Half Yearly Financial Report

RNS Number : 1825G

New India Investment Trust PLC

18 November 2015

 

NEW INDIA INVESTMENT TRUST PLC

UNAUDITED HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015

FINANCIAL SUMMARY AND PERFORMANCE

Financial Summary	30 September 2015	30 September 2014	% change
Total shareholders' funds (£'000)	202,855	189,103	+ 7.3
Share price (mid-market)	306.00p	285.00p	+ 7.4
Net asset value per share	343.41p	320.13p	+ 7.3
Discount to net asset value	10.9%	11.0%
Rupee to Sterling exchange rate	99.4	100.1	+ 0.7

Performance (total return)	Six months ended 30 September 2015 %	Year ended 31 March 2015 %
Share price	- 13.1	+ 56.4
Net asset value	- 10.9	+ 46.3
MSCI India Index (Sterling adjusted)	- 11.9	+ 35.6

CHAIRMAN'S STATEMENT

Performance

During the six months to 30 September 2015, the Company's net asset value fell by 10.9% to 343.4p, which compared to a fall of 11.9% in the benchmark MSCI India Index. The ordinary share price fell by 13.1% to 306.0p.

Overview

Indian equities slipped lower in the period under review as investors' risk appetites waned, especially for emerging markets, while the challenging state of the global economy steadily became more apparent. Headlines were largely discouraging, dominated by global commodity prices, China's deepening economic malaise, and conflicting signals from the US Federal Reserve (the "Fed") on the likely path of US monetary policy. Investors were further discouraged by domestic events, with regulatory uncertainty, political wrangling and the perceived leisurely progress of reforms all weighing on sentiment.

Plans unveiled in April 2015 to retroactively tax foreign fund managers operating in India were met with concerted protests by a number of fund managers. Authorities were eventually compelled to rescind the demands, but the effect of this aborted attempt was a reminder of India's still opaque regulatory backdrop. Meanwhile, Prime Minister Narendra Modi celebrated his first full year in power, chalking up a number of policy successes. However, the 'Modi effect', which had propelled markets to record highs following his election in 2014, began to dissipate on the realisation that there was no quick-fix for the country's structural issues.  Discontent was particularly rife over the fate of two pivotal reforms, as the unified goods and services bill was sent back to the drawing board, while the proposed land acquisition act was abandoned. Prime Minister Modi's unwillingness to expend further political capital on his landmark land acquisition legislation highlighted the considerable obstacles to progress posed by the opposition-controlled Upper House.

For all this, though, India held up well compared to its emerging market peers. Declining oil prices were a blessing for the net energy importer, helping to narrow the current account deficit and temper previously high levels of inflation. This provided the Reserve Bank of India with room to manoeuvre, which it did, cutting interest rates twice. The domestic economy, while not hurtling forward at full-steam, was sturdier than most in the region, with economic growth hovering around 7%. Moody's was encouraged enough to upgrade the country's credit rating from stable to positive.

Outlook

India's stock markets should remain resilient, at least when compared to others in the region. Nonetheless, increases in equity prices are likely to be constrained as long as investors feel uneasy about the global economic climate. Emerging markets, India included, seem to be stuck between a rock and a hard place when it comes to the Fed. The longer the Fed holds off raising interest rates, the more uncertain, and risk averse, investors become. However, the immediate aftermath of a rate increase is likely to induce more capital outflows from the developing world before sentiment stabilises. Meanwhile, the wider implications of China's deceleration could provide a continued source of concern, although India is less of a hostage to Chinese economic fortunes than its commodity-exporting peers.

On the domestic front, the criticism that Mr Modi has faced for failing to make headway with key reforms ignores the considerable progress he has made elsewhere. There is a sense that 'high-level' corruption has reduced and a number of moribund projects revived through accelerated approvals. And, it seems the government has found a viable alternative to a federal land acquisition bill, by enabling local authorities to follow the spirit of the legislation at state level. Meanwhile, the economy is continuing to grow. Private investment is still weak, credit conditions tight and demand muted. However, there are early indications the cycle might be turning, with industrial production showing signs of life. The government has also stepped up spending on infrastructure development, with buoyant tax revenues providing a welcome fiscal cushion. India still has its fair share of challenges to surmount, but the future looks increasingly bright.

Hasan Askari

Chairman

18 November 2015

INTERIM BOARD REPORT

Investment Objective

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

Investment Policy

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

Principal Risks and Uncertainties

The Directors have identified the principal risks and uncertainties affecting its business. The Directors are aware that, apart from those issues it can identify, there are likely to be matters about which they do not, nor cannot know, which may also affect the Company.

With that reservation, the Directors believe that the factors which could have the most significant adverse impact on shareholders would be likely to include:

-      falls in the prices of securities in Indian companies, which may be themselves determined by local and international economic, political and financial factors and management actions;

-      adverse movements in the exchange rate between Sterling and the Rupee as well as between other currencies affecting the overall value of the portfolio;

-      a lack of appropriate stock selection by the Company's Manager;

-      factors which affect the discount to net asset value 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 may be traded on the London Stock Exchange;

-      insolvency of the depositary, custodian or sub-custodian combined with a shortfall in the assets held by that depositary, custodian or sub-custodian arising from fraud, operational errors or settlement difficulties resulting in a loss of assets owned by the Company; and

-      changes in or breaches of the complicated set of statutory, tax and regulatory rules within which the Company seeks to conduct its business in India, Mauritius and the United Kingdom (including any changes in how these rules are interpreted and applied).

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

Other financial risks are detailed in note 15 to the Financial Statements in the Company's Annual Report for the year ended 31 March 2015.

Going Concern

In accordance with the Financial Reporting Council's Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued in September 2014, the Directors have undertaken a rigorous review and consider both that there are no material uncertainties and that the adoption of the going concern basis of accounting is appropriate. The Company's assets currently consist entirely of equity shares in companies listed on recognised Stock Exchanges in India, the majority of which are normally realisable within a short timescale.

The Directors are mindful of the principal risks and uncertainties set out above. After making enquiries, including a review of forecasts detailing revenue and liabilities, the Directors have a reasonable expectation that the Company possesses adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the Financial Statements.

This belief is also based on the assumption that the Ordinary resolution, that the Company continues as an investment trust, which will be proposed at the next Annual General Meeting of the Company, is passed as it has been in the years since it was put in place.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Half-Yearly Financial Report, in accordance with applicable law and regulations. The Directors confirm that, to the best of their knowledge:

-         the condensed set of Financial Statements within the Half-Yearly Financial Report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'; and

-         the Chairman's Statement and Interim Board Report (together constituting the interim management report) includes a fair review of the information required by 4.2.7R (indication of important events during the first six months of the year) and 4.2.8R (disclosure of related party transactions and changes therein) of the UKLA's Disclosure and Transparency Rules.

The Half-Yearly Financial Report for the six months ended 30 September 2015 comprises the Chairman's Statement, Interim Board Report, the Statement of Directors' Responsibilities and a condensed set of Financial Statements.

For and on behalf of the Board

Hasan Askari

Chairman

18 November 2015

INVESTMENT MANAGER'S REPORT

Overview

Indian equities fell in the six months under review, hampered by both domestic and external events. After an extremely good run, share prices corrected as corporate earnings disappointed amid expectations that the economy was on the cusp of a recovery led by Prime Minister Narendra Modi. Also, investors recoiled at the government's plans to tax foreign fund managers operating in India retroactively. Whether from weak Chinese data or doubts over the US interest rate policy, ongoing uncertainty surrounding global equities further dampened risk appetites and sent markets lower. Despite that, losses were mitigated by a late rally in June on the back of bargain-hunting.

It proved to be a brief reprieve, however, as share prices fell again in mid-August in the wake of volatility in Chinese equities. Beijing's surprise move to devalue its currency, and failed attempts to stabilise the markets, rattled investors' nerves across the globe. The Fed's decision to leave rates unchanged in September sent mixed signals and its perceived indecisiveness fuelled uncertainty. Meanwhile, German carmaker Volkswagen's revelations that it had cheated on emissions tests reverberated through domestic markets, given that India houses several of the world's leading automotive parts suppliers. At the period end, the central bank cut rates by a higher-than-expected 50 basis points to 6.75% which drove a late recovery in the market.

For our holdings, corporate earnings were mixed over the six months. The demand environment has been fairly lacklustre, particularly for the cyclical and industrial sectors. Consumer demand has been more resilient though there were also pockets of weakness in the rural sectors of the economy.  On a positive note, falling oil and commodity prices generally lifted profit margins.

Performance

For the six months under review, the portfolio's net asset value fell by 10.9%, compared to a decline of 11.9% in the benchmark MSCI India Index. Positive stock selection in materials was the biggest contributor to relative performance. In particular, Kansai Nerolac Paints did well, benefiting from robust volumes and improved margins. At the same time, the lack of exposure to metals and mining stocks within the sector, such as Sesa Goa, Jindal Steel & Power and Tata Steel, also contributed positively.

The underweight positions in industrials and telco services also aided relative performance. The lack of exposure to Tata Motors was the top contributor as the carmaker continued to suffer from deteriorating demand in China, one of its key markets. Meanwhile, Bosch, our main auto-sector holding succumbed to profit-taking following a lengthy period of good performance. Prior to this, we had top-sliced our position in the holding on price strength.

At the stock level, Godrej Consumer Products was a key contributor on the back of decent results and its commitment to improving profitability. Among our financial holdings, HDFC Bank largely avoided the sell-off after reporting healthy loan and margin growth, while maintaining decent asset quality. However, the same could not be said of ICICI Bank, which was beset by asset quality concerns. That said, its retail business remains relatively resilient and management expects non-performing loan growth to remain largely stable.

Among the detractors, not holding benchmark heavyweight Reliance Industries negatively affected the portfolio as the market reacted positively to its strategy update, while anticipation over the expected launch of Reliance Jio (involving the proposed pan-India roll-out of 4G broadband) further supported sentiment. However, its share price has come off since June on concerns over weaker margins and lower oil prices. We remain comfortable with our lack of exposure as we believe that we can find higher-quality alternatives that focus on returns for minority shareholders.

Although the lack of exposure to Dr Reddys Laboratories also hurt performance, this was offset by the Company's non-benchmark holding in Sanofi India which delivered similar returns over the period. The underweight to Infosys detracted as the stock re-rated on better-than-expected results and hopes that that CEO, Vishal Sikka, could return the company to its dominant position in the industry. Despite that, the IT services sector is still the Company's second-largest exposure, with Infosys one of the portfolio's core holdings.

Portfolio Activity

Over the review period, we sold GAIL India given our disappointment with its performance amid challenging operating conditions and regulatory uncertainty. We also trimmed Bharti Airtel following good performance. Conversely, we topped up ICICI and ITC on price weakness as we believe their fundamentals remain compelling over the long term. In addition, we participated in Sun Pharmaceuticals' share placement at an attractive discount, topping up the position.

Outlook

Indian equities are likely to face ongoing volatility in the near term, especially as market participants await the Federal Reserve's normalisation of its interest rate policy. Tepid rural demand remains a concern. However, the central bank's ongoing monetary easing, coupled with its determination to see banks pass on lower borrowing costs, should support consumption. While valuations are still not cheap at the moment, companies have the capability to increase their earnings as a result of the huge and growing middle class.

Still-low commodity prices, which have been keeping import costs down for a while, could further bolster margins. Prime Minister Modi's reforms have also made headway in cultivating a more business-friendly environment that values transparency, which is likely to be beneficial in the longer term. While corporate earnings may not show significant improvements in the near term, we remain optimistic about the medium to long-term potential of the portfolio's holdings. Current fluctuations aside, India remains one of the most compelling investment destinations in the region as it offers a wide selection of fundamentally sound and well managed companies.

Aberdeen Asset Management Asia Limited

Investment Manager

18 November 2015

INVESTMENT PORTFOLIO - CONSOLIDATED

As at 30 September 2015

		Valuation	Net assets
Company	Sector	£'000	%
Housing Development Finance Corporation	Financials	17,913	8.8
Infosys	Information Technology	15,486	7.6
Tata Consultancy Services	Information Technology	15,074	7.4
ICICI Bank	Financials	11,677	5.8
ITC	Consumer Staples	10,384	5.1
Bosch	Consumer Discretionary	8,337	4.1
Godrej Consumer Products	Consumer Staples	7,374	3.6
Grasim Industries{A}	Materials	7,331	3.6
Ambuja Cements{A}	Materials	7,321	3.6
Hero MotoCorp	Consumer Discretionary	7,070	3.5
Top ten investments		107,967	53.1
Hindustan Unilever	Consumer Staples	6,822	3.4
Lupin	Healthcare	6,645	3.3
Container Corporation of India	Industrials	6,312	3.1
Kansai Nerolac Paints	Materials	6,180	3.0
Nestlé India	Consumer Staples	5,851	2.9
HDFC Bank	Financials	5,359	2.6
Ultratech Cement{A}	Materials	4,983	2.5
Kotak Mahindra Bank	Financials	4,891	2.4
Piramal Enterprises	Healthcare	4,863	2.4
Gujarat Gas	Utilities	4,459	2.2
Top twenty investments		164,332	80.9
MphasiS	Information Technology	4,423	2.2
Sanofi India	Healthcare	3,777	1.9
ACC	Materials	3,182	1.6
Gruh Finance	Financials	3,050	1.5
ABB India	Industrials	2,962	1.5
Sun Pharmaceutical Industries	Healthcare	2,805	1.4
Bharti Airtel	Telecommunication Services	2,648	1.3
CMC	Information Technology	2,449	1.2
GlaxoSmithKline Pharmaceuticals	Healthcare	2,339	1.2
Linde India	Materials	2,257	1.1
Top thirty investments		194,224	95.8
Jammu & Kashmir Bank	Financials	1,743	0.9
Castrol India	Materials	1,736	0.9
Tata Power	Utilities	1,454	0.7
Biocon	Healthcare	1,072	0.5
Bharti Infratel	Telecommunication Services	1,002	0.5
Total portfolio investments		201,231	99.3
Other net current assets held in subsidiaries		917	0.4
Total investments		202,148	99.7
Net current assets		707	0.3
Net assets		202,855	100.0
{A} Comprises equity and listed or tradeable GDR holdings.

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

		Six months ended			Six months ended
		30 September 2015			30 September 2014
					(restated)
		(unaudited)			(unaudited)
		Revenue	Capital		Revenue	Capital
		return	return	Total	return	return	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Total revenue	3	54	-	54	97	-	97
(Losses)/gains on investments held at fair value		-	(24,602)	(24,602)	-	33,638	33,638
Currency gains		-	3	3	-	1	1
		_______	_______	_______	_______	_______	_______
		54	(24,599)	(24,545)	97	33,639	33,736
		_______	_______	_______	_______	_______	_______
Expenses
Investment management fees		(48)	-	(48)	(47)	-	(47)
Other administrative expenses		(260)	-	(260)	(266)	-	(266)
		_______	_______	_______	_______	_______	_______
(Loss)/profit before taxation		(254)	(24,599)	(24,853)	(216)	33,639	33,423
		_______	_______	_______	_______	_______	_______
Taxation	4	-	-	-	-	-	-
		_______	_______	_______	_______	_______	_______
(Loss)/profit for the period		(254)	(24,599)	(24,853)	(216)	33,639	33,423
		_______	_______	_______	_______	_______	_______
Return per Ordinary share (pence)	5	(0.43)	(41.64)	(42.07)	(0.37)	56.95	56.58
		_______	_______	_______	_______	_______	_______
The Company does not have any income or expense that is not included in (loss)/profit for the period, and therefore the "(loss)/profit for the period" is also the "Total comprehensive income for the period", as defined in International Accounting Standard 1 (revised).
All of the (loss)/profit and total comprehensive income is attributable to the equity holders of the parent company. There are no minority interests.
The total column of this statement represents the Statement of Comprehensive Income of the Company, prepared in accordance with International Financial Reporting Standards ("IFRS"). The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.
All items in the above statement derive from continuing operations.

CONDENSED STATEMENT OF COMPREHENSIVE INCOME (Cont'd)

		Year ended
		31 March 2015
		(audited)
		Revenue	Capital
		return	return	Total
	Notes	£'000	£'000	£'000
Total revenue	3	341	-	341
Gains on investments held at fair value		-	72,254	72,254
Currency gains		-	4	4
		_______	_______	_______
		341	72,258	72,599
		_______	_______	_______
Expenses
Investment management fees		(100)	-	(100)
Other administrative expenses		(471)	-	(471)
		_______	_______	_______
(Loss)/profit before taxation		(230)	72,258	72,028
		_______	_______	_______
Taxation	4	-	-	-
		_______	_______	_______
(Loss)/profit for the period		(230)	72,258	72,028
		_______	_______	_______
Return per Ordinary share (pence)	5	(0.39)	122.33	121.94
		_______	_______	_______
All items in the above statement derive from continuing operations.

CONDENSED BALANCE SHEET

		As at	As at	As at
		30 September	30 September	31 March
		2015	2014	2015
		(unaudited)	(unaudited)	(audited)
			(restated)
	Notes	£'000	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss		202,148	188,659	225,698
		_______	_______	_______
Current assets
Cash at bank		796	558	2,017
Other receivables		48	50	127
		_______	_______	_______
Total current assets		844	608	2,144
		_______	_______	_______
Total assets		202,992	189,267	227,842
Current liabilities
Other payables		(137)	(164)	(134)
		_______	_______	_______
Total current liabilities		(137)	(164)	(134)
		_______	_______	_______
Net assets		202,855	189,103	227,708
		_______	_______	_______
Capital and reserves
Ordinary share capital	8	14,768	14,768	14,768
Share premium account		25,406	25,406	25,406
Special reserve		15,778	15,778	15,778
Capital redemption reserve		4,484	4,484	4,484
Capital reserve	9	142,354	128,334	166,953
Revenue reserve		65	333	319
		_______	_______	_______
Equity shareholders' funds		202,855	189,103	227,708
		_______	_______	_______
Net asset value per Ordinary share (pence)	10	343.41	320.13	385.49
		_______	_______	_______

CONDENSED STATEMENT OF CHANGES IN EQUITY

Six months ended 30 September 2015 (unaudited)
		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2015	14,768	25,406	15,778	4,484	166,953	319	227,708
Net loss on ordinary activities after taxation	-	-	-	-	(24,599)	(254)	(24,853)
	______	______	______	______	______	______	_______
Balance at 30 September 2015	14,768	25,406	15,778	4,484	142,354	65	202,855
	______	______	______	______	______	______	_______
Six months ended 30 September 2014 (unaudited)
(restated)		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2014	14,768	25,406	15,778	4,484	94,695	549	155,680
Net gain/(loss) on ordinary activities after taxation	-	-	-	-	33,639	(216)	33,423
	______	______	______	______	______	______	_______
Balance at 30 September 2014	14,768	25,406	15,778	4,484	128,334	333	189,103
	______	______	______	______	______	______	_______
Year ended 31 March 2015 (audited)
		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2014	14,768	25,406	15,778	4,484	94,695	549	155,680
Net gain/(loss) on ordinary activities after taxation	-	-	-	-	72,258	(230)	72,028
	______	______	______	______	______	______	_______
Balance at 31 March 2015	14,768	25,406	15,778	4,484	166,953	319	227,708
	______	______	______	______	______	______	_______

CONDENSED CASH FLOW STATEMENT

	Six months ended	Six months ended	Year ended
	30 September	30 September	31 March
	2015	2014	2015
		(restated)
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Operating activities
(Loss)/profit before taxation	(24,853)	33,423	72,028
Losses/(gains) on investments held at fair value through profit or loss	24,602	(33,638)	(72,254)
Net gains on foreign exchange	(3)	(1)	(4)
Net purchases of investments held at fair value through profit or loss	(1,052)	420	1,996
Decrease/(increase) in other receivables	79	3	(75)
Increase/(decrease) in other payables	3	(4)	(32)
	__________	__________	__________
Net cash (outflow)/inflow from operating activities	(1,224)	203	1,659
Taxation paid	-	-	-
	__________	__________	__________
Net (decrease)/increase in cash and cash equivalents	(1,224)	203	1,659
Cash and cash equivalents at the start of the period	2,017	354	354
Effect of foreign exchange rate changes	3	1	4
	__________	__________	__________
Cash and cash equivalents at the end of the period	796	558	2,017
	__________	__________	__________

NOTES TO THE FINANCIAL STATEMENTS

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.
	The principal activity of its foreign subsidiary is similar in all relevant respects to that of its United Kingdom parent.  The Company has adopted IFRS 10 'Consolidated Financial Statements - Consolidation relief for Investment Entities'; as such the Company has not consolidated the results of its active subsidiaries.

2.	Accounting policies
	The Company's financial statements have been prepared in accordance with International Accounting Standard ('IAS') 34 - 'Interim Financial Reporting', as adopted by the International Accounting Standards Board (IASB), and interpretations issued by the International Reporting Interpretations Committee of the IASB (IFRIC). The Company's financial statements have been prepared using the same accounting policies applied for the year ended 31 March 2015 financial statements, which received an unqualified audit report.
	IFRS 10 Consolidated Financial Statements - Consolidation relief for Investment Entities
	The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates which requires management to exercise its judgement in the process of applying the accounting policies. One of the key areas for consideration has been the application of IFRS 10 'Consolidated Financial Statements' including the Amendments, 'Investment entities (Amendments to IFRS 10, IFRS 12 and IAS 27) (Investment Entity Amendments). The amendments require entities that meet the definition of an investment entity to fair value certain subsidiaries through profit or loss in accordance with IAS 39 Financial Instruments: Recognition and Measurement, rather than consolidate their results. However, entities which are not themselves investment entities and provide investment related services to the Company will continue to be consolidated.
	Assessment as investment entity
	Entities which meet the definition of an investment entity are required to fair value subsidiaries through profit or loss rather than consolidate them. To determine whether an entity meets the definition of an investment entity it is required to meet the following three criteria:
	(i)     an entity obtains funds from one or more investors for the purpose of providing those investors with investment services; the Company provides investment services and has several investors who pool funds to gain access to these services and investment opportunities which they might not be able to as individuals.
	(ii)    an entity commits to its investors that its business purpose is to invest funds solely from capital appreciation, investment income, or both; the Company's investment objective is to provide shareholders with long-term capital appreciation by investment in companies which are incorporated in India, or which derive significant revenue or profit from India, with dividend yield from the Company being of secondary importance.
	(iii)    an entity measures and evaluates the performance of substantially all of its investments on a fair value basis; the Company has elected to measure and evaluate the performance of all of its investments on a fair value basis with the exception of its Singapore subsidiary which is dormant. The fair value basis is used to present the Company's performance in its communication with the market and the primary measurement attribute to evaluate performance of all of its investments and to make investment decisions.
	The Board is of the opinion that the Company meets the definition of an investment entity, and, therefore, all investments are recognised at fair value through profit or loss. This has changed the treatment for the Company's investment in New India Investment Company (Mauritius) Limited and New India Investment Company (Singapore) Pte Ltd, which were previously consolidated.
	The change is first applicable to the Company for the year ended 31 March 2015. Under the transitional provisions of IFRS 10 this change in accounting policy is required to be accounted for retrospectively. Therefore, the relevant comparative figures for 30 September 2014 have been restated.
	The impact of these changes on the Company's Balance Sheet is to increase the value of the investment in the subsidiaries at 30 September 2014 by £1,903,000, to decrease cash by £1,691,000, to decrease receivables by £517,000 and to decrease payables by £305,000. The impact of these changes on the Company's Condensed Statement of Comprehensive Income is to decrease income by £2,339,000, to increase gains/losses on investments held at fair value through profit or loss by £1,236,000, to increase currency gains by £25,000, to decrease investment management fees by £814,000, to decrease other administrative expenses by £215,000 and to decrease taxation by £49,000.

		Six months ended	Six months ended	Year ended
		30 September 2015	30 September 2014	31 March 2015
			(restated)
3.	Income	£'000	£'000	£'000
	Income from investments
	Overseas dividends	52	97	190
	Dividend from subsidiary	-	-	150
	Other operating income
	Deposit & other interest	2	-	1
		__________	__________	__________
	Total income	54	97	341
		__________	__________	__________

			Six months ended	Six months ended	Year ended
			30 September 2015	30 September 2014	31 March 2015
				(restated)
4.	Tax on ordinary activities		£'000	£'000	£'000
	(a)	Current tax:
		Overseas tax	-	-	-
			__________	__________	__________
	(b)	Factors affecting the tax charge for the year or period
		The tax charged for the period can be reconciled to the profit per the Condensed Statement of Comprehensive Income as follows:
			Six months ended	Six months ended	Year ended
			30 September 2015	30 September 2014	31 March 2015
				(restated)
			£'000	£'000	£'000
		(Loss)/profit before tax	(24,853)	33,423	72,028
			__________	__________	__________
		Corporation tax on (loss)/profit at the standard rate of 20% (30 September 2014 22% and 31 March 2015 - 21%)	(4,971)	7,353	15,126
		Effects of:
		Losses/(gains) on investments held at fair value through profit or loss not taxable	4,920	(7,400)	(15,173)
		Currency gains not taxable	(1)	-	(1)
		Movement in excess expenses	62	68	119
		Non-taxable dividend income	(10)	(21)	(71)
			__________	__________	__________
		Current tax charge	-	-	-
			__________	__________	__________
		The Company is exempt from corporation tax on capital gains provided it obtains agreement from HM Revenue & Customs that the tests within Sections 1158-1159 of the Corporation Tax Act 2010 have been met. Under Mauritian taxation laws, no Mauritian capital gains tax is payable on profits arising from the sale of securities.

5.	Return per Ordinary share
	The basic earnings per Ordinary share is based on the net loss after taxation of £24,853,000 (30 September 2014 (restated) - net gain of £33,423,000; 31 March 2015 - net gain of £72,028,000), and on 59,070,140 (30 September 2014 - 59,070,140; 31 March 2015 - 59,070,140) Ordinary shares, being the weighted average number of Ordinary shares in issue during the period.
	The earnings per Ordinary share can be further analysed between revenue and capital as follows:
		Six months ended	Six months ended	Year ended
		30 September 2015	30 September 2014	31 March 2015
			(restated)
		p	p	p
	Revenue return per share	(0.43)	(0.37)	(0.39)
	Capital return per share	(41.64)	56.95	122.33
		__________	__________	__________
	Total	(42.07)	56.58	121.94
		__________	__________	__________
		Six months ended	Six months ended	Year ended
		30 September 2015	30 September 2014	31 March 2015
			(restated)
		£'000	£'000	£'000
	Revenue return total	(254)	(216)	(230)
	Capital return total	(24,599)	33,639	72,258
		__________	__________	__________
	Total	(24,853)	33,423	72,028
		__________	__________	__________
	Weighted average number of Ordinary shares in issue	59,070,140	59,070,140	59,070,140
		__________	__________	__________

6.	Dividends on equity shares
	No interim dividend has been declared in respect of either the six months ended 30 September 2015 or 30 September 2014.
	During the year ended 31 March 2015, a dividend of £150,000 (2014 - £215,000) was paid up from the subsidiary company to the parent company.

7.	Transaction costs
	During the period no expenses (30 September 2014 - £nil; 31 March 2015 - £1,000) were incurred in acquiring and disposing of investments classified as fair value though profit or loss. These costs are expensed through capital and are included within (losses)/gains on investments in the Condensed Statement of Comprehensive Income.

8.	Ordinary share capital
	As at 30 September 2015 there were 59,070,140 (30 September 2014 and 31 March 2015 - 59,070,140) Ordinary shares in issue.

9.	Capital reserve
	The capital reserve reflected in the Balance Sheet at 30 September 2015 includes losses of £24,988,000 (30 September 2014 (restated) - gains of £33,474,000; 31 March 2015 - gains of £71,935,000) which relate to the revaluation of investments held at the reporting date.

10.	Net asset value per Ordinary share
	The basic net asset value per Ordinary share is based on a net asset value of £202,855,000 (30 September 2014 - £189,103,000; 31 March 2015 - £227,708,000) and on 59,070,140 (30 September 2014 and 31 March 2015 - 59,070,140) Ordinary shares, being the number of Ordinary shares in issue at the period end.

11.	Transactions with the Manager
	The Company has agreements with Aberdeen Fund Managers Limited ("AFML" or the "Manager") for the provision of investment management, secretarial, accounting and administration and promotional activity services.
	During the period, the management fee was payable monthly in arrears and was based on an annual amount of 1% of the net asset value of the Company excluding the fair value of the subsidiary, New India Investment Company (Mauritius) Limited, valued monthly. The management agreement is terminable by either the Company or AFML on 12 months' notice. The amount payable in respect of the Company for the period was £48,000 (30 September 2014 - £47,000; 31 March 2015 - £100,000) and the balance due to AFML at the period end was £7,000 (30 September 2014 - £8,000; 31 March 2015 - £9,000).  All investment management fees are charged 100% to the revenue column of the Condensed Statement of Comprehensive Income.
	New India Investment Company (Mauritius) Limited also has an agreement with AFML to receive management services based on an annual amount of 1% of its net asset value. The amount payable during the period was £1,002,000 (30 September 2014 - £815,000; 31 March 2015 - £1,840,000) and the balance due at the period end was £160,000 (30 September 2014 -£148,000; 31 March 2015 - £184,000).
	The promotional activities fee is based on a current annual amount of £142,000, payable quarterly in arrears. During the period £71,000 (30 September 2014 - £51,000; 31 March 2015 - £122,000) of fees were earned, with a balance of £35,000 (30 September 2014 - £26,000; 31 March 2015 - £35,000) being payable to AFML at the period end.

12.	Half-Yearly Report
	The financial information contained in this Half-Yearly Report does not constitute statutory accounts as defined in Sections 434 - 436 of the Companies Act 2006. The financial information for the six months ended 30 September 2015 and 30 September 2014 has not been reviewed or audited by the Company's Independent Auditor.
	The information for the year ended 31 March 2015 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. The report of the Independent Auditor on those accounts contained no qualification or statement under Section 237 (2), (3) or (4) of the Companies Act 2006.

13.	Approval
	This Half-Yearly Report was approved by the Board on 18 November 2015.

Aberdeen Asset Management PLC

Secretaries

18 November 2015

 

END

 

 

IR GGGCGGUPAGCR