares of the Company are listed on the London Stock Exchange, it is regulated in the United Kingdom, principally having its shareholder base in the United Kingdom and also pays dividends and expenses in Sterling. Consequently, the Board also considers the Company's presentational currency to be Sterling.
		Standards issued but not yet effective
		At the date of authorisation of these financial statements, the following Standards and Interpretations were effective for annual periods beginning on or after 1 January 2018:
		IFRS 9 - Financial Instruments (revised, early adoption permitted)
		IFRS 15 - Revenue from Contracts with Customers (early adoption permitted)
		IFRS 16 - Leasing (effective for annual periods beginning on or after 1 January 2019)
		The following amendments to Standards are all effective for annual periods beginning on or after 1 January 2017:
		IAS 7 - Disclosure initiative
		IAS 12 - Recognition of Deferred Tax Assets for Unrealised Assets
		The following amendments to Standards are all effective for annual periods beginning on or after 1 January 2018:
		IFRS 2 - Classification and measurement of share-based payment transactions
		IFRS 4 - Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
		IFRS 15 - Clarifications
		IAS 40 - Transfers of Investment Property
		In addition, under the Annual Improvements to IFRSs 2014 - 2016 Cycle, a number of Standards are included for annual periods beginning on or after 1 January 2017.
		The Directors do not anticipate that the adoption of these Amendments in future periods will materially impact the Company's financial results in the period of initial application although there will be revised presentations to the Primary Financial Statements and additional disclosures. The Company intends to adopt the standards in the reporting period when they become effective.
	(b)	Presentation of Statement of Comprehensive Income
		In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of revenue and capital nature has been presented in the Statement of Comprehensive Income.
	(c)	Segmental reporting
		The Board has considered the requirements of IFRS 8 'Operating Segments' and is of the view that the Company is engaged in a single segment business, of investing in Indian quoted equities and that therefore the Company has only a single operating segment. The Board of Directors, as a whole, has been identified as constituting the chief operating decision maker of the Company. The key measure of performance used by the Board to assess the Company's performance is the total return on the Company's net asset value, as calculated under IFRS, and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the financial statements.
	(d)	Income
		Dividends receivable on equity shares are recognised in the Statement of Comprehensive Income on the ex-dividend date, and gross of any applicable withholding tax. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company's right to receive payment is established. Special dividends are credited to capital or revenue, according to their circumstances. Where a company has elected to receive dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised in the Statement of Comprehensive Income. Provision is made for any dividends not expected to be received. Interest receivable from cash and short-term deposits is accrued to the end of the financial year.
	(e)	Expenses and interest payable
		All expenses, with the exception of interest expenses, which would be recognised using the effective interest method, are accounted for on an accruals basis. Expenses are charged to the revenue column of the Statement of Comprehensive Income except as follows:
		-      expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the Statement of Comprehensive Income and separately identified and disclosed in note 9 (b); and
		-      expenses are charged to the capital column of the Statement of Comprehensive Income where a connection with the maintenance or enhancement of the value of the investments can be demonstrated.
	(f)	Taxation
		The tax expense represents the sum of the tax currently payable and deferred tax. Tax payable is based on the taxable profit for the year. Taxable profit differs from profit before tax as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Balance Sheet date.
		Deferred tax
		Deferred tax is recognised in respect of all temporary differences at the Balance Sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the Balance Sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise, using tax rates that are expected to apply at the date the deferred tax position is unwound.
	(g)	Investments
		All investments have been designated upon initial recognition at fair value through profit or loss. This is done because all investments are considered to form part of a portfolio of financial assets which is evaluated on a fair value basis, in accordance with the Company's documented investment strategy, and information about the investments is provided internally on that basis. Purchases of investments are recognised on a trade date basis at the value of the consideration payable excluding transaction costs and designated upon initial recognition as held at fair value through profit or loss. Sales of assets are also recognised on a trade date basis. Proceeds are measured at fair value, which is regarded as the proceeds of sale less any transaction costs.
		The fair value of the financial instruments is based on their quoted bid price at the Balance Sheet date, without deduction for any estimated future selling costs. Any unquoted investments would be held at fair value, as measured by the Directors using appropriate valuation methodologies such as earnings multiples, recent transactions and net assets. In the case of the Company's investment in the subsidiary, of which the Company owns 100% of its Ordinary share capital, this has been measured at fair value, which is deemed to be its net asset value.
		Changes in the value of investments (including changes related to movements in foreign exchange) held at fair value through profit or loss and gains and losses on disposal are recognised in the  Statement of Comprehensive Income as "Gains/(losses) on investments at fair value through profit or loss". Also included within this caption are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase.
	(h)	Cash and cash equivalents
		Cash comprises cash in hand and at banks and short-term deposits. Cash equivalents are short-term, highly-liquid investments that are readily convertible to known amounts of cash, and that are subject to an insignificant risk of changes in value.
	(i)	Receivables and payables
		Other receivables and prepayments do not carry any interest and are short-term in nature, and are, accordingly, stated at their recoverable amount. Payables are non-interest bearing and are stated at their payable amount.
	(j)	Dividends payable
		Dividends are recognised from the date on which they are declared and approved by shareholders.
	(k)	Nature and purpose of reserves
		Special reserve
		The special reserve arose following Court approval in 1998 to transfer £30 million from the share premium account. This reserve is distributable and its function is to fund any share buy-backs by the Company.
		Capital redemption reserve
		The capital redemption reserve arose when Ordinary shares were redeemed, and subsequently cancelled by the Company, at which point an amount equal to the par value of the Ordinary share capital was transferred from the Ordinary share capital to the capital redemption reserve.
		Capital reserve
		This reserve reflects any gains or losses on investments realised in the period along with any increases and decreases in the fair value of investments held that have been recognised in the Statement of Comprehensive Income.
		Revenue reserve
		This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income. The revenue reserve represents the amount of the Company's reserves distributable by way of dividend.
	(l)	Foreign currency
		Overseas monetary assets and liabilities are converted into Sterling at the rate of exchange ruling at the Balance Sheet date. Transactions during the year involving foreign currencies are converted at the rate of exchange ruling at the transaction date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss and recognised in the Statement of Comprehensive Income.

		2017	2016
3.	Income	£'000	£'000
	Income from investments
	Overseas dividends	3,103	369
	Other operating income
	Deposit interest	1	5
		__________	__________
		3,104	374
		__________	__________

		2017	2016
4.	Investment management fees	£'000	£'000
	Investment management fees	2,520	329
		__________	__________
	The Company has an agreement with Aberdeen Fund Managers Limited for the provision of management and secretarial services.
	During the year, the management fee was payable monthly in arrears and was based on an annual amount of 1% of the total assets of the Company less current liabilities, excluding the fair value of the subsidiary, New India Investment Company (Mauritius) Limited, valued monthly. The management agreement is terminable by either the Company or AFML on 12 months' notice. The amount payable in respect of the Company for the year was £2,520,000 (2016 - £329,000) and the balance due to AFML at the year end was £245,000 (2016 - £181,000). All investment management fees are charged 100% to the revenue column of the Statement of Comprehensive Income.
	New India Investment Company (Mauritius) Limited also has an agreement with AFML to receive management services based on an annual amount of 1% of its net asset value. The amount payable during the year was £6,000 (2016 - £1,743,000) which was expensed through its own profit and loss account. The balance due to AAMAL at the year end was £nil (2016 - £1,000).
	Accordingly, the aggregate amount payable in respect of management services provided to the Company and its Subsidiary for the year was £2,526,000 (2016 - £2,072,000) and the balance due to AAMAL at the year end was £245,000 (2016 - £182,000).

		Year ended	Year ended
		31 March 2017	31 March 2016
5.	Administrative expenses	£'000	£'000
	Directors' fees	112	110
	Promotional activities	142	142
	Auditor's remuneration:
	-      fees payable to the Company's auditor for the audit of the Company's annual accounts (Ernst & Young LLP)	-	27
	-      fees payable to the Company's auditor for the audit of the Company's annual accounts (KPMG LLP)	21	-
	-      for other services relating to taxation provided to the Company (Ernst & Young LLP)	29	33
	Legal and advisory fees	45	82
	Custodian and overseas agents' charges	252	77
	Other	149	139
		__________	__________
		750	610
		__________	__________
	The Company has an agreement with Aberdeen Asset Management PLC ('AAM PLC') for the provision of promotional activities in relation to the Company's participation in the Aberdeen Investment Trust Share Plan and ISA. The total fees paid and payable under the agreement during the year were £142,000 (2016 - £142,000) and £35,000 (2016 - £35,000) was due to AAM PLC at the year end.
	Ernst & Young LLP was the Company's external auditor until their resignation on 6 September 2016. During this time, £29,000 (2016 - £33,000) was paid to Ernst & Young LLP for other services relating to taxation and the Company's restructure; the majority of these fees consist of tax advice provided by Ernst & Young LLP in relation to the Company's restructure and the repurchase of warrants by the Subsidiary from the Company. Ernst & Young LLP also advised the Company at the time of its restructuring in November 2004 when the Mauritian Subsidiary was created. KPMG LLP were appointed as the Company's external auditor on 6 September 2016. The only fees paid to KPMG LLP are the audit fees of £21,000. Audit fees in respect of New India Investment Company (Mauritius) Limited of £3,500 are paid to KPMG Mauritius by New India Investment Company (Mauritius) Limited. The amounts disclosed above for Auditor's remuneration are all shown net of VAT.
	The increase in custodian and overseas agents' charges reflects the effect of the first full year following the change in the Company's structure during February and March 2016 when investment holdings were transferred to the Company from its Subsidiary. Contained within the total cost are custodian charges of £183,000 (2016 - £18,000) payable by the Company. By comparison custodian charges payable by its Subsidiary were £1,000 (2016 - £125,000).

			2017			2016
			Revenue	Capital	Total	Revenue	Capital	Total
6.	(a)	Tax on ordinary activities	£'000	£'000	£'000	£'000	£'000	£'000
		Analysis of charge for the year
		Overseas taxation	-	755	755	-	-	-
			________	________	_______	_______	_______	________
		Total tax charge	-	755	755	-	-	-
			________	________	_______	_______	_______	________
		The Company is liable to Indian capital gains tax under Section 115 AD of the Indian Income Tax Act 1961, and following the disposal of certain securities within twelve months of their transfer from the Subsidiary to the Company, a charge has been allocated to capital as detailed above.
	(b)	Factors affecting the tax charge for the year
		The tax charged for the year can be reconciled to the profit/(loss) per the Statement of Comprehensive Income as follows:
			2017			2016
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
		Profit/(loss) before tax	(166)	75,237	75,071	(624)	(13,210)	(13,834)
		Corporation tax on profit/(loss) at the standard rate of 20% (2016 - 21%)	(33)	15,047	15,014	(125)	(2,642)	(2,767)
		Effects of:
		Income taxable in different years	-	-	-	(1)	-	(1)
		Expenses not deductible for tax purposes	-	-	-	7	-	7
		(Gains)/losses on investments held at fair value through profit or loss not taxable (see note below)	-	(15,036)	(15,036)	-	2,421	2,421
		Currency (gains)/losses not taxable	-	(11)	(11)	-	221	221
		Movement in excess expenses	654	-	654	192	-	192
		Capital gains tax charge	-	755	755	-	-	-
		Non-taxable dividend income	(621)	-	(621)	(73)	-	(73)
			________	________	_______	_______	_______	________
		Total tax charge	-	755	755	-	-	-
			________	________	_______	_______	_______	________
		The Company has excess expenses of £7,928,000 (2016 - £4,659,000) carried forward. This sum has arisen due to cumulative deductible expenses having exceeded taxable income over the life of the Company. It is considered too uncertain that there will be sufficient taxable profits against which these expenses can be offset and, therefore, in accordance with IAS 12, a deferred tax asset of £1,348,000 (2016 - £839,000) has not been recognised, based on the deferred tax rate of 17% (2016 - 18%). Any excess management expenses will be utilised against any taxable income that may arise in the future.
		Due to the Company's status as an Investment Company, and its intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided for deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

7.	Dividends on equity shares
	No final dividend is being proposed for the year ended 31 March 2017 (2016 - £nil).

		Year ended			Year ended
		31 March 2017			31 March 2016
8.	Return/(loss) per Ordinary share	Revenue	Capital	Total	Revenue	Capital	Total
	Net profit/(loss) (£'000)	(166)	74,482	74,316	(624)	(13,210)	(13,834)
	Weighted average number of Ordinary shares in issue			59,070,140			59,070,140
	Return/(loss) per Ordinary share (pence)	(0.28)	126.09	125.81	(1.06)	(22.36)	(23.42)
		________	________	_______	_______	_______	________

9.	Investments held at fair value through profit or loss
			Year ended 31 March 2017				Year ended 31 March 2016
			Investments				Investments
			In subsidiary	Parent	Total		In subsidiary		Parent		Total
	(a)	Company	£'000	£'000	£'000		£'000		£'000		£'000
		Opening book cost	20,495	192,033	212,528		50,150		5,040		55,190
		Opening investment holdings fair value gains	(19,593)	20,661	1,068		166,466		4,042		170,508
			________	______	_______		_______		______		________
		Opening valuation	902	212,694	213,596		216,616		9,082		225,698
		Movements in the year:
		Purchases	-	32,244	32,244		-		188,759		188,759
		Sales - proceeds	(390)	(35,634)	(36,024)		(186,607)		(2,151)		(188,758)
		Sales - realised net gains	459	7,509	7,968		156,952		385		157,337
		Increase/(decrease) in investment holdings fair value gains	(918)	68,133	67,215		(186,059)		16,619		(169,440)
			________	______	_______		_______		______		________
		Closing valuation	53	284,946	284,999		902		212,694		213,596
			________	______	_______		_______		______		________
			Year ended 31 March 2017				Year ended 31 March 2016
			Investments				Investments
			In subsidiary	Parent	Total		In subsidiary		Parent		Total
			£'000	£'000	£'000		£'000		£'000		£'000
		Closing book cost	20,564	196,152	216,716		20,495		192,033		212,528
		Closing investment holdings fair value gains	(20,511)	88,794	68,283		(19,593)		20,661		1,068
			________	______	_______		_______		______		________
		Closing valuation	53	284,946	284,999		902		212,694		213,596
			________	______	_______		_______		______		________
								As at			As at
								31 March 2017			31 March 2016
		Gains/(losses) on investments						£'000			£'000
		Realised net gains on sales of investments						7,968			157,337
		Increase/(decrease) in investment holdings fair value gains						67,215			(169,440)
								________			______
								75,183			(12,103)
								________			______
		As at 31 March 2017, all of the overseas investments held are in listed stocks (2016 - same).
		The Company owns 100% of the Ordinary share capital of its subsidiary, New India Investment Company (Mauritius) Limited, an investment holding company registered in Mauritius.
	(b)	Transaction costs
		During the year, expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through the capital column of the Statement of Comprehensive Income, and are included within gains/(losses) on investments at fair value through profit or loss in the Statement of Comprehensive Income. The total costs were as follows:
						Year ended				Year ended
						31 March 2017				31 March 2016
						£'000				£'000
		Purchases				65				229
		Sales				75				-
						________				______
						140				229
						________				______

		2017	2016
10.	Receivables	£'000	£'000
	Amounts due from brokers	-	15
	Prepayments and accrued income	181	111
		________	______
		181	126
		________	______
	None of the above amounts are past their due date or impaired (2016 - nil).

		2017	2016
11.	Payables	£'000	£'000
	Amounts due to brokers	-	476
	Other payables	415	353
		________	______
		415	829
		________	______

		2017		2016
12.	Ordinary share capital	Number	£'000	Number	£'000
	Issued and fully paid
	Ordinary shares of 25p each	59,070,140	14,768	59,070,140	14,768
		________	______	_______	_______
	The Ordinary shares give shareholders voting rights, the entitlement to all of the capital growth in the Company's assets, and to all the income from the Company that is resolved to be distributed.
	Ownership of Subsidiaries
	At the year end, the Company's wholly-owned Subsidiary, New India Investment Company (Mauritius) Limited ('the Subsidiary') had share capital of 4,275,000 (2016 - 4,275,000) Redeemable Participating Preference shares of £0.10 each ('Preference shares') and 50 Management shares of £1 each. The Company holds 100% of the share capital of the Subsidiary.
	In January 2005 the Subsidiary issued a Warrant instrument to the Company for a consideration of £32,270,000 giving the Company the right to purchase up to 38,350,900 Preference shares, at an exercise price per share of £20 per share ('the 2015 Warrant'). The 2015 Warrant was subsequently extended and is exercisable until 26 August 2020.
	In August 2010, the Subsidiary issued a further Warrant instrument to the Company for a consideration of £9,000,000, giving the Company the right to purchase up to 1,321,417 Preference shares, at an exercise price per share of £40 per share ('the 2020 Warrant'). The 2020 Warrant is exercisable for 10 years to 26 August 2020.
	Following the above, there are two separate Warrants issued by the Subsidiary. The Subsidiary has the right to repurchase both Warrants in part or in whole at any time for a consideration to be determined in the market at the time by an independent valuer.
	The Company also incorporated a wholly-owned subsidiary, registered in Singapore, on 27 November 2013 which was struck off during the year ended 31 March 2017, this was previously considered to be dormant by the Directors.
	Partial repurchase of Subsidiary Warrant
	On 15 May 2008, the Subsidiary repurchased part of the 2015 Warrant, in relation to 405,900 Preference shares, at a valuation based on the subscription price of £20. In aggregate, proceeds of £3,004,000 were received by the Company in the form of a partial capital redemption. These proceeds were credited to the capital reserve of the Company.
	During February and March 2016, the Subsidiary repurchased a further part of the 2015 Warrant, in relation to 30,381,195 Preference shares, at a valuation based on the subscription price of £20. In aggregate, proceeds of £186,607,000 were received by the Company in the form of a partial capital redemption. These proceeds were also credited to the capital reserve of the Company.
	During March 2017, the Subsidiary repurchased a further part of the 2015 Warrant, in relation to 63,500 Preference shares, at a valuation based on the subscription price of £20. In aggregate, proceeds of £390,000 were received by the Company in the form of a partial capital redemption. These proceeds were also credited to the capital reserve of the Company.
	At the year end there were then two (2016 - two) Warrants in issue carrying the right for the Company to subscribe for 7,500,305 (2016 - 7,563,805) and 1,321,417 (2016 - 1,321,417) new Preference shares of 10p in the Subsidiary at £20 and £40 per share respectively.

		2017	2016
13.	Capital reserves	£'000	£'000
	At 1 April 2016	153,743	166,953
	Currency gains/(losses)	54	(1,107)
	Movement in investment holdings fair value gains	67,215	(169,440)
	Gains on sales of investments	7,968	157,337
	Capital gains tax charge	(755)	-
		________	______
	At 31 March 2017	228,225	153,743
		________	______
	The capital reserve includes gains of £68,283,000 (2016 - gains of £1,068,000) which relate to the revaluation of investments held at the reporting date.

14.	Net asset value per Ordinary share
	The net asset value per Ordinary share is based on a net asset value of £288,190,000 (2016 - £213,874,000) and on 59,070,140 (2016 - 59,070,140) Ordinary shares, being the number of Ordinary shares in issue at the year end.

15.

Financial instruments

Risk Management

The Company's investment activities expose it to various types of financial risk associated with the financial instruments and markets in which it invests. The Company's financial instruments comprise securities and other investments, cash balances and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income.

The Board has delegated the risk management function to AFML under the terms of its management agreement with AFML (further details of which are included under note 4). The Board regularly reviews and agrees policies for managing each of the key financial risks identified with the Manager. The types of risk and the Manager's approach to the management of each type of risk, are summarised below. Such approach has been applied throughout the year and has not changed since the previous accounting period. The numerical disclosures exclude short-term debtors and creditors on the grounds of their materiality.

Risk management framework

The directors of Aberdeen Fund Managers Limited collectively assume responsibility for AFML's obligations under the AIFMD including reviewing investment performance and monitoring the Company's risk profile during the year.

AFML is a fully integrated member of the Aberdeen Group ("the Group"), which provides a variety of services and support to AFML in the conduct of its business activities, including in the oversight of the risk management framework for the Company. The AIFM has delegated the day to day administration of the investment policy to Aberdeen Asset Management Asia Limited, which is responsible for ensuring that the Company is managed within the terms of its investment guidelines and the limits set out in its pre-investment disclosures to investors (details of which can be found on the Company's website). The AIFM has retained responsibility for monitoring and oversight of investment performance, product risk and regulatory and operational risk for the Company.

The Manager conducts its risk oversight function through the operation of the Group's risk management processes and systems which are embedded within the Group's operations. The Group's Risk Division supports management in the identification and mitigation of risks and provides independent monitoring of the business. The Division includes Compliance, Business Risk, Market Risk, Risk Management and Legal. The team is headed up by the Group's Head of Risk, who reports to the Chief Executive Officer of the Group. The Risk Division achieves its objective through embedding the Risk Management Framework throughout the organisation using the Group's operational risk management system ("SWORD").

The Group's Internal Audit Department is independent of the Risk Division and reports directly to the Group CEO and to the Audit Committee of the Group's Board of Directors. The Internal Audit Department is responsible for providing an independent assessment of the Group's control environment.

The Group's corporate governance structure is supported by several committees to assist the board of directors of Aberdeen, its subsidiaries and the Company to fulfil their roles and responsibilities. The Group's Risk Division is represented on all committees, with the exception of those committees that deal with investment recommendations. The specific goals and guidelines on the functioning of those committees are described on the committees' terms of reference.

Risk management

The main risks the Company faces from its financial instruments are (i) market risk (comprising interest rate risk, currency risk and price risk), (ii) liquidity risk and (iii) credit risk.

(i)

Market risk

The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - interest rate risk, foreign currency risk and other price risk.

Interest rate risk

Interest rate movements may affect the level of income receivable on cash deposits.

Management of the risk

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.

Financial assets

The interest rate risk profile of the Company's financial assets, excluding equity shares and short-term debtors which are non-interest bearing, as at 31 March 2017 and 31 March 2016 was as follows:

Total

(per Balance Sheet)

Floating rate

2017

2016

2017

2016

Type

£'000

£'000

£'000

£'000

Cash at bank - Sterling

3,425

981

3,425

981

________

_______

_______

_______

The floating rate assets consist of cash deposits on call earning interest at prevailing market rates, and are classified as having maturity dates of less than one year.

Financial liabilities

The Company had no financial liabilities as at 31 March 2017 and 31 March 2016 which were exposed to interest rate risk.

Interest rate sensitivity

Movements in interest rates would not significantly affect net assets and total profit attributable to the Company's shareholders (2016 - same).

Foreign currency risk

The Company's total return and net assets can be significantly affected by currency translation movements as the majority of the Company's assets and income, including those of the Company's subsidiary, are denominated in currencies other than Sterling, which is the Company's functional currency.

Management of the risk

It is not the Company's policy to hedge this risk but it reserves the right to do so, to the extent possible.

The revenue account is subject to currency fluctuation arising on dividends paid in foreign currencies. The Company does not hedge this currency risk.

Foreign currency exposure by currency of denomination:

31 March 2017

31 March 2016

Net

Total

Net

Total

Overseas

monetary

currency

Overseas

monetary

currency

investments

assets

exposure

investments{A}

assets

exposure

£'000

£'000

£'000

£'000

£'000

£'000

US Dollar

13,937

-

13,937

9,565

-

9,565

Indian Rupee

271,009

-

271,009

204,031

-

204,031

________

______

_______

_______

______

________

284,946

-

284,946

213,596

-

213,596

________

______

_______

_______

______

________

{A}         Investments held by the Company's Subsidiary are reported on a look-through basis.

Foreign currency sensitivity

At 31 March 2017, the exchange rate of the Indian Rupee against the reporting currency Sterling was £1: INR 81.198 compared with an exchange rate of £1: INR 95.1816 at 31 March 2016. Based on continuing to hold the same investments in the same quantities from 1 April 2016 to 31 March 2017, all other things being equal, the impact of the exchange rate movement over the year would be to increase the value of the investments by £35,137,000 (2016 - decrease by £5,188,000).

At 31 March 2017, the exchange rate of the US Dollar against the reporting currency Sterling was £1: US$1.25045 compared with an exchange rate of £1: US$1.4373 at 31 March 2016. Based on continuing to hold the same investments in the same quantities from 1 April 2016 to 31 March 2017, all other things being equal, the impact of the exchange rate movement over the year would be to increase the value of the investments by £1,429,000 (2016 - increase by £298,000).

The exposure noted in the above table is representative of the exposure across the year as a whole.

Price risk

Price risks (ie, changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.

Management of the risk

It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a sector. Both the allocation of assets and the stock selection process act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are all listed on the Bombay (Mumbai) Stock Exchange and/or The Indian National Stock Exchange, with the exception of Grasim Industries GDR, Ultratech Cement GDR and Ambuja Cements GDR, whose primary exchange is Luxembourg. The subsidiary, New India Investment Company (Mauritius) Limited is unlisted.

Price risk sensitivity

If market prices at the Balance Sheet date had been 15% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders for the year ended 31 March 2017 would have increased /(decreased) by £42,750,000 (2016 - increased/(decreased) by £32,039,000) and capital reserves would have increased /(decreased) by the same amount.

(ii)

Liquidity risk

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

Management of the risk

All liabilities are payable on demand for a cash consideration equivalent to the balances shown in note 11, and therefore liquidity risk is not considered to be significant, as the Company's assets mainly comprise readily realisable securities which can, in normal circumstances, be sold to meet funding requirements, if necessary.

(iii)

Credit risk

This is failure of the counterparty to a transaction to discharge its obligations under that transaction, which could result in the Company suffering a loss.

Management of the risk

Investment transactions are carried out with a number of brokers, whose credit standing is reviewed periodically by the Manager, and limits are set on the amount that may be due from any one broker;

-        the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the review of failed trade reports by the Manager on a daily basis. In addition, both stock and cash reconciliations to custodians' records are performed on a daily basis by the Manager to ensure discrepancies are investigated on a timely basis. The Manager's Compliance department carries out periodic reviews of the Custodian's operations and reports its findings to the Manager's Risk Management Committee and to the Board of the Company. This review will also include checks on the maintenance and security of investments held; and

-        cash is held only with reputable banks whose credit ratings are monitored on a regular basis.

None of the Company's financial assets are secured by collateral or other credit enhancements (2016: same).

Credit risk exposure

In summary, compared to the amounts included in the Balance Sheet, the maximum exposure to credit risk at 31 March was as follows:

2017

2016

Balance

Maximum

Balance

Maximum

Sheet

exposure

Sheet

exposure

£'000

£'000

£'000

£'000

Current assets{A}

Cash at bank

3,425

3,425

981

981

________

______

_______

_______

{A}         Excluding short-term debtors.

The exposure noted in the above table is representative of the exposure across the year as a whole.

None of the Company's financial assets are past due or impaired (2016 - same).

Fair values of financial assets and financial liabilities

Investments held at fair value through profit or loss are valued at their quoted bid prices which equate to their fair values. The Directors are of the opinion that the other financial assets and liabilities carried at amortised cost equates to their fair value.

16.	Capital management policies and procedures
	The Company's capital management objectives are:
	-      to ensure that the Company will be able to continue as a going concern; and
	-      to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt. The policy is that debt should not exceed 25% of net assets.
	The Board, with the assistance of the Manager monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes:
	-     the planned level of gearing, which takes account of the Manager's views on the market;
	-     the need to buy back equity shares for cancellation, which takes account of the difference between the net asset value per share and the share price (ie the level of share price discount or premium);
	-     the need for new issues of equity shares; and
	-     the extent to which revenue in excess of that which is required to be distributed should be retained.
	The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.
	The Company had no debt at the year end (2016 - nil).

17.	Fair value hierarchy
	IFRS 13 'Fair Value Measurement' requires an entity to classify fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used in making measurements. The fair value hierarchy has the following levels:
	Level 1: quoted (unadjusted) market prices in active markets for identical assets or liabilities;
	Level 2: valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and
	Level 3: valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
	The financial assets and liabilities measured at fair value in the Balance Sheet are grouped into the fair value hierarchy at the Balance Sheet date are as follows:
				Level 1	Level 2	Level 3	Total
	As at 31 March 2017		Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities		a)	284,946	-	-	284,946
	Investment in Subsidiary		b)	-	53	-	53
				________	______	_______	_______
	Net fair value			284,946	53	-	284,999
				________	______	_______	_______
				Level 1	Level 2	Level 3	Total
	As at 31 March 2016		Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities		a)	212,694	-	-	212,694
	Investment in Subsidiary		b)	-	902	-	902
				________	______	_______	_______
	Net fair value			212,694	902	-	213,596
				________	______	_______	_______
	a)	Quoted equities
		The fair value of the Group's investments in quoted equities has been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges.
	b)	Investment in Subsidiary
		The Company's investment in its Subsidiary is categorised in Fair Value Level 2 as its fair value has been determined by reference to the Subsidiary company's net asset value at the reporting date. The net asset value is predominantly made up of cash and receivables.

18.	Controlling party
	In the opinion of the Directors on the basis of shareholdings advised to them, the Company has no immediate or ultimate controlling party.

19.		Related party transactions
		Directors' fees and interests
		Fees payable during the year to the Directors and their interests in shares of the Company are disclosed within the Directors' Remuneration Report on page 38.
		Transactions with the Subsidiary
		During the year the Subsidiary repurchased warrants to the value of £390,000 further detail of which is provided in note 12. There were no balances due/to from the subsidiary at year end.
		Transactions with the Manager
		The Company has an agreement with Aberdeen Fund Managers Limited for the provision of management, secretarial, accounting and administration services and for the carrying out of promotional activities in relation to the Company. Details of transactions during the year and balances outstanding at the year end disclosed in notes 4 and 5.
	This Annual Financial Report announcement is not the Company's statutory accounts. The above results for the year ended 31 March 2017 are an abridged version of the Company's full accounts. The 2017 and 2016 statutory accounts received unqualified reports from the Company's Auditor and did not include any reference to matters to which the Auditor drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s.498 of the Companies Act 2006. The financial information for 2016 is derived from the statutory accounts for 2016 which have been delivered to the Registrar of Companies. The 2017 statutory accounts will be filed with the Registrar of Companies in due course.
	The Annual Report will be posted to shareholders in July 2017. Further copies may be obtained from the registered office, Bow Bells House, 1 Bread Street, London EC4M 9HH or from the Company's website at: aberdeen-newindia.co.uk.
	The Annual General Meeting will be held at Bow Bells House, 1 Bread Street, London EC4M 9HH at 12.30 p.m. on 5 September 2017.
	By Order of the Board Aberdeen Asset Management PLC Secretaries 13 June 2017

 

END

 

 

FR UORNRBKANAAR