Annual Financial Report

RNS Number : 5610B

Aberdeen New India Invest Trust PLC

11 June 2021

 

ABERDEEN NEW INDIA INVESTMENT TRUST PLC

LEI - 549300D2AW66WYEVKF02

ANNUAL FINANCIAL REPORT

For the year ended 31 March 2021

FINANCIAL HIGHLIGHTS

	31 March 2021	31 March 2020	% change
Equity shareholders' funds (net assets)	£366,106,000	£241,583,000	+51.5
Market capitalisation	£316,448,000	£192,605,000	+64.3
Share price (mid market)	542.00p	328.00p	+65.2
Net asset value per Ordinary share	627.05p	411.41p	+52.4
Discount to net asset value{A}	13.6%	20.3%
Net gearing{A}	5.8%	9.3%
Total return/(loss) per share	216.25p	(120.34p)
Revenue profit per share	0.19p	2.08p
Revenue reserves per share	0.19p	0.22p
Operating costs
Ongoing charges ratio{A}	1.16%	1.14%
{A} Considered to be an Alternative Performance Measure.

Overview

FINANCIAL CALENDAR

Financial year end	31 March 2021
Online shareholder presentation	24 August 2021
Annual General Meeting (functional only)	9 September 2021
Expected announcement of results for year ending 31 March 2022	June 2022

STRATEGIC REPORT - RESULTS

Financial Highlights

Performance (total return in Sterling terms)

	1 year	3 year	5 year	10 year
	% return	% return	% return	% return
Share price{A}	+65.6	+27.5	+73.4	+123.1
Net asset value per Ordinary share{A}	+52.7	+28.2	+73.5	+133.6
MSCI India Index (sterling adjusted)	+59.1	+32.8	+77.6	+80.2
{A} Considered to be an Alternative Performance Measure.
Source: Aberdeen Standard Fund Managers Limited, Morningstar & Lipper.

Ten Year Financial Record

Year to 31 March	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021
Total income (£'000){A}	2,702	2,414	376	341	374	3,104	3,318	3,602	5,185	4,517
Per share (p)
Net revenue return/(loss)	0.61	0.20	(0.36)	(0.39)	(1.06)	(0.28)	(0.71)	(0.35)	2.08	0.19
Dividends{B}	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	1.00	n/a
Total (loss)/return	(24.95)	24.75	(5.16)	121.94	(23.42)	125.81	2.12	41.90	(120.34)	216.25
Net asset value per share (p)
Basic	243.96	268.71	263.55	385.49	362.07	487.88	490.00	531.90	411.41	627.05
Shareholders' funds (£'000)	144,105	158,726	155,680	227,708	213,874	288,190	289,444	314,196	241,583	366,106
{A} Years 2012 to 2013 reflect the consolidated amounts of the Company and its Subsidiary, years 2014 to 2021 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). 2017 reflects the transfer of securities to the Company from its Subsidiary.
{B} 2020 dividend represents 0.22p per share paid from revenue reserves and 0.78p per share paid from capital reserves.

STRATEGIC REPORT - CHAIRMAN'S STATEMENT

Dear Shareholder,

Overview

For the 12 months ended 31 March 2021 ("the Year"), your Company's net asset value ("NAV") per share rose by 52.7%, in total return terms. By comparison the Company's benchmark, the MSCI India Index (the "Index"), rose by 59.1% in sterling total return terms. Assisted by a narrowing of the Company's discount from 20.3% to 13.6%, the Company's share price total return was 65.6% for the Year.

After the Covid-19 upheaval in March 2020, the Indian stock market staged a strong comeback during the Year. This resilience was the result of coordinated global monetary easing and simultaneous fiscal stimulus as well as the rollout of vaccines in some countries around the world.

The Indian domestic economy, also, began to slowly get back on track: from one that was at a virtual standstill for almost three months in mid-2020, resulting in severe damage to supply chains and widespread job losses, to one that is seeing a nascent but fragile recovery, with improving credit conditions and corporate earnings through successive quarters. 

Nevertheless, GDP growth in India in 2020-21 was a negative 7.3%, tempered somewhat by an unexpected 1.6% growth in the January-March quarter. However, with the country again at a virtual standstill between April and June of 2021 this year, our expectations for growth in 2021-22 are modest at best.

Your Company benefited from this reversal of fortunes although its NAV return fell somewhat behind the performance of the Index, unlike the year before when it had outperformed. For the most part, the portfolio behaved as the Manager had intended: with a firm foundation of industry-leading companies that not only have the quality to withstand severe market gyrations, but are also equally well-placed to benefit from a market upturn.

Performance, however, was affected as your Manager has been cautious about diversifying into stocks that have benefited temporarily from the sharp upturn in the market. There were also certain sectors that did well in the pandemic but which subsequently faced profit-taking. One such example was the banking sector, with the Company having an exposure through several good quality private-sector lenders, especially those with ample capital buffers, attractive assets and led by experienced management. Further details are provided in the Investment Manager's Report.

Meanwhile, several themes emerged in the Indian stockmarket over the course of the Year. Notable among these were the impetus for digital solutions as a direct response to the pandemic, government reform and, allied to that, the push to go green.

The surge of mobile phone users and improvements in payment systems in recent years provided fertile ground for the coming of age of maturing internet companies, amplified by the shift to "work-from-home" arrangements. This has driven a significant increase in online activity across categories ranging from e-commerce and digital payments to food delivery and more. Although still years behind China, I believe India's digital ecosystem is growing and building out fast. Your Manager has added to new positions that are benefiting from this rising digital adoption and I look forward to reporting to you in the future on opportunities from this fast evolving landscape.

The green economy also took a leap forward as the global commitment to carbon reduction gained momentum. This is no different for India whose cost of generating solar power is the most affordable in the region and installations have been growing rapidly. The enlarged infrastructure slice of the Indian Budget could potentially boost renewable energy projects, but this capital intensive sector also needs foreign investment. So far, the nation's goal is to double gas usage within this decade, involving huge plans for pipelines, smart grids and LNG fuel stations. However, reforms to address power distributors' financial losses have been delayed and your Manager is careful that exposure to New Delhi's resolve for lower carbon emissions should be through companies with good balance sheets.

Meanwhile, the rural economy remains integral to the country's growth. When the pandemic wreaked havoc, fiscal relief gave priority to the agricultural sector, which employs about 40% of the workforce. Micro and small enterprises were provided with collateral-free credit which could be used by farmers to buy equipment, fertiliser, and to build storage. Government support for the rural sector rose significantly when the economic contraction reached its nadir. This helped underpin rural demand and, in turn, stabilised the economy which eventually registered its first positive data point by the year-end. A good monsoon season also bolstered rural spending. On a separate note, the move by Mr Modi's government to help the agricultural sector to compete globally was poorly received. Many farmers felt their livelihoods would be threatened and headed to New Delhi to stage months-long protests creating a headache for policymakers and forcing the Supreme Court to put the new laws on hold.

Board

Rebecca Donaldson joined the Board on 1 September 2020 and her election as a Director was approved by shareholders at the AGM on 23 September 2020. Rachel Beagles stepped down as a Director at the conclusion of the AGM. Michael Hughes succeeded Rachel both as Senior Independent Director and as Chairman of the Management Engagement Committee.

Consistent with best practice and as required by Provision 19 of the UK Code of Corporate Governance published in July 2018, I offered to step down as Chairman on the ninth anniversary of my appointment in September 2021. However, the other Directors, led by Michael Hughes as Senior Independent Director, have determined that it is in the best interests of all shareholders that I continue as Chairman until the AGM due in September 2022, in order to oversee the recruitment of two new Directors by mid-2022.

The Board arranged, in April 2021, for an external evaluation of the Directors to be carried out by an independent firm; further details may be found in the Nomination Committee section of the Directors' Report.

Gearing

The Company announced on 7 July 2020 that it had entered into a new two year multi-currency revolving credit facility of £30m with Natwest Markets plc which replaced the facility, also with Natwest Markets plc, that had been due to expire on 24 July 2020. As at 31 March 2021, £24 million had been drawn of the total available facility (31 March 2020 - £15m), which resulted in net gearing of 5.8%, as compared to 9.3% as at the previous year end. The ability to gear is one of the advantages of the closed ended company structure and your Manager continues to seek opportunities to deploy this facility.

Discount and Share Buybacks

The Board continues to monitor actively the discount of the Ordinary share price to the NAV per Ordinary share (including income) and pursues a policy of selective buybacks of shares where to do so, in the opinion of the Board, is in the best interests of shareholders, whilst also having regard to the overall size of the Company.

During the Year, the discount to NAV narrowed from 20.3% to 13.6% as at 31 March 2021 following the Company buying back into treasury 335,653 (2020 - 349,159) Ordinary shares, resulting in 58,385,328 shares in issue with voting shares and an additional 684,812 shares held in treasury.

The Board believes that a combination of strong long-term performance and effective promotion should increase demand for the Company's shares and reduce the discount to NAV at which they trade, over time.

Reduction in Investment Management Fee

The Board is pleased to advise that the Company reached agreement with the Manager that, with effect from 1 April 2021, the management fee is reduced to 0.85% of the Company's net assets up to £350m and 0.70% above net assets of £350m. Previously, the fee was based on the Company's total assets less current liabilities and was charged at 0.9% on the first £350m and at 0.75% above £350m. Further details may be found in the Directors' Report.

Indian Capital Gains Tax

With effect from April 2020, the Company has been subject to both short and long term capital gains tax in India on the growth in value of its investment portfolio. Although this additional tax only becomes payable at the point at which the underlying investments are sold and profits crystallised, the Company must accrue for this additional cost which is £13.6m for the Year, equivalent to a reduction in the NAV per share of 23.3p or 3.6%.

Continuation of the Company

Your Board considers that the Company's investment objective remains relevant and appropriate, and in view of its long term performance record, recommends that Shareholders vote in favour of Ordinary resolution 8 at the Annual General Meeting ("AGM"), to allow the Company to continue as an investment trust. Shareholders will be aware that they have had the opportunity to vote on this resolution annually since 2005.

Annual General Meeting

The Board has been watching closely the potential impact of the COVID-19 pandemic upon the arrangements for the Company's upcoming AGM on 9 September 2021. At the time of writing, Government advice means that shareholder attendance at AGMs is not legally permissible and, notwithstanding this, accommodating shareholders safely, while in compliance with minimum social distancing requirements which may persist, would be challenging. It is very difficult to predict the extent to which the current guidance may be relaxed in the near future. Accordingly, in order to provide certainty, whilst encouraging and promoting interaction and engagement with our shareholders, the Board has decided to hold an interactive Online Shareholder Presentation (the "Presentation") at 10.00am on 24 August 2021.  During the Presentation, shareholders will receive updates from the Chairman and Investment Manager followed by an interactive question and answer session. After the Presentation, shareholders will have until 9.00 am on 7 September 2021 to submit their proxy votes prior to the AGM and I would encourage all shareholders to lodge their votes in advance in this manner. Full details on how to join the Presentation, including how to register, may be found at:

https://www.workcast.com/register?cpak=1258441883676159 

The Presentation will be available for viewing on the Company's website shortly after 24 August 2021.

The AGM will, by necessity, be a functional only AGM, and will be held at 9.00am on 9 September 2021 at Bow Bells House, 1 Bread Street, London EC4M 9HH. Arrangements will be made by the Company to ensure that the minimum number of shareholders required to form a quorum will attend the meeting in order that the meeting may proceed and the business be concluded. The Board considers these arrangements to be in the best interests of shareholders given the current circumstances.

The Board would strongly discourage shareholders from attending the AGM on 9 September 2021 and entry will be refused if Government guidance so requires or if the Chairman considers it to be necessary. Instead, shareholders are encouraged to exercise their votes in respect of the meeting in advance. Any questions from shareholders who are unable to join the Presentation on 24 August 2021 may be submitted by email to: [e-mail]. The Board and/or the Manager will seek to respond to all such questions received either before, or after the AGM.

On behalf of the Board I should like to thank shareholders in advance for their co-operation and understanding and I very much look forward to presenting to shareholders on 24 August 2021.

Given the uncertainty of government guidance on Covid-19 at the time of the AGM on 9 September 2021, the Company will continue to keep arrangements for the AGM under review and it is possible these may change. We will keep shareholders updated of any changes through the Company's website (aberdeen-newindia.co.uk) and announcements to the London Stock Exchange.

Shareholder Communications

The Board encourages shareholders to visit the Company's website (aberdeen-newindia.co.uk) for the latest information and regular podcasts and monthly factsheets, or follow the Manager at twitter.com/AberdeenTrusts and linkedin.com/company/aberdeen-standard-investment-trusts.

Outlook

As I write to you, India is in the grip of a second wave of Covid-19 which is much more extensive and damaging, both in human and economic terms, than the first wave. Economic performance, which at the beginning of this year was forecast to result in double digit growth in GDP terms, is bound to be adversely affected, although it is too early for revised figures for the current year to be issued either by the government or international institutions. The government has resisted a national lockdown because of its impact on growth and has resorted to localised lockdowns to manage the pandemic. Your Board does not claim to have the wisdom to opine as to which course of action would have been better, but what is clear is that the loss of life is colossal and, in almost everyone's reckoning, understated.

There are two other important issues for shareholders to reflect on. First of all, Mr Modi's administration has enjoyed, with some justification, a reputation for pragmatism and competence. This has taken a knock; will this affect his authority over the country and more pertinently, his future electoral performance? And, if it does, how would the resultant uncertainty affect the markets?

The other point is the apparent official management of the statistics on Covid-19. If this under-estimation is true (and it is widely believed to be so), what does this say for other official statistics that we, as international investors, rely on? We believe it is very much in the interest of the country, now and in the long-term, to ensure the integrity of its statistical output and to maintain its reputation for economic and statistical prudence.

Over the longer term, the Indian market continues to retain its appeal. This stems from India being home to many high quality companies, led by experienced management, that have been tested by crises, both past and present. Consumption is driven by an expanding middle-class. Labour supply is ample given the youthful and educated population. Government reforms to modernise the country, despite political challenges and inefficiencies, will eventually come to pass. Meanwhile, your Manager's focus on the market remains constant and, despite the present crisis, will continue to seek out opportunities to enhance the underlying portfolio with its well-tested approach that will ensure sustainable long-term growth for your Company.

Hasan Askari,

Chairman
10 June 2021

STRATEGIC REPORT - INVESTMENT MANAGER'S REPORT

The Company's net asset value ("NAV") rose by 52.7% in sterling terms for the year ended 31 March 2021 (the "Year"), a strong absolute performance but still underperforming the benchmark MSCI India Index. Meanwhile, the share price advanced by 65.6% in total return terms.

Market review

The year marked a solid recovery for Indian equities as the market rebounded from the multi-year lows witnessed after Covid-19 struck in early 2020. In March 2020, India went into a strict lockdown to curb the spread of the pandemic. This sudden halt to business activity saw GDP numbers collapse to historic lows. The decline was made worse because economic growth had started to flatten in the preceding quarters. The authorities responded with unprecedented monetary easing and fiscal stimulus to support those hit hardest.

By October 2020, infection cases had receded and social-distancing measures were eased, allowing for business activity to restart. This, together with good monsoons that supported rural spending, led to optimism for corporate earnings recovery.

The year ended on a high note with the welcome global rollout of vaccines.  A pro-growth February 2021 Budget further lifted hopes that the government's commitment to infrastructure spending will support future economic growth. However, towards the end of March 2021, infection rates spiked once again, resulting in fresh localised lockdowns and harrowing scenes as death rates multiplied. This prompted the central bank to continue to adopt an accommodative monetary policy, despite inflation fears from a rebound in oil prices.

Portfolio overview

The Company's NAV rose sharply despite a challenging 12 months. The pandemic made winners of some companies while others faced their toughest test in years.

Among those which benefited from rising adoption of cloud computing, increased remote working and accelerating digitisation were your Company's holdings in the information technology services sector, where the portfolio has a large exposure. Mphasis contributed to returns as the company clinched record contract wins with businesses turning to digital transformation solutions. In communication services, AffleIndia, an ad-tech holding that was newly introduced during the Year, posted impressive share price gains. As the dominant and profitable data platform provider for direct digital advertising in India, the company benefits from the rise in digital adoption, mobile and e-commerce penetration in the country.  India offers exciting growth prospects in the internet space, yet there are limited opportunities in the listed universe. This makes Info Edge another interesting addition to the Company as the leading online classified advertising business with a dominant position in recruitment and real-estate search. It has a profitable and cash flow-generative business that has enabled the company to build up a portfolio of technology-based start-ups.

Businesses that are more leveraged to a cyclical recovery outperformed during the period. Your Company's higher exposure to Consumer Staples, namely Nestle India and HindustanUnilever, and a more defensive positioning within Financials via KotakMahindraBank meant that portfolio returns had not kept pace with the market's strong rally. We continue to favour these high quality holdings that deliver consistent earnings through cycles given that this will enable your Company to maintain resilience even as India heads into another period of uncertainty with the ongoing resurgence in Covid-19 cases.

Meanwhile, your Company's exposures to real estate and construction were among the key performance contributors. Although both sectors were among the worst hit at the peak of the pandemic in March 2020, your Company's investments in the industry leaders provided positive returns, as they delivered growth ahead of beleaguered rivals that had suffered a liquidity crunch stemming from the lockdown.

Leading residential developer GodrejProperties enjoyed healthy pre-sales growth thanks to its well-established brand and reputation among homebuyers. Although the recent spike in infections may once again have a near-term impact on sales, we believe in the long run structural demand in the real estate sector should benefit from a conducive environment of favourable housing policies and low-mortgage rates. Furthermore, Godrej Properties is a prime beneficiary of industry consolidation. With its funding advantage and operational capability, the company is upbeat about acquisition opportunities that will enhance their land bank.

Similarly, UltraTechCement delivered better-than-expected results during a tough period. The company gained market share and demonstrated pricing power being one of the few companies with the financial strength to expand capacity. Industry fundamentals are expected to strengthen with the pick-up in construction activity, driven by the improving housing and infrastructure cycle. The latter has been a long time coming and may finally be on the cusp of an expansion with the government reaffirming its commitment to infrastructure spending.

During the Year, your Company added a new holding in Larsen & Toubro that is likely to benefit from the government's push for more infrastructure and affordable housing. Larsen & Toubro is one of the oldest and most respected industrial conglomerates in India (see the case study for further details).

Elsewhere, India's energy transition is stepping up and the government is committed to more investment in renewables. We believe that PowerGrid, a national power transmission firm in the utilities business introduced during the Year, stands to benefit. This public sector enterprise is prudently managed and has a healthy operational cash flow, backed by a robust balance sheet. Gas also has a major role to play as a cleaner fuel substitute. Holdings in gas distributor Gujarat Gas and integrated gas and liquids logistics player Aegis have gained as a result.

The good performance in these two holdings compensated for our decision not to invest in Reliance Industries. Reliance Industries' shares surrendered some of their earlier gains following weaker third-quarter results, a cautious refining and petrochemical outlook; and execution challenges experienced in its new consumer business. Within Reliance's business portfolio, the brightest near-term prospect may be in its telecommunications division. This is because the industry is now going through market repair and consolidation after a tough operating environment brought on by a debilitating price war. For this same reason, we have re-introduced Bharti Airtel to the portfolio as it remains the leading telecom service provider with a pan-India reach and sophisticated customer base with higher average mobile spending.  We no longer hold a position in Bharti Infratel as the industry consolidation among its customers limits the company's prospects.

There are several other companies no longer owned by the Company. Lemon Tree was sold at the start of Covid-19 as the company was entering a challenging period for the hospitality sector with sizeable debt on its balance sheet that would have generated financial stress. We sold Grasim Industries to focus the cement exposure in its subsidiary Ultratech Cement that offered more direct exposure to housing and infrastructure spending. In the same vein, we exited Kansai Nerolac and focused our paints exposure on industry leader Asian Paints. We took profits in two other names, Hero MotoCorp and Varun Beverages, as their robust share price performance started to reflect unrealistic expectations of growth.

Strategy

An update on Covid-19 in India

There has been a massive surge in infections in India since the beginning of April, post the review period. The alarming numbers of daily cases have overwhelmed the healthcare system, while the shortage of vital medicines and oxygen has resulted in a humanitarian crisis unlike any other. The government in New Delhi has ruled out a nationwide lockdown, given the financial impact on daily wage earners, the informal sector and those at or below the poverty line. Instead, depending on the severity, each state government can impose their own targeted restrictions in efforts to curb the spread of the virus. As such, mobility will remain restricted until infections have fallen to manageable levels. Meanwhile, the Modi government is ramping up treatment and vaccinations, while international aid, in the form of oxygen and medical supplies, is being shipped. These measures should help alleviate the hardship in the short term. In the longer term, the US plans to waive some of the intellectual property protections for the vaccines to make them available to developing nations. This, however, is facing opposition from other countries and the outcome remains uncertain.

Unlike the initial lockdown which caught businesses unaware, the situation now appears less disruptive, as many companies are better prepared having successfully put in place work from home arrangements, while some industries and manufacturing are able to remain operational.

On the policy front, the central bank has maintained accommodative policies, along with credit provisions for the healthcare sector as well as small and medium sized enterprises. Additionally, supportive fiscal policies were already announced ahead of the second wave. Therefore, while the current situation could hamper the nascent economic rebound, the magnitude of contraction may not be as large as that of the second quarter in 2020.

What does it mean for your Company?

It is under such trying circumstances that we need to remind ourselves that India is still one of the fastest growing economies in the world and that it is home to many well-managed companies that are embedded with solid corporate governance standards. While the short term is likely to stay volatile, your Company's portfolio has been built to weather storms such as the current one. The Company's core holdings are well capitalised, backed by solid balance sheets and are leaders in their respective business sectors. They are well equipped to ride out this storm, given their quality that lends them a defensive buffer in difficult times. We remain focused on identifying companies that possess high barriers to entry, clear earnings levers, and that maintain prudent capital management. We believe the portfolio's holdings should continue to deliver sustainable returns over the long term despite recent issues associated with Covid-19.

Kristy Fong and James Thom,

Aberdeen Standard Investments (Asia) Limited

Investment Manager
10 June 2021

 

ENVIRONMENTAL, SOCIAL AND GOVERNANCE ENGAGEMENT AND CASE STUDIES

Whilst the management of the Company's investments is not undertaken with any specific instructions to exclude certain asset types or classes, the Investment Manager embeds Environmental, Social and Governance ("ESG") factors into its research as part of the investment process.  ESG investment is about active engagement, in the belief that the performance of assets can be improved over the longer term.

What is ESG, and why do we do it?

ESG considerations have been an integral part of the Investment Manager's decision-making process for almost 30 years. The Investment Manager believes that ESG factors are financially material and can meaningfully affect a company's performance. Hence, a company's ability to sustainably generate returns for investors depends on the management of its environmental impact, its consideration of the interests of society and stakeholders, and on the way it is governed. By putting ESG factors at the heart of its investment process, the Investment Manager aims to generate better outcomes for the Company's shareholders. The three factors can be considered as follows:

· Environmental factors relate to how a company conducts itself with regard to environmental conservation and sustainability. Types of environmental risks and opportunities include a company's energy consumption, waste disposal, land development and carbon footprint, among others.

· Social factors pertain to a company's relationship with its employees and vendors. Risks and opportunities can include (but are not limited to) a company's initiatives on employee health and well-being, and how supplier relationships align with corporate values.

· Corporate governance factors can include the corporate decision-making structure, independence of board members, the treatment of minority shareholders, executive compensation and political contributions, among others.

At the investment stage, ESG factors and analysis help to frame where best to invest by considering material risks and opportunities alongside other financial metrics. Due diligence can ascertain whether such risks are being adequately managed, and whether the market has understood and priced them accordingly.

The Investment Manager is an active owner, voting at shareholder meetings in a deliberate manner, working with companies to drive positive change, and engaging with policymakers on ESG and stewardship matters.

Can we measure it?

There are elements of ESG that can be quantified, for example the diversity of a board, the carbon footprint of a company, and the level of employee turnover. While diversity can be monitored, measuring inclusion is more of a challenge. Although it is possible to measure the level of staff turnover, it is more challenging to quantify corporate culture. Relying on calculable metrics alone would potentially lead to misleading insights. As active managers, quantitative and qualitative assessments are blended to better understand the ESG performance of a company.

The Investment Manager's analysts consider such factors in a systematic and globally-applied approach to assess and compare companies consistently on their ESG credentials, both regionally and against their peer group. Some of the key questions asked of companies include:

· How material are ESG issues for this company, and how are they being addressed?

· What is the quality of this company's governance, ownership structure and management?

· Are incentives and key performance indicators aligned with the company's strategy and the interests of shareholders?

The questions asked differ from company to company; the type of questions poised to a bank would be quite different from those of a semiconductor manufacturing firm. Having considered the regional universe and peer group in which the company operates, an ESG score is assigned ranging from 1 to 5. This proprietary ESG score is applied to every stock within the Manager's investment universe.

The ESG Scoring System

Having considered the regional universe and peer group in which a company operates, the Investment Manager allocates it an ESG score between one and five.  This is applied across every stock covered globally. Examples of each category and a small sample of the criteria used are detailed below:

1. Best in class	ESG considerations are a material part of the company's core business strategy. Excellent disclosure. Makes opportunities from strong ESG risk management.
2. Leader	ESG considerations are not market-leading. Disclosure is good, but not best in class. Governance is generally very good.
3. Average	ESG risks are considered in the normal course of the company's business. Disclosure in line with regulatory requirements. Governance is generally of a high standard but some minor concerns.
4. Below average	Evidence of some financially material controversies. Poor governance or limited oversight of key ESG issues. Some issues in treating minority shareholders poorly.
5. Laggard	Many financially material controversies. Severe governance concerns. Poor treatment of minority shareholders.

Climate Change

Climate change is one of the most significant challenges of the 21st century and has big implications for investors. The energy transition is underway in many parts of the world, and policy changes, falling costs of renewable energy, and a change in public perception are happening at a rapid pace. Assessing the risks and opportunities of climate change is a core part of the investment process. In particular, the Investment Manager considers:

· Transition risks and opportunities

Governments could take robust climate change mitigation actions to reduce emissions and transition to a low-carbon economy. This is reflected in targets, policies and regulation and can have a considerable impact on high-emitting companies.

· Physical risks and opportunities

Insufficient climate change mitigation action will lead to more severe and frequent physical damage. This results in financial implications, including damage to crops and infrastructure, and the need for physical adaptation such as flood defences.

The Investment Manager has aligned its approach with that advocated by the investor agenda of the Principles for Responsible Investment ("PRI") - a United Nations-supported initiative to promote responsible investment as a way of enhancing returns and better managing risk.

The PRI provides an intellectual framework to steer the massive transition of financial capital towards low-carbon opportunities. It also encourages fund managers to demonstrate climate action across four areas: investments; corporate engagement; investor disclosure; and policy advocacy as explained overleaf:

	FOCUS	OBJECTIVE	AIM
Investments	Research & Data	Provide high quality climate-change insights and thematic research across asset classes and regions. This includes using climate-related data as an input into the investment process.	Provide relevant high-quality data and insights on climate-change trends, risks and opportunities that are fully integrated into our decision making and drive positive outcomes for our clients
	Investment Integration	Understand the potential impacts of climate-change risks and opportunities across regions and sectors, integrate these into our investment decisions and understand the implications for our portfolios.
	Client Solutions	Understand client needs in relation to climate change and low-carbon product demand. Develop innovative climate-related client solutions and products across all asset classes.
Corporate Engagement	Investee Engagement & Voting	Better understands investee exposure and management of climate change risks and opportunities. Influence investee companies on management of climate change risks and opportunities via engagement and voting. Highlight expectation to apply the Task Force on Climate-related Financial Disclosures ("TCFD") framework when reporting on climate-related data.
Policy Advocacy	Collaboration & Influence	Collaborate with climate-change-related industry associations and participate in relevant initiatives. Engage with peers and policymakers to drive industry developments and best practice.
Investor Disclosure	Disclosure	Disclose climate-change-related data using the TCFD reporting framework across the four pillars: governance, strategy, risk management, metrics and targets.

Importance of Engagement

The Investment Manager is committed to regular, ongoing engagement with the companies in which it invests, to help to maintain and enhance their ESG standards into the future.

As part of the investment process, the Investment Manager undertakes a significant number of company meetings each year on behalf of the Company. Your Company is supported by on-desk ESG analysts, as well as a well-resourced specialist ESG Investment team. These meetings provide an opportunity to discuss various relevant ESG issues including board composition, remuneration, audit, climate change, labour issues, human rights, bribery and corruption. Companies are strongly encouraged to set clear targets or key performance indicators on all material ESG risks.

ESG engagements are conducted with consideration of the ten principles of the United Nations Global Compact, and companies are expected to meet fundamental responsibilities in the areas of human rights, labour, the environment and anti-corruption.

This engagement is not limited to a company's management team. It can include many other stakeholders such as non-government agencies, industry and regulatory bodies, as well as activists and the company's customers and client.

CASE STUDIES

Bandhan Bank: Enhancing financial access for the unbanked

Bandhan Bank first opened in 2001 as a not-for-profit enterprise with the aim of boosting financial inclusion and the empowerment of women in India. It turned into a non-banking financial company (NBFC) a few years later. In 2015 it was granted a universal banking licence, allowing it to open bank branches that gather deposits; and offer credit and insurance. 

Today, it is the largest microfinance lender in India. It is dominant in the North and North East, the country's most underbanked regions where interest from traditional lenders and NBFCs has been lukewarm.

We like Bandhan's clear focus on its home territories, where it has deep local knowledge, and on its core business. It has leveraged on its banking licence to build up a strong retail deposit franchise. A high-touch operating model and strong cost control have also enabled it to be the most competitive on price. 

Although financial inclusion in India has progressed, there still remain 40% of households with no bank accounts, of which two-thirds are in rural areas. More than 25% of the rural population also remain below the poverty line. The government and central bank have rolled out various reforms to reduce poverty and enhance financial access, alongside a push for more cost effective approaches, such as digital banking.

Given its philosophy, business footprint and priority on strengthening its digital platform, Bandhan Bank is well positioned to contribute towards addressing these issues. Notably, 54% of the lender's branches are located in rural areas, well above the 25% minimum that is mandated by the regulator.  

Despite rapid growth in the past decade, microfinancing penetration is still around 34% with plenty of room for growth. We see Bandhan as being strongly positioned, given that it is well capitalised and has maintained robust asset quality through careful customer selection. We also expect Bandhan to be an early beneficiary of a post Covid-19 recovery. It has been diversifying in terms of geography and revenue mix, helping to further stabilise its banking franchise.

Larsen & Toubro: Turnaround to more focused capital allocation

From a one-room operation in Mumbai in 1938 started by two Danish engineers (Henning Holck-Larsen and Søren Kristian Toubro), Larsen & Toubro ("L&T") has grown into a US$25 billion group that is one of the oldest and most respected industrial conglomerates in India.

Known as the 'national champion', L&T is frequently shortlisted for government and private projects of a certain engineering scale and complexity. Its customers include the Indian Navy and Coast Guard. We view L&T as a proxy for infrastructure spending in India. It is benefitting from the improving capex cycle, with increasing road orders and new metro and high-speed rail projects being promoted. We believe that it is well positioned for a sharp rebound in orders in the coming years. We also believe that we are buying into change; change in capital allocation and returns, and change in ESG processes and disclosure by the company.

The group's core business can be cyclical and to mitigate this cyclicality it has evolved into an industrial conglomerate. However, this journey has not been without its challenges. L&T is undergoing a much needed restructuring after its new CEO was appointed in 2017, following a number of strategic missteps that eroded its returns on equity. These included a foray into concessions, like toll roads, that required competitive bids and heavy capital outlay but with revenue spread out over the length of the concession. The new management team has set about turning the business around, putting in place a more focused capital allocation process. It is selling non-core assets, divesting infrastructure concessions and growing the proportion of services that have higher margins. If well executed, we think this could result in a higher return on equity, revenue growth and lower earnings volatility.

There is also progress on the ESG front with the company historically receiving relatively low ESG scores from ESG research providers. L&T's focus on clean technology was a reason for its recent upgrade by MSCI of its ESG rating score from B to BB. L&T has sought to improve key environmental metrics, such as share of green revenues, energy conservation, energy and carbon emissions intensity, water consumption and the use of eco-friendly materials and recycled steel (Macquarie Research, 24 March 2021). L&T's new five-year plan will be published soon. Another factor that has weighed on its ESG scoring is the alleged involvement in the production of cluster munitions. We have engaged heavily with the company on this issue. The company has enhanced and improved disclosure in this area and has stated that it has never been involved in the manufacture of any kind of munitions, including cluster munitions or nuclear weapons, and that it does not plan to do so in the future. Further, it also does not manufacture any components used in the assembly of such weapons. This new disclosure will, we believe, change perceptions of the company.

We have also spoken to L&T on a number of corporate governance issues, urging the company to enhance its disclosures and move to a smaller board of directors with reduced executive representation. These conversations have been constructive and we will continue this dialogue.

STRATEGIC REPORT - OVERVIEW OF STRATEGY

Business Model

The business of the Company is that of an investment company which continues 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 invests primarily in Indian equity securities.

 

Delivering the Investment Policy

Risk Diversification

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 is used in relation to specific opportunities or circumstances. The Directors take care to ensure that borrowing covenants permit flexibility of investment policy.

 

Currency, Hedging Policy and Derivatives

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.

Although the Company does not employ derivatives presently, it may do so, if appropriate, to enhance portfolio returns (of a capital or income nature) and for efficient portfolio management, that is, to reduce, transfer or eliminate risk in its investments, including protection against currency risks, or to gain exposure to a specific market.

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 held no investments in other listed investment companies during the year ended 31 March 2021.

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 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, five and ten years are set out below and a graph showing NAV total return performance against the MSCI India Index over the past five years is shown in the published 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 published 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 Highlights.

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, including emerging 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 which is available from the Company's website: aberdeen-newindia.co.uk .

The principal risks and uncertainties, and emerging risks, 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. In addition the Board has identified, as an emerging risk which it considers is likely to become more relevant for the Company in the future, the implications for the Company's investment portfolio of a changing climate. The Board assesses this emerging risk as it develops, including how investor sentiment is evolving towards climate risk within investment portfolios, and will consider how the Company may mitigate this risk, any other emerging risks, if and when they become material.

The key, principal uncertainty during the year ended 31 March 2021 was the potential impact on the Company of Covid-19 which caused significant economic disruption and triggered global stock market volatility in its early stages. The Company demonstrated resilience in relation to its two primary exposures to Covid-19 in the form of possible disruption to its operations and the effect on the underlying investment portfolio. In respect of the former, the Company continued to function normally and the Board monitored this by seeking regular assurances that appropriate contingency arrangements were in place to ensure that the Manager and key service providers were able to continue to meet their contractual obligations to the Company.  The portfolio investments owned by the Company were able to withstand Covid-19 due to their robust business models, and collectively contributed to the Company's strong NAV and share price performance over the year. However the Board remains mindful of the residual risk that variants of Covid-19 may yet emerge, particularly in India where vaccination levels remain low.

In all other respects, the Company's principal risks and uncertainties have not changed materially since the date of the Annual Report and are not expected to change materially for the current financial year. 

An explanation of other risks relating to the Company's investment activities, specifically market price, interest rate, liquidity and credit risk, and a note of how these risks are managed, is contained in Note 17 to the financial statements.

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 reduce 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 invest in any single stock (measured when the investment is made) where the exposure is more than 10% of the Company's net assets, up to a maximum of 2% above or below the MSCI Index weighting, 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 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 does consider the selective buyback of shares where to do so would be in the best interests of shareholders, balanced against reducing the overall size of the Company. Any shares bought back would be either cancelled or held in treasury.
Depositary - 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.	The depositary, BNP Paribas Securities Services London Branch, presents to the Board at least annually on the Company's compliance with the Alternative Investment Fund Managers Directive ("AIFMD"). The Manager separately monitors the activities of the depositary and reports to the Board on any exceptions arising.
Financial and regulatory - the financial risks associated with the portfolio could result in losses to the Company. In addition, failure to comply with relevant regulation (including the Companies Act, the Financial Services and Markets Act, the Alternative Investment Fund Managers Directive, accounting standards, investment trust regulations and the Listing Rules, Disclosure Guidance and Transparency Rules and Prospectus Rules ) may have an adverse impact on the Company. Any change in the Company's tax status or in taxation legislation either in India or in the UK (including the tax treatment of dividends, capital gains or other investment income received by the Company) could affect the value of the investments held by the Company and the Company's ability to provide returns to shareholders or alter the post-tax returns to shareholders.	The financial risks associated with the Company include market risk, liquidity risk and credit risk, all of which are mitigated by the Manager. Further details of the steps taken to mitigate the financial risks associated with the portfolio are set out in Note 17 to the financial statements. 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. The Board receives updates from the Manager and AIC briefings concerning industry changes. From time to time, the Company also employs external advisers covering specific areas of compliance. 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 UK capital gains tax on profits realised from the sale of its investments. The Company is liable to Indian capital gains tax at rates of 10% and 15% for long term and short term gains, respectively, although this is likely to be partly mitigated through the Manager's investment process with its emphasis on buy-and-hold.
Gearing - whilst the use of gearing should enhance the total return on the Ordinary shares where the return on the Company's underlying assets is rising and exceeds the cost of borrowing, it will have the opposite effect where the underlying return is less than the cost of borrowing, further reducing the total return on the Ordinary shares. A significant fall in the value of the Company's investment portfolio could result in a breach of bank covenants and trigger demands for early repayment.	The Board is responsible for determining the gearing strategy for the Company, with day-to-day gearing decisions being made by the Investment Manager. Borrowings are short term in nature and particular care is taken to ensure that any bank covenants permit maximum flexibility of investment policy. The Board has agreed certain gearing restrictions with the Manager and reviews compliance with these guidelines at each Board meeting. Loan agreements are entered into following review by the Company's lawyers.
Covid-19 - the Directors have evaluated the financial position of the Company with particular attention to the economic and social impacts of Covid-19.  As indicated in the Chairman's Statement and in the Overview of Strategy, Covid-19 presented significant challenges both to India and the rest of the world during the Company's year ended 31 March 2021.	The Company demonstrated resilience in relation to its two primary exposures to Covid-19 in the form of possible disruption to its operations and the effect on the underlying investment portfolio. In respect of the former, the Company continued to function normally and the Board monitored this by seeking regular assurances that appropriate contingency arrangements were in place to ensure that the Manager and key service providers were able to continue to meet their contractual obligations to the Company. In relation to investment risks surrounding the Indian companies in the portfolio such as employee absence, reduced demand, reduced turnover and supply chain breakdowns, the Board was pleased to note their robust performance, despite Covid-19. The Board takes comfort from the Manager's selection of stocks with robust balance sheets and strong business models which have allowed, and continue to allow, the Company to withstand Covid-19, noting that the Board is aware of risk of new variants emerging and the relatively slow vaccination rate in India.

 

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 Aberdeen Standard Investments on behalf of all the investment companies under its management. The Company's financial contribution to the programme is matched by Aberdeen Standard Investments.  Aberdeen Standard Investments promotional activities team 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 by reducing the discount at which they trade. Communicating the long-term attractions of the Company is key and therefore the Company also supports Aberdeen Standard Investments investor relations programme which involves regional roadshows, promotional and public relations campaigns. 

Board Diversity and Succession

The Board recognises the importance of having a range of skilled, experienced individuals with the right knowledge represented on the Board in order to allow the Board to fulfil its obligations. The Board also recognises the benefits, and is supportive, of the principle of diversity in its recruitment of new Board members. The Board will continue to ensure that all appointments are made on the basis of merit against the specification prepared for each appointment and will search widely when recruiting any new Director with a view to maximising diversity. Consequently, the Company does not consider it appropriate to set specific diversity targets. At 31 March 2021, there were three male Directors and one female Director on the Board.

In relation to succession, the Board has agreed a policy whereby the Chairman shall not serve for more than nine years from the date of their initial date of appointment as a Director of the Company unless in relation to exceptional circumstances around ensuring the orderly refreshment of the Board. The other Directors, led by Michael Hughes as Senior Independent Director, have determined that it is in the best interests of shareholders that Hasan Askari continue as Chairman until the AGM due in September 2022, in order to oversee the recruitment of two replacement Directors by mid-2022.

 

Environmental, Social and Human Rights Issues

The Company has no employees as it is managed by Aberdeen Standard Fund Managers Limited and there are therefore no disclosures to be made in respect of employees. The Company's responsible investment policy is outlined above while the Manager's ESG engagement is set out below.

 

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 and Streamlined Energy and Carbon Reporting ("SECR")

All of the Company's activities are outsourced to third parties. The Company therefore has no greenhouse gas emissions to report from the operations of its business, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.  For the same reason as set out above, the Company considers itself to be a low energy user under the SECR regulations and therefore is not required to disclose energy and carbon information.

 

 

 

Duration

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

 

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.

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:

· the Company's assets consist, substantially, of a portfolio of readily realisable quoted securities, where the Directors monitor the liquidity of each holding as well as reviewing the outcome of testing undertaken by the Manager in which the portfolio is subject to adverse market scenarios, including those related to the impact of Covid-19;

· the Company's principal risks and uncertainties and the steps taken to mitigate these;

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

· the Directors regularly review the Company's level of gearing, including the financial modelling undertaken by the Manager to establish what level of reduction in the Company's NAV would require to occur in order to cause a breach in the covenants attached to the Company's £30m loan facility; and

· in advance of expiry in July 2022 of the Company's £30m loan the Company will enter into negotiations with its bankers. If acceptable terms are available from the existing bankers, or any alternative, the Company would expect to continue to access borrowings. However, should these terms not be forthcoming, any outstanding borrowing would be repaid through the proceeds of equity sales.

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 AGM, is passed at the next AGM on 9 September 2021 and at the two subsequent AGMs, as it has been previously.

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 making this assessment, the Board has considered in particular the risk of a large economic, a continuing period of significant stock market volatility, a significant reduction in the liquidity of the portfolio or changes in investor sentiment, and how these factors might affect the Company's prospects and viability in the future. The Board has also evaluated the medium to longer term impact on the Company of Covid-19 noting that this is considered to have receded, but not disappeared, based on the resilience demonstrated both by the ongoing nature of the Company's operations, via the Manager and other third party suppliers, and by the underlying portfolio companies which have withstood Covid-19 due to their robust business models and balance sheet strength.

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 in the Investment Manager's Report.

Hasan Askari,
Chairman
10 June 2021

INVESTMENT PORTFOLIO - TEN LARGEST INVESTMENTS

As at 31 March 2021

Housing Development Finance Corporation		Infosys
A steady, well-managed financial services conglomerate with leading positions in mortgage finance, retail banking, life insurance and asset management, supported by a broad distribution network, efficient cost structure and balance sheet quality.		One of India's best software developers, it continues to impress with its strong management, solid balance sheet and sustainable business model.
Tata Consultancy Services		Hindustan Unilever
A best-in-class Indian IT services provider with the most consistent execution and lowest attrition rates. It is a long-term compounder with a decent outlook for revenue growth and order wins over the medium term.		The largest fast-moving consumer goods company (FMCG) in India, with an unrivalled portfolio of brands, an extensive distribution network nationwide, and a long and successful operational track record in the country.
Kotak Mahindra Bank		Ultratech Cement
A full-service private-sector bank in India that has good asset quality and a relatively low level of non-performing loans compared to many of its peers. It is well positioned in an industry that offers higher growth than most markets in Asia, given the low level of financial penetration.		A clear industry leader in India's cement industry, backed by strong brand recognition, a good distribution and sales network and solid product quality. Its focus on cost efficiency and an improving energy mix has given UltraTech a cost advantage.
ITC		HDFC Bank
An associate of British American Tobacco, it is a dominant cigarette player in the Indian market with a strong distribution system. Its competitive advantage is strong; not just in its core tobacco business, but also in its paper and packaging business, its agribusiness and its newer branded packaged foods business.		HDFC Bank is known to have the best retail banking franchise in India, with a high quality wholesale portfolio, solid underwriting standards and a progressive digital stance further strengthening its competitive edge.
Asian Paints		Axis Bank
The market leader in India's decorative paint segment, it is benefiting from rising paint demand given its unparalleled distribution network, broad product portfolio and good management.		The third largest private sector bank in India is focused on its retail franchise and higher quality corporates. Its conservative management has also been tightening its risk framework and been prudent with new loan disbursements.

INVESTMENT PORTFOLIO

As at 31 March 2021
			Valuation	Total assets			Valuation
			2021	2021			2020
Company	Industry		£'000	%			£'000
Housing Development Finance Corporation	Financials		39,438	10.1			25,724
Infosys	Information Technology		34,188	8.8			16,858
Tata Consultancy Services	Information Technology		33,875	8.7			21,115
Hindustan Unilever	Consumer Staples		25,587	6.5			20,102
Kotak Mahindra Bank	Financials		19,477	5.0			14,599
Ultratech Cement {A}	Materials		18,617	4.8			10,400
ITC	Consumer Staples		14,350	3.7			11,542
HDFC Bank	Financials		13,698	3.5			8,626
Asian Paints	Materials		12,715	3.2			10,427
Axis Bank	Financials		12,050	3.1			3,635
Ten largest investments			223,995	57.4
Godrej Properties	Real Estate		11,547	2.9			5,849
SBI Life Insurance	Financials		11,313	2.9			9,793
MphasiS	Information Technology		10,725	2.7			6,515
Container Corporation of India	Industrials		9,993	2.6			6,787
Gujarat Gas	Utilities		9,739	2.5			6,166
Nestlé India	Consumer Staples		8,122	2.1			13,583
Fortis Healthcare	Health Care		7,629	2.0			3,253
Maruti Suzuki India	Consumer Discretionary		7,472	1.9			4,259
Power Grid Corporation	Utilities		7,050	1.8			1,828
Affle India	Communication Services		6,886	1.8			-
Top twenty investments			314,471	80.6
Larsen & Toubro	Industrials		6,828	1.7			-
Aegis Logistics	Energy		6,813	1.7			3,373
Syngene International	Health Care		6,610	1.7			3,893
Prestige Estates Projects	Real Estate		6,576	1.7			3,927
Crompton Greaves Consumer Electricals	Consumer Discretionary		5,731	1.5			-
Sanofi India	Health Care		5,297	1.4			5,238
Tech Mahindra	Information Technology		5,168	1.3			4,979
Bandhan Bank	Financials		5,142	1.3			2,814
Biocon	Health Care		4,902	1.3			4,245
Piramal Enterprises	Financials		4,522	1.2			5,842
Top thirty investments			372,060	95.4
Shree Cement	Materials		4,260	1.1			3,718
Godrej Consumer Products	Consumer Staples		4,234	1.1			6,209
Jyothy Laboratories	Consumer Staples		4,125	1.1			3,325
Bharti Airtel	Communication Services		3,927	1.0			-
Info Edge	Communication Services		3,924	1.0			-
ICICI Prudential Life Insurance	Financials		3,221	0.8			-
Bosch	Consumer Discretionary		3,083	0.8			2,220
Godrej Agrovet	Consumer Staples		2,835	0.7			3,069
Total investments			401,669	103.0
Net current assets (before deducting prior charges){B}			(11,563)	(3.0)
Total assets{B}			390,106	100.0
{A} Current year represents equity holding only, prior year holding represented equity and listed Global Depositary Receipt ("GDR") holdings.
{B} Excluding loan balances.
Unless otherwise stated, investments are in common stock. Purchases and/or sales effected during the year will result in 2021 and 2020 values not being directly comparable. Where 2020 valuation is "-" this indicates the company was not held at the previous year-end.

DIRECTORS' REPORT

The Directors present their Report and the audited Financial Statements of the Company for the year ended 31 March 2021, 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.

Interim Dividend paid on 30 October 2020

In order for the Company to continue to maintain its investment trust status, the Board declared, on 24 September 2020, an interim dividend of 1.00p per Ordinary share in respect of the year ended 31 March 2020, payable on 30 October 2020. This arose in relation to tax legislation which requires the distribution to shareholders of at least 85% of investment income, after allowing for revenue losses brought forward. The minimum required net revenue distribution of approximately 0.22 pence per Ordinary share was supplemented by capital reserves in accordance with the flexibility afforded by the Company's revised Articles of Association which were approved by shareholders at the AGM on 23 September 2020. This likely one-off exceptional payment, due to higher dividend income than normal, and the use of capital reserves, is not expected to set any precedent for the future.

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 2021. 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"). In order to continue to meet these conditions, the Board paid an interim dividend of 1.0 pence per share, in respect of the year ended 31 March 2020, on 30 October 2020.

Capital Structure

During the year ended 31 March 2021 the Company bought back into treasury 335,653 Ordinary shares (2020 - 349,159 Ordinary shares). As at 31 March 2021, the Company's issued share capital consisted of 58,385,328 Ordinary shares (2020 - 58,720,981 Ordinary shares) with voting rights, each share holding one voting right in the event of a poll, and an additional 684,812 Ordinary shares in treasury.

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.

Manager and Company Secretaries

The Company has appointed Aberdeen Standard Fund Managers Limited ("ASFML"), a wholly owned subsidiary of Standard Life Aberdeen plc, as its alternative investment fund manager. ASFML has been appointed to provide investment management, risk management, administration and company secretarial services and promotional activities to the Company. The Company's portfolio is managed by Aberdeen Standard Investments (Asia) Limited ("ASIAL") by way of a group delegation agreement in place between ASFML and ASIAL. In addition, ASFML has sub-delegated administrative and secretarial services to Aberdeen Asset Management PLC and promotional activities to Aberdeen Asset Managers Limited ("AAML").

Under the terms of the management agreement ("MA"), investment management fees payable to the Manager have been calculated and charged on the following basis throughout the year ended 31 March 2021: a monthly fee, payable in arrears, calculated at an annual rate of 0.9% of the Company's total assets less current liabilities, up to £350m and 0.75% above £350m. There is a rebate for any fees received in respect of any investments by the Company in investment vehicles managed by the Standard Life Aberdeen Group. The MA is terminable by either party on not less than six months' notice. In the event of termination on less than the agreed notice period, compensation is payable to the Manager in lieu of the unexpired notice period.

With effect from 1 April 2021, the management fee was reduced to an annual rate of 0.85% of the Company's net assets (formerly total assets less current liabilities) up to £350m and 0.70% above net assets of £350m and is otherwise calculated on the same basis as previously.

The fees, and other expenses, payable to the Standard Life Aberdeen Group companies during the year ended 31 March 2021 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 FCA, this statement describes how the Company applies the Main Principles identified in the UK Corporate Governance Code published in July 2018 (the "UK Code") and which is applicable for the Company's year ended 31 March 2021. The UK Code is available on the Financial Reporting Council's (the "FRC") website: frc.org.uk.

The Board has also considered the AIC Code of Corporate Governance as published in February 2019 (the "AIC Code") which addresses all the principles and recommendations set out in the UK Code, as well as setting out additional guidance on issues which are of specific relevance to investment trusts. The AIC Code is 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 AIC Code and UK Code include provisions relating to

-  the Board's policy on the tenure of the Chairman (AIC Code provision 24 and UK Code provision 19): further information may be found below regarding the tenure of Hasan Askari, as the Company's Chairman;

-  the composition of the Audit Committee (AIC Code provision 29 and UK Code provision 24): the other Directors consider that it is appropriate for the Chairman of the Board to be a member of, but not chair, the Audit Committee, due to the Board's small size, the lack of any perceived conflict of interest, and because the other Directors believe that Hasan Askari continues to be independent; and

-  the establishment of a remuneration committee (AIC Code provision 37 and UK Code provision 32): for the reasons set out in the AIC Code the Board considers that this provision is 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 this provision.

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 who served throughout the year under review, other than Rebecca Donaldson who joined the Board on 1 September 2020. Rachel Beagles retired as a Director at the AGM on 23 September 2020. The Senior Independent Director was Rachel Beagles until her retirement with Michael Hughes succeeding her in the role thereafter.

The Chairman is responsible for providing effective leadership to the Board, by setting the tone of the Company, demonstrating objective judgement and promoting a culture of openness and debate. The Chairman facilitates the effective contribution and encourages active engagement by each Director. In conjunction with the Company Secretary, the Chairman ensures that Directors receive accurate, timely and clear information to assist them with effective decision-making. The Chairman acts upon the results of the Board evaluation process by recognising strengths and addressing any weaknesses and also ensures that the Board engages with major shareholders and that all Directors understand shareholder views.

The Senior Independent Director acts as a sounding board for the Chairman and acts as an intermediary for other directors, when necessary. Working closely with the Nomination Committee, the Senior Independent Director takes responsibility for an orderly succession process for the Chairman, and leads the annual appraisal of the Chairman's performance. The Senior Independent Director is also available to shareholders to discuss any concerns they may have.

The names and biographies of each of the Directors are shown on the Company's website 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 2021 as follows (with their eligibility to attend the relevant meeting in brackets):

Director	Board Meetings	Audit Committee Meetings	Management Engagement Committee Meetings	Nomination Committee Meetings
Hasan Askari	4 (4)	3 (3)	1 (1)	2 (2)
Michael Hughes	4 (4)	3 (3)	1 (1)	3 (3)
Stephen White	4 (4)	3 (3)	1 (1)	3 (3)
Rebecca  Donaldson A	3 (3)	2 (2)	1 (1)	2 (2)
Rachel Beagles B	2 (2)	1 (1)	- (-)	- (-)

^A  Appointed a Director on 1 September 2020.

^B  Retired as a Director on 23 September 2020.

Hasan Askari, Michael Hughes, Stephen White and Rebecca Donaldson, 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 individual contribution of each Director is set out in the published Annual Report.

The Board has adopted a policy that all Directors will retire at each AGM and stand for re-election and, accordingly, all of the Directors will retire at the AGM. The Board has also agreed that the Chairman shall not serve for more than nine years from the date of their initial date of appointment as a Director of the Company unless in relation to exceptional circumstances around ensuring the orderly refreshment of the Board.

The ninth anniversary of Hasan Askari's term as a Director falls on 21 September 2021.  The other Directors, led by Michael Hughes as Senior Independent Director, have determined that it is in the best interests of shareholders that Hasan Askari continue as Chairman until the AGM due in September 2022, in order to oversee the recruitment of two replacement Directors by mid-2022.

The Board therefore has no hesitation in recommending, at the next AGM, the individual re-elections of Hasan Askari, Michael Hughes, Stephen White and Rebecca Donaldson as Directors of the Company.

All appointments to the Board of Directors are considered by the Board as a whole. The Board's overriding priority in appointing new Directors 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.

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 deeds of 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. Other than the deeds of indemnity referred to above, 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 Standard Life Aberdeen Group also takes a zero tolerance approach and has its own detailed policy and procedures in place to prevent bribery and corruption.

In relation to the corporate offence of failing to prevent tax evasion, it is the Company's policy to conduct all business in an honest and ethical manner. The Company takes a zero-tolerance approach to facilitation of tax evasion whether under UK law or under the law of any foreign country and is committed to acting professionally, fairly and with integrity in all its business dealings and relationships. 

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's Report is included in the published Annual Report.

Management Engagement Committee

The Board has established a Management Engagement Committee comprising all of the Directors. The Chairman was Rachel Beagles until her retirement on 23 September 2020 and Michael Hughes succeeding her in the role thereafter. The Committee is responsible for reviewing matters concerning the MA which exists between the Company and ASFML together with the promotional activities programme operated by the Manager to which the Company contributes. 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 Committee in November 2020. Details of a reduction in the investment management fee from 1 April 2021 may be found in the Chairman's Statement and in the Director's Report.

In monitoring the performance of the Manager, the Committee 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 Committee also reviews the management processes, risk control mechanisms and promotional activities of the Manager.

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

Nomination Committee

The Board has established a Nomination Committee, comprising all of the Directors, with Hasan Askari as Chairman. The Committee is responsible for undertaking an annual evaluation of the Board as well as longer term succession planning and, when appropriate, oversight of appointments to the Board. The Company engaged Lintstock Ltd, an independent external service provider which has no other connection to the Company, to undertake a board evaluation in March 2020.

Assisted by Lintstock Ltd, the Board assessed that it had in place the appropriate balance of skills, experience, length of service and knowledge of the Company, while also recognising the advantages of diversity. Details of the individual contribution made by each Director may be found in the published Annual Report.

As the Company has no employees and the Board is comprised wholly of non-executive directors and, given the size and nature of the Company, the Board has not established a separate remuneration committee and Directors' fees are determined by the Nomination Committee.

Accountability and Audit

The responsibilities of the Directors and the Auditor, in connection with the financial statements, appear below, for the former, and in the published Annual Report for the latter.

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 review, as applicable, the level of non-audit services provided by the Auditor, together with the Auditor's procedures in connection with the provision of such services. No non-audit services were provided by the auditor during the year or to the date of this Report. The Directors remain satisfied that the Auditor is objective and independent.

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 substantially of a portfolio of quoted securities 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 17 to the financial statements and have reviewed income forecasts detailing revenue and expenses; accordingly, the Directors believe that, including their assessment of Covid-19 in particular, 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 8, that the Company continues as an investment trust, which will be proposed at the AGM of the Company on 9 September 2021, 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.

In July 2020, the Company entered into a two year, £30 million revolving credit facility (the "Facility") with Natwest Markets Plc, part of The Royal Bank of Scotland Group plc, of which £24m was drawn down at 31 March 2021 (2020 - £30m). The Board has set limits for borrowing and regularly reviews the level of any gearing and compliance with banking covenants. In advance of expiry of the Facility, the Company will enter into negotiations with its bankers. If acceptable terms are available from the existing bankers, or any alternative, the Company would expect to continue to access a facility. However, should these terms not be forthcoming, any outstanding borrowing would be repaid through the proceeds of equity sales.

The Board considers that there was limited adverse impact from Covid-19 on the Company's finances, operational resources and existence during the year ended 31 March 2021. The results of stress testing prepared by the Manager, which models a sharp decline in market levels and income, demonstrated that the Company had the ability to raise sufficient funds so as to both pay expenses and remain within its debt covenants.

The UK Stewardship Code and Proxy Voting

Responsibility for actively monitoring the activities of portfolio companies has been delegated by the Board to the AIFM which has sub-delegated that authority to the Manager. The full text of the Company's response to the Stewardship Code may be found on its website at: www.aberdeenstandard.com/en/responsible-investing

Responsible Investment

The Board is aware of its duty to act in the interests of the Company. The Board acknowledges that there are risks associated with investment in companies which fail to conduct business in a socially responsible manner. The Investment Manager considers social, environmental and ethical factors which may affect the performance or value of the Company's investments. The Directors, through the Company's Investment Manager, encourage companies in which investments are made to adhere to best practice in the areas of Environmental, Social and Corporate Governance stewardship. They believe that this can best be achieved by entering into a dialogue with company management to encourage them, where necessary, to improve their policies in this area.

Substantial Interests

The Company had been notified of the following share interests above 3% in the Company as at 31 March 2021 which were unchanged at the date of this Report:

Shareholder	Number of shares held	% held
Clients of the Standard Life Aberdeen Group	13,492,104	23.1
Lazard Asset Management	8,881,800	15.2
City of London Investment Management	6,552,716	11.2
Clients of Hargreaves Lansdown (execution only)	4,220,781	7.2
Interactive Investor (execution only)	2,669,343	4.6
Standard Life Aberdeen Group retail plans	2,499,068	4.3

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 Standard Life 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 Standard Life 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 prior to the Company's AGM.

Annual General Meeting

The AGM will be held on 9 September 2021 and the AGM Notice and related notes may be found in the published Annual Report. Resolutions relating to the following items will be proposed at the AGM as special business:

Continuance of the Company (Resolution 8)

In accordance with Article 166 of the Articles of Association of the Company approved by shareholders on 23 September 2020, the Directors are required to propose an Ordinary resolution at each AGM that the Company continue as an investment trust. Accordingly, the Directors are proposing, as ordinary resolution 8, that the Company continue as an investment trust and recommend that shareholders support the continuance of the Company.

Share Repurchases (Resolution 9)

At the AGM held on 23 September 2020, shareholders approved the renewal of the authority for the Company to repurchase its Ordinary shares.

The principal aim of a share buy-back facility is to enhance shareholder value by acquiring shares at a discount to NAV as and when the Directors consider this to be appropriate. The purchase of shares, when they are trading at a discount to NAV, should result in an increase in the NAV 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 NAV 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 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.

Renewal of the authority to buy back shares is sought at the AGM as the Board considers that this mechanism has assisted in lowering the volatility of the discount reflected in the Company's share price and is also accretive, in NAV terms, for continuing shareholders. Special resolution 9 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 as at 10 June 2021, being the nearest practicable date to the approval of this Report (equivalent to approximately 8.8 million Ordinary shares). Such authority will expire on the date of the AGM in 2022 or on 30 September 2022, 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 (Resolutions 10 and 11)

Ordinary resolution 10 in the Notice of AGM will, if passed, renew the authority to allot unissued share capital up to an aggregate of 5%, equivalent to approximately 2.9 million Ordinary shares, of the Company's existing issued share capital, excluding treasury shares, as at 10 June 2021, being the nearest practicable date to the approval of this Report). Such authority will expire on the date of the AGM in 2022 or on 30 September 2022, whichever is earlier, which means that the authority will have to be renewed at the next AGM or, 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 11 will, if passed, give the Directors power to allot for cash equity securities up to 5% (equivalent to approximately 2.9 million Ordinary shares), of the Company's existing issued share capital as at 10 June 2021, 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 10.

This authority will expire on the date of the AGM in 2022 or on 30 September 2022, whichever is earlier, which means that the authority will have to be renewed at the next AGM or, 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 10 and 11 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.

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 11, 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 NAV 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 all of the Resolutions to be put to shareholders at the AGM 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 29,386 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 Management Agreement ("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, further details of which are set out in the Directors' Report, 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.

The financial risk management objectives and policies arising from its financial instruments and the exposure of the Company to risk are disclosed in Note 17 to the Financial Statements.

Hasan Askari,

Chairman
10 June 2021

PROMOTING THE SUCCESS OF THE COMPANY

The Purpose of the Company and Role of the Board

The Board is required to report on how it has discharged its duties and responsibilities under section 172 of the Companies Act 2006 (the "s172 Statement"). Under section 172, the Directors have a duty to promote the success of the Company for the benefit of its members as a whole, taking into account the likely long term consequences of decisions, the need to foster relationships with the Company's stakeholders and the impact of the Company's operations on the environment.

The purpose of the Company is to act as a vehicle to provide, over time, attractive financial returns to its shareholders. Investment trusts, such as the Company, are long-term investment vehicles and are typically externally managed, have no employees, and are overseen by an independent non-executive board of directors.

The Board, which during the year was comprised of four independent non-executive Directors with a broad range of skills and experience across all major functions that affect the Company, retains responsibility for taking all decisions relating to the Company's investment objective and policy, gearing, corporate governance and strategy, and for monitoring the performance of the Company's service providers.

The Board's philosophy is that the Company should operate in a transparent culture where all parties are provided with respect as well as the opportunity to offer practical challenge and participate in positive debate which is focused on the aim of achieving the expectations of shareholders and other stakeholders alike.  The Board expects the Manager to act as a responsible steward of the Company's investments. The Manager's approach to responsible investing may be found at aberdeenstandard.com/en/responsible-investing .

How the Board Engages with Stakeholders

The Company's main stakeholders are its Shareholders, the Manager, Investee Companies, Service Providers, Debt Providers and the Environment and Community. The Board considers its stakeholders at Board meetings and receives feedback on the Manager's interactions with them.

Stakeholder	How the Board Engages
Shareholders	Its shareholders are key stakeholders and the Board places great importance on communication with them. The Board welcomes all shareholders' views and aims to act fairly between all shareholders. The Directors, Manager and Company's broker regularly meet with current and prospective shareholders to discuss performance and shareholder feedback is discussed by the Directors at Board meetings. In addition, the Directors meet with major shareholders in the absence of representatives of the Manager. Regular updates are provided to shareholders through the Annual Report, Half Yearly Report, Manager's monthly factsheets, Company announcements, including daily net asset value announcements, and the Company's website.  In normal years, the Company's Annual General Meeting provides a forum, both formal and informal, for shareholders to meet and discuss issues with the Directors and Manager. As an alternative, the Board is encouraging shareholders to attend the Online Shareholder Presentation on 24 August 2021; further details on how to register and/or submit questions to the Directors and Manager may be found in the Chairman's Statement.
Manager	The Investment Manager's Report details the key investment decisions taken during the year. The Investment Manager has continued to manage the Company's assets in accordance with the mandate provided by shareholders, with the oversight of the Board. The Board regularly reviews the Company's performance against its investment objective and the Board undertakes an annual strategy review to ensure that the Company is positioned well for the future delivery of its objective for its stakeholders. The Board receives presentations from the Investment Manager at every Board meeting to help it to exercise effective oversight of the Investment Manager and the Company's strategy. The Board, through the Management Engagement Committee, formally reviews the performance of the Manager at least annually and further details are provided in the Directors' Report.
Investee Companies	Responsibility for actively monitoring the activities of portfolio companies has been delegated by the Board to the Manager which has sub-delegated that authority to the Investment Manager. The Board has also given discretionary powers to the Investment Manager to exercise voting rights on resolutions proposed by the investee companies within the Company's portfolio.  The Manager reports on a quarterly basis on stewardship (including voting) issues.  Through engagement and exercising voting rights, the Investment Manager actively works with companies to improve corporate standards, transparency and accountability.
Service Providers	The Board seeks to maintain constructive relationships with the Company's suppliers either directly or through the Manager with regular communications and meetings. The Audit Committee conducts an annual review of the performance, terms and conditions of the Company's key service providers to ensure they are performing in line with Board expectations and providing value for money.
Debt Providers	On behalf of the Board, the Manager maintains a constructive working relationship with Natwest Markets Plc, part of The Royal Bank of Scotland Group plc , the provider of the Company's £30m multi-currency loan facility, ensuring compliance with its loan covenants and arranging for regular updates for the lender on the Company's business activities, where requested.
Environment and Community	The Board and Manager are committed to investing in a responsible manner and the Investment Manager integrates Environmental, Social and Governance ("ESG") considerations into its research and analysis as part of the investment decision-making process.  Further information on the Manager's ESG engagement, with case studies from the investment portfolio, may be found below.

Specific Examples of Stakeholder Consideration During the Year

While the importance of giving due consideration to the Company's stakeholders is not new, and is considered as part of every Board decision, the Directors were particularly mindful of stakeholder considerations during the following decisions undertaken during the year ended 31 March 2021.

Renewal of bank loan

As set out in the Chairman's Statement, the Company announced on 7 July 2020 that it had entered into a new two year multi-currency revolving credit facility of £30m with Natwest Markets plc which replaced the facility, also with Natwest Markets plc, that had been due to expire on 24 July 2020. The Directors considered that shareholders are best served by the Company's judicious use of gearing to enhance returns, which is a key feature of the investment trust structure.

Share buybacks

During the year the Company bought back into treasury 335,653 shares, providing a small accretion to the NAV per share and a degree of liquidity to the market at times when the discount to the NAV per share had widened unusually. It is the view of the Board that this policy is in the interest of all shareholders. The Board reached this decision following its strategic review and deciding that initiating limited share buybacks would be in shareholders' best interests.

Interim dividend paid on 30 October 2020

On 30 October 2020, the Company paid an exceptional interim dividend of 1.00p per Ordinary share in respect of the year ended 31 March 2020. This arose in relation to tax legislation which requires the distribution to shareholders of at least 85% of investment income, after allowing for revenue losses brought forward. Further information may be found in the Directors' Report.

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 international accounting standards in conformity with the requirements of the Companies Act 2006 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 its profit or loss 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, relevant and reliable; 

· state whether they have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006;

· assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

· use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

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 its financial statements comply with the Companies Act 2006.  They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and 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 but not for the content of any information included on the website that has been prepared or issued by third parties.  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; and

· the strategic 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
10 June 2021

STATEMENT OF COMPREHENSIVE INCOME

		Year ended				Year ended
		31 March 2021				31 March 2020
		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	4,517	-	4,517		5,185		-			5,185
Gains/(losses) on investments held at fair value through profit or loss	10(a)	-	140,538	140,538		-		(74,343)			(74,343)
Currency losses		-	(404)	(404)		-		(133)			(133)
		4,517	140,134	144,651		5,185		(74,476)			(69,291)
Expenses
Investment management fees	4	(2,801)	-	(2,801)		(2,866)		-			(2,866)
Administrative expenses	5	(821)	-	(821)		(787)		-			(787)
		(3,622)	-	(3,622)		(3,653)		-			(3,653)
Profit/(loss) before finance costs and taxation		895	140,134	141,029		1,532		(74,476)			(72,944)
Finance costs	6	(334)	-	(334)		(304)		-			(304)
Profit/(loss) before taxation		561	140,134	140,695		1,228		(74,476)			(73,248)
Taxation	7	(452)	(13,624)	(14,076)		(2)		2,276			2,274
Profit/(loss) for the year		109	126,510	126,619		1,226		(72,200)			(70,974)
Return/(loss) per Ordinary share (pence)	9	0.19	216.06	216.25		2.08		(122.42)			(120.34)
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 Company. There are no non-controlling 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.

STATEMENT OF FINANCIAL POSITION

			As at		As at
			31 March 2021		31 March 2020
	Notes		£'000		£'000
Non-current assets
Investments held at fair value through profit or loss	10		401,669		264,644
Current assets
Cash at bank			2,588		8,578
Other receivables	11		530		33
			3,118		8,611
Current liabilities
Bank loan	12(a)		(24,000)		(30,000)
Other payables	12(b)		(1,038)		(1,672)
			(25,038)		(31,672)
Net current liabilities			(21,920)		(23,061)
Non-current liabilities
Deferred tax liability on Indian capital gains	13		(13,643)		-
Net assets			366,106		241,583
Share capital and reserves
Ordinary share capital	14		14,768		14,768
Share premium account	2(l)		25,406		25,406
Special reserve	2(l)		12,628		14,139
Capital redemption reserve	2(l)		4,484		4,484
Capital reserve	2(l)		308,711		182,656
Revenue reserve	2(l)		109		130
Equity shareholders' funds			366,106		241,583
Net asset value per Ordinary share (pence)	16		627.05		411.41
The financial statements were approved by the Board of Directors and authorised for issue on 10 June 2021and were signed on its behalf by:
Hasan Askari
Chairman
The accompanying notes are an integral part of these financial statements.

STATEMENT OF CHANGES IN EQUITY

Year ended 31 March 2021
			Share		Capital
		Share	premium	Special	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	reserve	Total
	Note	'000	'000	'000	'000	'000	'000	'000
Balance at 1 April 2020		14,768	25,406	14,139	4,484	182,656	130	241,583
Net profit after taxation		-	-	-	-	126,510	109	126,619
Equity dividend paid	8	-	-	-	-	(455)	(130)	(585)
Buyback of share capital to treasury		-	-	(1,511)	-	-	-	(1,511)
Balance at 31 March 2021		14,768	25,406	12,628	4,484	308,711	109	366,106
Year ended 31 March 2020
			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 2019		14,768	25,406	15,778	4,484	254,856	(1,096)	314,196
Net (loss)/profit after taxation		-	-	-	-	(72,200)	1,226	(70,974)
Buyback of share capital to treasury		-	-	(1,639)	-	-	-	(1,639)
Balance at 31 March 2020		14,768	25,406	14,139	4,484	182,656	130	241,583
The accompanying notes are an integral part of these financial statements.

STATEMENT OF CASH FLOWS

		Year ended	Year ended
		31 March 2021	31 March 2020
	Notes	£'000	£'000
Cash flows from operating activities
Dividend income received		4,517	5,199
Interest income received		-	15
Investment management fee paid		(2,427)	(2,704)
Overseas withholding tax		(937)	(2)
Other cash expenses		(812)	(773)
Cash inflow from operations		341	1,735
Interest paid		(302)	(315)
Net cash inflow from operating activities		39	1,420
Cash flows from investing activities
Purchases of investments		(69,103)	(65,653)
Sales of investments		71,555	55,430
Indian capital gains tax on sales		-	(74)
Indian capital gains tax on sales refunded		19	-
Net cash inflow/(outflow) from investing activities		2,471	(10,297)
Cash flows from financing activities
Equity dividend paid		(585)	-
Buyback of shares		(1,511)	(1,639)
(Repayment)/drawdown of loan		(6,000)	15,000
Net cash (outflow)/inflow from financing activities		(8,096)	13,361
Net (decrease)/increase in cash and cash equivalents		(5,586)	4,484
Cash and cash equivalents at the start of the year		8,578	4,227
Effect of foreign exchange rate changes		(404)	(133)
Cash and cash equivalents at the end of the year	2(h),17	2,588	8,578
There were no non-cash transactions during the year (2020 - £nil).
The accompanying notes are an integral part of these financial statements.

Notes to the Financial Statements for the year ended 31 March 2021

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").

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 2021.
		The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as adopted by the International Accounting Standards Board ("IASB"), and interpretations issued by the International Reporting Interpretations Committee of the IASB ("IFRIC"). The Company adopted all of the IFRS which took effect during the year.
		The financial statements have also been prepared in accordance with the Statement of Recommended Practice (SORP), "Financial Statements of Investment Trust Companies and Venture Capital Trusts," issued in April 2021. The commencement date for the SORP is for accounting periods of 1 January 2021 but early adoption is encouraged.
		The Company's assets consist mainly of equity shares in companies listed on a recognised stock exchange and in most circumstances, including in the current market environment, are considered to be realisable within a short timescale. The Board has set limits for borrowing and regularly reviews actual exposures, cash flow projections and compliance with banking covenants, including the headroom available. The Company had a £30 million loan facility which had been due to mature on 24 July 2020. On 6 July 2020, the Company entered into a new two year £30 million loan facility. £24 million of this amount is drawn down on a short-term basis through a revolving credit facility and can be repaid without incurring any financial penalties. In advance of expiry of the facility in July 2022, the Company will enter into negotiations with its bankers. If acceptable terms are available from the existing bankers, or any alternative, the Company would expect to continue to access a facility. However, should these terms not be forthcoming, any outstanding borrowing would be repaid through the proceeds of equity sales. Having taken these factors into account, as well as the impact on the Company of the spread of the Covid-19 virus, the Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future and has the ability to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of this Report. For these reasons, the Company continues to adopt the going concern basis of accounting in preparing the financial statements. 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 9 September 2021, 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.
		Significant estimates and 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. The Directors do not believe that any accounting judgements or estimates have been applied to these financial statements that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities within the next financial year. The Company considers the selection of Sterling as its functional currency to be a key judgement.
		Functional currency. The Company's investments are made in Indian Rupee and US Dollar, 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 expenses in Sterling, as it would dividends, where declared by the Company.
		New and amended accounting standards and interpretations. The Company applied, for the first time, certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2020. The nature and impact is described below:
		- IAS 1 and IAS 8 Amendments: Definition of Material
		- IAS 1, 8, 34, 37, 38 and IFRS 2, 3, 6, 14 Amendments: References to the Conceptual Framework
		- IAS 39, IFRS 7 and 9 Amendments: Interest Rate Benchmark Reform (Phase 1)
		- IFRS 3 Amendment: Definition of a Business
		- IFRIC 12, 19, 20, 22 and SIC 32 Amendments: References to the Conceptual Framework
		At the date of authorisation of these financial statements, the following amendments to Standards and Interpretations were assessed to be relevant and are all effective for annual periods beginning on or after 1 January 2021 and thereafter;
		- IAS 1 Amendments: Classification of Liabilities as Current or Non-Current
		- IAS 1 Amendments: Disclosure of Accounting Policies
		- IAS 8 Amendments: Definition of Accounting Estimates
		- IAS 39, IFRS 4, 7, 9 and 16 Amendments: Interest Rate Benchmark Reform (Phase 2)
		- IAS 41, IFRS 1, 9 and 16 Amendments: Annual Improvements 2018-20 Cycle
		- IFRS 3 Amendments: Reference to the Conceptual Framework
		- IFRS 4 Amendments: Extension of IFRS 9 Deferral
		The Company intends to adopt the Standards and Interpretations in the reporting period when they become effective and the Board does not anticipate that the adoption of these Standards and Interpretations in future periods will materially impact the Company's financial results in the period of initial application although there may be revised presentations to the Financial Statements and additional disclosures.
	(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, which is one 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 are 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 10 (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 Statement of Financial Position date.
		Deferred tax . Deferred tax is recognised in respect of all temporary differences at the Statement of Financial Position 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 Statement of Financial Position 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 enacted tax rates that are expected to apply at the date the deferred tax position is unwound.
	(g)	Investments. Investments have been designated upon initial recognition as fair value through profit or loss. Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are measured initially at fair value. Subsequent to initial recognition, investments are recognised at fair value through profit or loss.
		The Company classifies its investments based on their contractual cash flow characteristics and the Company's business model for managing the assets. The business model, which is the determining feature, is such that the portfolio of investments is managed, and performance and risk is evaluated, on a fair value basis. The Manager is also compensated based on the fair value of the Company's assets. Consequently, all investments are measured at fair value through profit or loss.
		Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are measured at fair value. For listed investments, this is deemed to be bid market prices or closing prices on a recognised stock exchange.
		Gains and losses arising from the changes in fair value are included in net profit or loss for the period as a capital item. Transaction costs are treated as a capital cost.
	(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)	Other receivables. The Company has adopted the classification and measurement provisions of IFRS 9 'Financial Instruments' as other receivables are held to collect contractual cash flows and give rise to cash flows representing solely payments of principal and interest. As such they are measured at amortised cost. Other receivables held by the Company do not carry any interest, they have been assessed as not having any expected credit losses over their lifetime due to their short-term nature.
	(j)	Other payables. The Company has adopted the classification and measurement provisions of IFRS 9 'Financial Instruments'. Other payables are non-interest bearing and are stated at amortised cost.
	(k)	Borrowings. Bank loans are initially recognised at cost, being the fair value of the consideration received, net of any issue expenses. Subsequently, they are measured at amortised cost using the effective interest method.  Finance charges are accounted for on an accruals basis using the effective interest rate method and are charged 100% to revenue.
	(l)	Nature and purpose of reserves
		Called-up share capital. The Ordinary share capital on the Statement of Financial Position relates to the number of shares in issue and in treasury. Only when the shares are cancelled, either from treasury or directly, is a transfer made to the capital redemption reserve. This reserve is not distributable.
		Share premium account. The balance classified as share premium includes the premium above nominal value from the proceeds on issue of any equity share capital comprising Ordinary shares of 25p. This reserve is not distributable.
		Special reserve. The special reserve arose following Court approval in 1998 to transfer £30 million from the share premium account. This reserve is distributable for the purpose of funding 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. This reserve is not distributable.
		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. The part of this reserve represented by realised capital gains is available for distribution by way of dividend.
		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.
	(m)	Foreign currency. Overseas monetary assets and liabilities are converted into Sterling at the rate of exchange ruling at the Statement of Financial Position 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.

3.	Income
		2021	2020
		£'000	£'000
	Income from investments
	Overseas dividends	4,517	5,171
	Other operating income
	Deposit interest	-	14
		4,517	5,185

4.	Investment management fees
		2021	2020
		£'000	£'000
	Investment management fees	2,801	2,866
	The Company has an agreement with Aberdeen Standard Fund Managers Limited ("ASFML") 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 0.9% up to £350 million and 0.75% thereafter of the Company's net assets, valued monthly. The management agreement is terminable by either the Company or ASFML on six months' notice. The amount payable in respect of the Company for the year was £2,801,000 (2020 - £2,866,000) and the balance due to ASFML at the year end was £775,000 (2020 - £403,000). All investment management fees are charged 100% to the revenue column of the Statement of Comprehensive Income.
	Subsequent to the year end, the Company and the Manager agreed that with effect from 1 April 2021, the management fee would be payable monthly in arrears based on an annual amount of 0.85% up to £350 million and 0.7% thereafter of the Company's net assets, valued monthly.

5.	Administrative expenses
		2021	2020
		£'000	£'000
	Directors' fees	122	118
	Promotional activities	166	161
	Auditor's remuneration:
	- fees payable for the audit of the Company's annual financial statements	35	24
	Legal and advisory fees	84	54
	Custodian and overseas agents' charges	290	298
	Other	124	132
		821	787
	ASFML supports the Company with promotional activities through its participation in the Aberdeen Standard Investment Trust Share Plan and ISA. The total fees paid and payable under the agreement during the year were £166,000 (2020 - £161,000) and £42,000 (2020 - £42,000) was due to ASFML at the year end.
	The only fees paid to KPMG LLP by the Company are the audit fees of £35,000 (2020 - £23,500). The amounts disclosed above for Auditor's remuneration are all shown net of VAT.

6.	Finance costs
		2021	2020
		£'000	£'000
	On bank loans	334	304
	Finance costs are charged 100% to revenue as disclosed in the accounting policies.

7.	Taxation
			2021				2020
			Revenue	Capital	Total		Revenue		Capital	Total
			£'000	£'000	£'000		£'000		£'000	£'000
	(a)	Analysis of charge for the year
		Indian capital gains tax charge on sales	-	-	-		-		74	74
		Indian capital gains tax charge refunded on sales	-	(19)	(19)		-		-	-
		Overseas taxation	452	-	452		2		-	2
		Total current tax charge for the year	452	(19)	433		2		74	76
		Movement in deferred tax liability on Indian capital gains	-	13,643	13,643		-		(2,350)	(2,350)
		Total tax charge for the year	452	13,624	14,076		2		(2,276)	(2,274)
		The Company is liable to Indian capital gains tax under Section 115 AD of the Indian Income Tax Act 1961.
		On 1 April 2018, the Indian Government withdrew an exemption from capital gains tax on investments held for twelve months or longer. The Company has recognised a deferred tax liability of £13,643,000 (2020 - £nil) on capital gains which may arise if Indian investments are sold.
		On 1 April 2020, the Indian Government withdrew an exemption from withholding tax on dividend income. Dividends are received net of 20% withholding tax and a cess charge of 4%. A further surcharge of either 2% or 5% is applied if the receipt exceeds a certain threshold. Of this total charge, 10% of the withholding tax is irrecoverable with the remainder being shown in the Statement of Financial Position as an asset due for reclaim.
	(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:
			2021					2020
			Revenue	Capital		Total		Revenue	Capital	Total
			£'000	£'000		£'000		£'000	£'000	£'000
		Profit/(loss) before tax	561	140,134		140,695		1,228	(74,476)	(73,248)
		UK corporation tax on profit/(loss) at the standard rate of 19% (2020 - 19%)	107	26,625		26,732		233	(14,150)	(13,917)
		Effects of:
		(Gains)/losses on investments held at fair value through profit or loss not taxable	-	(26,702)		(26,702)		-	14,125	14,125
		Currency losses not taxable	-	77		77		-	25	25
		Deferred tax not recognised in respect of tax losses	750	-		750		747	-	747
		Expenses not deductible for tax purposes	1	-		1		3	-	3
		Indian capital gains tax (refunded)/charged on sales	-	(19)		(19)		-	74	74
		Movement in deferred tax liability on Indian capital gains	-	13,643		13,643		-	(2,350)	(2,350)
		Irrecoverable overseas withholding tax	452	-		452		2	-	2
		Non-taxable dividend income	(858)	-		(858)		(983)	-	(983)
		Total tax charge	452	13,624		14,076		2	(2,276)	(2,274)
	(c)	At 31 March 2021, the Company has surplus management expenses and loan relationship debits with a tax value of £4,424,000 (2020 - £3,673,000) based on enacted tax rates, in respect of which a deferred tax asset has not been recognised. No deferred tax asset has been recognised because the Company is not expected to generate taxable income in the future in excess of the deductible expenses of those future periods. Therefore, it is unlikely that the Company will generate future taxable revenue that would enable the existing tax losses to be utilised.

8.	Ordinary dividends on equity shares
		2021	2020
		£'000	£'000
	Amounts recognised as distributions paid during the year:
	Interim dividend for 2020 from revenue reserves of 0.22p	130	-
	Interim dividend for 2020 from capital reserves of 0.78p	455	-
		585	-
	Set out below is the dividend proposed in respect of the financial year, which is the basis on which the requirements of Sections 1158-1159 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the year is £109,000 (2020 - £130,000 after offsetting accumulated retained losses).
		2021	2020
		£'000	£'000
	Amounts recognised as distributions paid during the year:
	Interim dividend for 2021 from revenue reserves of nil (2020 - 0.22p)	-	130
	Interim dividend for 2021 from capital reserves of nil (2020 - 0.78p)	-	455
		-	585

9.	Return/(loss) per Ordinary share
				2021			2020
		Revenue	Capital	Total	Revenue	Capital	Total
	Net profit/(loss) (£'000)	109	126,510	126,619	1,226	(72,200)	(70,974)
	Weighted average number of Ordinary shares in issue			58,551,911			58,978,796
	Return/(loss) per Ordinary share (pence)	0.19	216.06	216.25	2.08	(122.42)	(120.34)

10.	Investments held at fair value through profit or loss
						2021						2020
						Company		In subsidiary{A}		Parent		Total
	(a)	Valuation				£'000		£'000		£'000		£'000
		Opening book cost				246,479		20,564		224,239		244,803
		Opening investment holdings fair value gains/(losses)				18,165		(20,521)		102,387		81,866
		Opening valuation				264,644		43		326,626		326,669
		Movements in the year:
		Purchases				68,032		-		65,232		65,232
		Sales - proceeds				(71,545)		(45)		(52,869)		(52,914)
		Gains/(losses) on investments				140,538		2		(74,345)		(74,343)
		Closing valuation				401,669		-		264,644		264,644
		{A} In solvent liquidation from 15 November 2017 until formally dissolved on 28 February 2020.
						2021						2020
								In subsidiary{A}		Parent		Total
						£'000		£'000		£'000		£'000
		Closing book cost				255,914		-		246,479		246,479
		Closing investment holdings fair value gains				145,755		-		18,165		18,165
		Closing valuation				401,669		-		264,644		264,644
		{A} In solvent liquidation from 15 November 2017 until formally dissolved on 28 February 2020.
		The Company received £71,545,000 (2020 - £52,914,000) from investments sold in the period. The book cost of these investments when they were purchased was £58,597,000 (2020 - £63,556,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
		The Company owned 100% of the Ordinary share capital of its subsidiary, New India Investment Company (Mauritius) Limited, an investment holding company registered in Mauritius which was placed into solvent liquidation on 15 November 2017. A final payment of £45,000 was received from the liquidator on 28 November 2019 prior to the formal dissolution of the subsidiary on 28 February 2020.
	(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:
									2021		2020
									£'000		£'000
		Purchases							109		127
		Sales							120		86
									229		213
		The above transaction costs are calculated in line with the AIC SORP. The transaction costs in the Company's Key Information Document provided by the Manager are calculated on a different basis and in line with the PRIIPs regulations.

11.	Other receivables
		2021	2020
		£'000	£'000
	Amounts due from brokers	-	10
	Recoverable tax on Indian dividends	485	-
	Prepayments and accrued income	45	23
		530	33
	None of the above amounts are past their due date or impaired (2020 - nil).

12.	Current liabilities
			2021	2020
			£'000	£'000
	(a)	Bank loan
		Loans repayable within one year	24,000	30,000
		In July 2020, the Company agreed a £30 million two year uncommitted multicurrency revolving loan facility with NatWest Markets Plc, which replaced the previous facility, also with NatWest Markets Plc. £24 million was drawn down at 31 March 2021 (31 March 2020 - £30 million) at an all-in interest rate of 0.949250% until 12 April 2021. At the date of this Report the Company had drawn down £24 million at an all-in interest rate of 0.96103% until 11 June 2021.
		The terms of the loan facility contain covenants that consolidated gross borrowings should not exceed 20% of adjusted investment portfolio value, the net asset value shall not at any time be less than £150 million and the investment portfolio contains a minimum of 25 eligible investments.
			2021	2020
			£'000	£'000
	(b)	Other payables
		Amounts due to brokers	-	1,071
		Other creditors	1,038	601
			1,038	1,672

13.	Non-current liabilities
		2021	2020
		£'000	£'000
	Deferred tax liability on Indian capital gains	13,643	-

14.	Ordinary share capital
		2021			2020
		Number	£'000		Number	£'000
	Authorised	200,000,000	50,000		200,000,000	50,000
	Issued and fully paid
	Ordinary shares of 25p each	58,385,328	14,597		58,720,981	14,681
	Held in treasury:
	Ordinary shares of 25p each	684,812	171		349,159	87
		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.
	During the year 335,653 (2020 - 349,159) Ordinary shares of 25p each were repurchased by the Company at a total cost, including transaction costs, of £1,511,000 (2020 - £1,639,000). All of the shares were placed in treasury. Shares held in treasury represent 1.16% (2020 - 0.59%) of the Company's total issued share capital at the year end. Shares held in treasury do not carry a right to receive dividends.

15.	Analysis of changes in net debt
		At			At
		31 March	Currency	Cash	31 March
		2020	differences	flows	2021
		'000	'000	'000	'000
	Cash and short term deposits	8,578	(404)	(5,586)	2,588
	Debt due within one year	(30,000)	-	6,000	(24,000)
		(21,422)	(404)	414	(21,412)
		At			At
		31 March	Currency	Cash	31 March
		2019	differences	flows	2020
		'000	'000	'000	'000
	Cash and short term deposits	4,227	(133)	4,484	8,578
	Debt due within one year	(15,000)	-	(15,000)	(30,000)
		(10,773)	(133)	(10,516)	(21,422)
	A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences from the above analysis.

16.	Net asset value per Ordinary share. The net asset value per Ordinary share is based on a net asset value of £366,106,000 (2020 - £241,583,000) and on 58,385,328 (2020 - 58,720,981) Ordinary shares, being the number of Ordinary shares in issue at the year end, excluding shares held in treasury.

17.

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 ASFML under the terms of its management agreement with ASFML (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 Standard Fund Managers Limited collectively assume responsibility for ASFML's obligations under the AIFMD including reviewing investment performance and monitoring the Company's risk profile during the year.

ASFML is a fully integrated member of the Standard Life Aberdeen Group ("the Group"), which provides a variety of services and support to ASFML 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 Standard Investments (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 and Risk Management. The team is headed up by the Group's Head of Risk, who reports to the CEO 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 ("SHIELD").

The Group's Internal Audit Department is independent of the Risk Division and reports directly to the Audit Chairman of Standard Life Aberdeen plc and the Group's CEO. 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 the Group, 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. The interest rate risk profile of the portfolio of the Company's financial assets and liabilities, excluding equity holdings which are all non-interest bearing, at the Statement of Financial Position date was as follows:

Weighted average

Weighted

period for which

average

Fixed

Floating

rate is fixed

interest rate

rate

rate

At 31 March 2021

Years

%

£'000

£'000

Assets

Sterling

-

-

-

2,457

US Dollars

-

-

-

7

Indian Rupee

-

-

-

124

-

2,588

Weighted average

Weighted

period for which

average

Fixed

Floating

rate is fixed

interest rate

rate

rate

Years

%

£'000

£'000

Liabilities

Bank loan - £24,000,000

0.08

0.95

24,000,000

-

Weighted average

Weighted

period for which

average

Fixed

Floating

rate is fixed

interest rate

rate

rate

At 31 March 2020

Years

%

£'000

£'000

Assets

Sterling

-

-

-

7,898

US Dollars

-

-

-

8

Indian Rupee

-

-

-

672

-

8,578

Weighted average

Weighted

period for which

average

Fixed

Floating

rate is fixed

interest rate

rate

rate

Years

%

£'000

£'000

Liabilities

Bank loan - £30,000,000

0.08

1.18

30,000,000

-

The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The weighted average interest rate on bank loans is based on the interest rate payable, weighted by the total value of the loans. The maturity date of the Company's loans is shown in note 12.

The floating rate assets consist of cash deposits on call earning interest at prevailing market rates.

The Company's equity portfolio and short-term debtors and creditors (excluding bank loans) have been excluded from the above tables.

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.

Interest rate sensitivity. The sensitivity analyses below have been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the Statement of Financial Position date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates.

The rate of interest on the loan is the percentage rate per annum which is the aggregate of the applicable margin, adjusted LIBOR Offered Rate and mandatory cost if any.

If interest rates had been 100 basis points higher or lower (based on current parameter used by Manager's Investment Risk Department on risk assessment) and all other variables were held constant, the Company's revenue return for the year ended 31 March 2021 would decrease/increase by £214,000 (2020 - increase/decrease £178,000). This is mainly attributable to the Company's exposure to interest rates on its floating rate cash balances and bank loans. These figures have been calculated based on cash positions and bank loans at each year end.

In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as part of the interest rate risk management process used to meet the Company's objectives. The risk parameters used will also fluctuate depending on the current market perception.

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 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 2021

31 March 2020

Net

Total

Net

Total

Overseas

monetary

currency

Overseas

monetary

currency

investments

assets

exposure

investments

assets

exposure

£'000

£'000

£'000

£'000

£'000

£'000

US Dollar

-

7

7

488

8

496

Indian Rupee

401,669

124

401,793

264,156

672

264,828

401,669

131

401,800

264,644

680

265,324

Foreign currency sensitivity. The following table details the positive impact to a 10% decrease in Sterling against the foreign currency in which the Company has exposure The sensitivity analysis includes foreign currency denominated monetary items and adjusts their translation at the year end for a 10% change in foreign currency rates. In the event of a 10% increase in Sterling then there would be a negative impact on the Company's returns.

2021

2021

2020

2020

Revenue

Equity{A}

Revenue

Equity{A}

£'000

£'000

£'000

£'000

US Dollar

2

1

2

50

Indian Rupee

450

40,179

516

26,483

452

40,180

518

26,533

{A} Represents equity exposure to relevant currencies.

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.

Price risk sensitivity . If market prices at the Statement of Financial Position 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 2021 would have increased /(decreased) by £60,250,000 (2020 - increased/(decreased) by £39,697,000) 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. The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Borrowings comprise a £30 million revolving multi-currency credit facility, which expires on 6 July 2022. Details of borrowings at 31 March 2021 are shown in note 12.

Liquidity risk is not considered to be significant as the Company's assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of the loan facility, details of which can be found in note 12. Details of the Board's policy on gearing are shown in the interest rate risk section of this note.

Liquidity risk exposure . The Company has a £30 million two year uncommitted multicurrency revolving loan facility, of which £24,000,000 (2020 - £30,000,000) was drawn down at the year end.

(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. The risk is actively managed as follows:

-

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 (2020 - same).

Credit risk exposure. In summary, compared to the amounts included in the Statement of Financial Position, the maximum exposure to credit risk at 31 March was as follows:

2021

2020

Statement

Statement

Financial

Maximum

Financial

Maximum

Position

Exposure

Position

Exposure

£'000

£'000

£'000

£'000

Current assets

Loans and receivables

530

530

33

33

Cash at bank and in hand

2,588

2,588

8,578

8,578

3,118

3,118

8,611

8,611

The exposure noted in the above table is not representative of the exposure across the year as a whole.

None of the Company's financial assets are past due or impaired (2020 - same).

Fair values of financial assets and financial liabilities. The fair value of bank loans are represented in the table below;

2021

2020

£'000

£'000

Bank loan

24,000

30,000

Investments held at fair value through profit or loss are valued at their quoted bid prices which equate to their fair values.

For the fixed rate GBP loan, the fair value of borrowings has been calculated at £24,000,000 as at 31 March 2021 (2020 - £30,000,000) compared to an accounts value in the financial statements £24,000,000 (2020 - £30,000,000) (note 12).

The Directors are of the opinion that the other financial assets and liabilities carried at amortised cost equates to their fair value.

18.	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.

19.

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 Statement of Financial Position are grouped into the fair value hierarchy at the Statement of Financial Position date are as follows:

Level 1

Level 2

Level 3

Total

As at 31 March 2021

Note

£'000

£'000

£'000

£'000

Financial assets at fair value through profit or loss

Quoted equities

a)

401,669

-

-

401,669

Net fair value

401,669

-

-

401,669

Level 1

Level 2

Level 3

Total

As at 31 March 2020

Note

£'000

£'000

£'000

£'000

Financial assets at fair value through profit or loss

Quoted equities

a)

264,156

488

-

264,644

Net fair value

264,156

488

-

264,644

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. Quoted equities included in Fair Value Level 2 in the prior year was represented by a GDR holding in Ultratech Cement, which was not considered to trade actively on a recognised stock exchange. This holding was sold during the year.

20.	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.

21.	Related party transactions and transactions with the Manager
	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 in the published Annual Report.
	Transactions with the Manager. The Company has an agreement with Aberdeen Standard 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 are disclosed in notes 4 and 5.

ALTERNATIVE PERFORMANCE MEASURES
Alternative performance measures are numerical measures of the Company's current, historical or future performance, financial position or cash flows, other than financial measures defined or specified in the applicable financial framework. The Company's applicable financial framework includes IFRS and the AIC SORP. The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for closed-end investment companies.
Total return. NAV and share price total returns show how the NAV and share price has performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. NAV total return involves investing the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend. Share price total return involves reinvesting the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend.
The tables below provide information relating to the NAVs and share prices of the Company on the dividend reinvestment dates during the years ended 31 March 2021 and 31 March 2020. A dividend of 1.0p was paid during the year ended 31 March 2021 (2020 - nil).
		Dividend			Share
2021		rate	NAV		price
31 March 2020			411.41p		328.00p
1 October 2020		1.00p	533.62p		435.00p
31 March 2021			627.05p		542.00p
Total return			+52.7%		+65.6%
					Share
2020			NAV		price
31 March 2019			531.90p		461.00p
31 March 2020			411.41p		328.00p
Total return			-22.7%		-28.9%
Discount to net asset value. The discount is the amount by which the share price of 542.00p (2020 - 328.00p) is lower than the net asset value per share of 627.05p (2020 - 411.41p), expressed as a percentage of the net asset value.
Net gearing . Net gearing measures the total borrowings of £24,000,000 (2020 - £30,000,000) less cash and cash equivalents of £2,588,000 (2020 - £7,517,000) divided by shareholders' funds of £366,106,000 (2020 - £241,583,000), expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes net amounts due to/from brokers at the year end of £nil (2020 - £1,061,000 due to brokers) as well as cash at bank of £2,588,000 (2020 - £8,578,000).
Ongoing charges. The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of investment management fees and administrative expenses and expressed as a percentage of the average net asset values with debt at fair value throughout the year.
				2021	2020
Investment management fees (£'000)				2,801	2,866
Administrative expenses (£'000)				821	787
Ongoing charges (£'000)				3,622	3,653
Average net assets (£'000)				312,355	319,144
Ongoing charges ratio				1.16%	1.14%
The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations which includes amongst other things, the cost of borrowings and transaction costs.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2021 or 2020 but is derived from those accounts. Statutory accounts for 2020 have been delivered to the registrar of companies, and those for 2020 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The statutory accounts for the financial year ended 31 March 2021 have been approved by the Board and audited but will not be filed with the Registrar of Companies until after the Company's Annual General Meeting which will be held at 9.00am on 9  September 2021 at Bow Bells House, 1 Bread Street, London EC4M 9HH.

The Annual Report will be posted to shareholders in June 2021. 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.

On behalf of the Board

Aberdeen Asset Management PLC

Secretaries

10 June 2021

END

 

END

 

 

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