THE INDIA FUND, INC.
August 21, 2002
DEAR FUND SHAREHOLDER,
We are pleased to present you with the unaudited financial statements of The
India Fund, Inc. (the "Fund") for the six-month period ended June 30, 2002. In
the following pages, the Fund's Investment Manager provides a detailed look at
the Fund's sector allocations and investments, as well as the economic and
market conditions in India for the recently closed year.
The Fund's net asset value (NAV) increased 2.51% during the six months ended
June 30, 2002, outperforming its benchmark, the IFC Investable Index, which
increased 2.45%. The Fund under-performed the Dollex Index of 200 leading Indian
stocks, which increased 13.38% during the period.
The political situation in India stabilized by the end of the six-month period,
although tensions with Pakistan ran quite high as the ongoing conflict in the
Kashmir region flared up. Now that the region appears to be stabilizing, the
Investment Manager believes there are several opportunities in the equities
markets.
The announcement of the Budget in March, at the start of India's fiscal year was
seen as a positive influence on the economy and the markets. Also, a number of
important state elections altered the political climate in India, but the
Investment Manager believes these changes can foster improvements in the
country's infrastructure.
The ongoing initiatives taken by the Indian government in divesting itself of
several industries are probably the most exciting news for investors. Energy and
telecommunications companies that had been state-run monopolies in the past, are
now moving into the private sector, which the Investment Manager sees as a
significant, favorable situation for investors.
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THE INDIA FUND, INC.
The Investment Manager believes that the Indian market environment is poised
to improve in the coming months. An improvement in the U.S. and global
economies has the potential to boost the nation's economy and its equity
markets. Also, the Investment Manager believes that further advances in the
government's privatization process may directly result in faster economic
growth. In the Investment Manager's opinion, these catalysts have the
potential to create exciting opportunities in Indian equities.
On behalf of the Board of Directors, we thank you for your participation and
continued support of the Fund. If you have any questions, please do not
hesitate to call our toll-free number, (800) 421-4777.
Sincerely,
/S/ BRYAN MC KIGNEY
Bryan McKigney
Director, President and Secretary
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THE INDIA FUND, INC.
REPORT OF THE INVESTMENT MANAGER
FOR THE SIX MONTHS ENDED JUNE 30, 2002
The net asset value ("NAV") of the India Fund, Inc. (the "Fund") increased
2.51% during the first six months of 2002. The Fund under-performed the
Dollex Index of 200 leading Indian stocks, which increased 13.38% in the
period, but it outperformed its benchmark, the IFC Index, which increased
2.45% over the same period.
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OVERVIEW OF INDIA'S STOCK MARKET
After demonstrating initial resilience amidst signs of recovery in the
beginning of the year, Indian stock markets fell back to lower levels during
the second quarter. Negative news flow on the political front and war
rhetoric dominated the backdrop affecting incremental equity flows and
increasing the market risk premiums. Domestic mutual fund inflows were
consistently negative throughout the six months ended June 30, 2002, while
foreign investment inflows began turning negative from May onwards.
Starting at 3,246 (up 24% from the September lows) in the beginning of the
year, India's major equity index, the BSE Sensex, rose 14%, peaking at 3,705
by the end of February. However, as the India-Pakistan stand-off
intensified, the market touched a low of 3,114 before recovering 4% at the
end of June as war fears receded. Throughout all this, India's fundamental
restructuring story gained momentum with the announcement of three major
disinvestments: telecommunications company Videsh Sanchar Nigam Ltd.
("VSNL"); and oil companies IBP (formerly Indo-Burma Petroleum) and India
Petrochemical Corporation Ltd. ("IPCL"), reported strong year-over-year
growth in core sectors of the economy, and steadily falling interest rates.
Though the war rhetoric has considerably subsided, it seems unlikely that
the overhang will be defused soon. Nevertheless, given distinct signs of
rationality on both sides, we believe a full-blown engagement is highly
improbable. As such, India continues to be a very attractive market in terms
of valuations and we believe the crisis should be viewed as an opportunity.
A trend to note in the market is the increasing polarization between the
large-cap index stocks and the small- and mid-cap stocks. While the BSE
Sensex (consisting of 30 stocks) has returned -0.5% between January and
June, the BSE-500 has returned a significant 19% over this period. This
trend is reflective of increasing retail interest in lower-line stocks, a
resultant higher liquidity chasing low valuations, and a consistent supply
of large-caps from the domestic institutions, especially United Trust of
India ("UTI").
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FUND UPDATES
The Fund's toll-free phone number, (800) 421-4777, provides callers with a
recorded monthly update of the markets in which the Fund invests. It also
offers details about the Fund, its portfolio and performance. The Fund's net
asset value (NAV) is calculated weekly and published in The Wall Street
Journal every Monday under the heading "Closed End Funds." The Fund's NAV is
also published in Barron's on Saturdays and in The New York Times on
Sundays. The Fund is listed on the New York Stock Exchange under the ticker
symbol IFN.
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THE INDIA FUND, INC.
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POLITICS
Politics dominated the first half of 2002 and contributed to most of the
negative news flow for the market. The year started out against a backdrop
of increased optimism about an economic recovery both globally and in India
tempered by subdued uncertainty over an India-Pakistan clash following the
December 2001 attack on the Indian Parliament.
While the economy did well as we had expected, war fears increased
significantly reaching a peak around mid-May. To make things worse, there
was communal tension in western India and the Bhartiya Janata Party (BJP)
government suffered a major setback in the Uttar Pradesh (UP) state
elections.
The announcement of the Union Budget, a much-awaited event in India, was
lackluster in our opinion. Expectations were low in the run-up to the event.
The market reaction to the Budget announcement was muted, inclined more
towards the negative, due to unpopular (though structurally positive)
reforms targeted at the capital markets.
The market peaked just before the Budget announcement triggered by communal
tensions in the western state of Gujarat around the same time. What
initially seemed to be a one-off incident blew up into a widespread clash
between Hindus and Muslims, apparently triggered by motivated factions. We
believe the government's handling of the situation presented a dismal
picture to the world at large and increased investor concern. The situation
culminated in a censure vote in the House of Parliament, which the
government won after much apprehension although a key ally, the Telugu Desam
Party ("TDP"), walked out before the vote. As it stands now, the situation
in Gujarat is completely under control.
In what was probably the most anticipated event of the year, the UP
elections turned out to be a major setback for the BJP government. These
elections have always been important to India since UP is the most populous
state in India and contributes almost 15% of the total House strength in the
Parliament. Traditionally a BJP stronghold, the party stand-alone lost about
50 votes (-32%) diluting their claim to power. The BJP, however, did manage
to set up the state government with the help of a coalition partner.
Meanwhile, tensions with Pakistan kept increasing as terrorist incidents
continued in India-administered Kashmir. On May 14, a terrorist attack by a
Pakistan-based group on Indian soldiers stationed in Kashmir and on a bus
carrying civilians triggered a strong reaction. The Indian government sent
out serious signals about war to the Western world and to Pakistan.
Expulsion of the Pakistan High Commissioner, high level meetings between
political leaders and military chiefs and a huge army build-up along the
border gave clear signals of India's willingness to commit aggression.
Gradually, however, high-level diplomatic intervention and an easing in
Pakistan's hard line stance mitigated tensions a bit. At the time of this
writing, India has opened up its air space to Pakistan and war rhetoric has
come down substantially.
Two positive events worth noting among all the negative commotion were the
increased disinvestments momentum and oil sector deregulation. Among others,
the government sold three major
4
THE INDIA FUND, INC.
Public Sector Units ("PSU"), IBP, VSNL and IPCL, providing a major
credibility boost to its claims on PSU re-structuring and disinvestment.
Judging by the current developments, we see reason to believe that
privatizations will increasingly gather momentum. Oil sector deregulation
was another major step towards long-pending reforms, and in our opinion,
indicated the government's newfound strong political will toward
structurally reforming the economy.
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ECONOMY
The fiscal year 2001-2002 ended on a sober note reflecting a distinct
slowdown in the economy. The Index of Industrial Production ("IIP") ended
the year with a year on year growth rate of 2.7% (previous year: 5.1%) the
lowest since fiscal year 1993. The saving grace to the overall Gross
Domestic Product ("GDP") growth of 5.7% was the agricultural sector, which
saw a volume increase of 7.2% (previous year: -5.8%), owing to good
monsoons. The services sector continued to record above-average growth.
While April figures overall continued to indicate a slowdown in the economy,
there are strong intermittent signs of recovery among certain core sectors
such as commercial vehicles, steel, cement, two-wheelers and consumer
durables. It is also interesting to note that there have been upward
revisions to recent official data. Moreover, consensus belief in recovery is
much stronger than what the provisional figures exhibit. With the monsoons
starting off on a good note and based on positive feedback from ground level
sources, we believe a mild economic recovery may be underway.
India's central bank continued its emphasis on lower interest rates by
lowering the cash credit ratio by 50 basis points in its customary slack
season credit policy. Due to lack of demand from industry, interest yields
on sovereign bonds have come down to multi-year lows. Though bonds have
reacted from early May highs, yields are still around 150 basis points lower
than average 2001 levels. Based on a better prospect for the industry and an
increased demand for credit, it appears that interest rates have bottomed
out.
Inflation continues to be benign. Since January 2002, it has remained below
2.0% against an average inflation of 3.7% during fiscal year 2002. With a
strong growth in money supply and a modest economic recovery, we believe
inflation is likely to move up from current levels. However, barring
unforeseen circumstances, this is unlikely to affect interest rate stability
in any way. Incidentally, the reported performing loan ratios at many banks
are still significantly higher (upwards of 400 basis points) than government
security yields. Also, no major slippage is expected in our opinion in the
fiscal deficit target of 5.3% of GDP, which though on the higher side will
not impinge on interest rates.
The external situation is extremely comfortable with all-time high foreign
exchange reserves of US$55 billion covering nearly a year's imports. The
rupee has remained relatively stable during the calendar year despite a
tense environment. We believe the Indian currency could at best depreciate
by about 2%-3% by the end of the calendar year under normal circumstances.
For the balance of payments, India's current fiscal year began with a very
impressive 19% growth in exports in April, after the 1% decline during
fiscal year 2002.
5
THE INDIA FUND, INC.
The privatization initiatives undertaken by the government in the background
of an uncertain climate reflect a gradual de-linking of the reform process
from coalition politics. In our opinion, the decontrol of the oil sector
(although partial so far) reaffirms that view. We believe privatization is a
major positive for the market. Even the worst skeptics seem to be quite
pleased at the pace and nature at which the government is going about its
divestment process.
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PORTFOLIO STRATEGY
During the first half of 2002, the Fund increased its weighting in banks and
financial institutions, as both the economic and regulatory environments
increasingly turned more positive. The Fund also selectively increased
holdings of certain PSU on the continuing theme of stepped-up government
disinvestments and privatizations. Broadly speaking, the Fund also spent the
first half of the year increasing its exposure to the market's mid-cap and
even small-cap stocks, which have sharply outperformed India's large-cap
stocks in recent months. The Fund tried to be extremely aggressive in the
small- and mid-cap area, but was hindered by low liquidity in these asset
classes.
The Fund selectively reduced its exposure in both telecommunications and
information technology during the first half, moving to
neutral-to-slightly-underweight in both sectors.
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KEY SECTOR HOLDINGS
COMPUTER SOFTWARE & PROGRAMMING; COMPUTER HARDWARE
17.3% OF THE FUND'S NET ASSETS
The Indian IT services companies showed tremendous resilience in revenue
growth as well as earnings growth compared to its peers in the U.S. The
companies managed to move along without much damage to their financial and
operating matrices. The Indian offshore model continued to display
significant robustness with most of the large companies reporting strong
volume growth. Pricing pressures within the industry persisted but we
believe it could be lower going forward.
The sentiment towards the sector has been impacted by the border tensions.
After the U.S. government asked its citizens to leave India, visits by
clients have been impacted substantially. The sector's revenues could see
some temporary setback but the impact will remain limited since as much as
90% of the business comes from existing clients.
We remain positive on the long-term outlook of the sector. We see an
opportunity in the emerging IT enabled services.
Sector leader INFOSYS TECHNOLOGIES, LTD. ("INFOSYS") remains one of our
largest holdings. Over the years this stock had delivered for us
extraordinary returns. We believe the company continues to be the
torchbearer in terms of management quality and transparency. The company
exceeded its guidance for fiscal 2002. Infosys constitutes 8.7% of the Fund.
Its reported earnings grew by 27% to US$164 million in fiscal 2002. Its
reported earnings grew by 25% to Rs2.17 billion in the first quarter of
fiscal 2003 - again above guidance.
6
THE INDIA FUND, INC.
SATYAM COMPUTER SERVICES ("SATYAM") also continues to be among our top five
holdings. It constitutes 5.2% of the Fund. It reported an after-tax profit
of Rs4.9 billion in fiscal 2002 versus Rs3.162 billion in fiscal 2001, an
increase of 54%.
DIGITAL GLOBALSOFT ("DIGITAL") has been a new entrant into the Fund. Digital
is 51% owned by American technology firm Compaq and has been the fastest
growing IT services company among the well-known companies. As reported, it
grew earnings by 71% in fiscal 2002. We see the merger of Compaq and HP as a
big opportunity for Digital, which we believe the current market price has
not fully factored. As reported, Digital is forecasted to exceed revenue
growth rates for the sector in fiscal 2003 because it is participating in
growth areas that can provide meaningful upside to fiscal 2004 earnings. The
stock has been one of the best performers in the sector last year. We feel
out-performance will continue.
TELECOMMUNICATIONS/TELECOMMUNICATIONS EQUIPMENT
4.7% OF THE FUND'S NET ASSETS
This has been a very eventful year for the telecom sector. The sector was
very resilient to the economic slowdown. Cellular and fixed services
providers began operations in new circles. The monopoly of VSNL in the
international long distance business came to an end in April 2002. The
government divested a 45% stake of VSNL to the Tata family. Several players
are likely to foray into the national and international long distance
businesses with licenses now available on demand.
We believe MAHANAGER TELEPHONE NIGAM ("MTNL") remains the best bet in the
sector despite its negatives. There is tremendous potential to be realized
from its divestment. The government has expressed its desire to sell a
strategic stake in the company. The biggest upside will come from tariff
re-balancing. With 4.5 million fixed line subscribers and 0.2 million
cellular subscribers in the most lucrative circles of Mumbai and Delhi, we
believe that MTNL is a valuable property and will fetch a very attractive
price. In our opinion, valuations are cheap and the stock is set to
outperform the sector.
CONSUMER NON-DURABLES
11.6% OF THE FUND'S NET ASSETS
Consumer Non-durables still continues to be a sizeable portion of the Fund
with HINDUSTAN LEVER ("HLL") and ITC LTD. among the main performers in this
sector. In the current year the sector started off on a positive note, but
widespread riots in Gujarat have affected all consumer companies to some
extent. However, since monsoons were at normal levels for the most recent
rainy season, we are hopeful for good numbers for the current fiscal year.
Hindustan Lever ("HLL") remains the largest consumer company in the country.
In terms of its contribution to its parent, Unilever Plc., it is the largest
contributor in the Asia-Pacific region; Hindustan Lever accounts for 10% of
Unilever's profits. For the fiscal year ended December 31, 2001 the company
had reported sales growth of around 3.5% and profit growth of 18%
year-on-year. However, first-quarter 2002 reported numbers were extremely
poor with a (5%) decline in the domestic consumer segment. We expect the
situation to improve in the subsequent quarters aided by price increases as
well as by improvements within the rural sector.
7
THE INDIA FUND, INC.
It appears to us that ITC Ltd. was the biggest beneficiary in the 2002-2003
budget since the central government decided not to raise any excise duties
this year. Last year's excise increase forced the company to raise prices of
cigarettes by around 13% which in turn led to a 8% decline in cigarette
sales volumes. Another reason for volume decline was the influx of cheap
cigarettes from Bangladesh. This year we expect a volume growth of around 1%
to 2%. We also expect the company to limit their capital expenditures in the
non-tobacco business as well as to have better dividend payouts.
PHARMACEUTICALS
12.9% OF THE FUND'S NET ASSETS
Indian pharmaceuticals companies are gradually gaining a good deal of
visibility in the U.S. market. In fact DR. REDDY'S LABORATORIES ("DRL") was
recommended by one of the U.S. fund managers at the Barron roundtable
discussion. Both DRL and RANBAXY LABORATORIES ("RANBAXY") have made several
Abbreviated New Drug Application (ANDA) filings in the U.S. and some also
involve patent litigations. In our opinion both these companies are also
making good progress in basic research.
Dr. Reddy's Laboratories had an amazing performance in the fiscal year ended
March 2002 with profits reportedly having more than tripled from Rs1.4
billion to around Rs5.1 billion. The major profit contribution came from
sales of Fluoxetine (generic Prozac) in the U.S. market. However, we believe
the earnings for fiscal 2003 will fall sharply as compared to fiscal 2002
since no similar upside is visible in fiscal 2003. We expect the fiscal 2003
earnings to be lower by around 20% to 25% year-on-year. As far as basic
research is concerned, we believe the company is progressing well. It has
reportedly licensed one more molecule in the diabetes segment to Novartis
for a milestone payment of US$55 million. Their earlier molecule licensed to
Novo Nordisk is reportedly making good progress and is currently in Phase
III stage. The company is reportedly confident of a commercial launch for
this compound in 2004.
For Ranbaxy Laboratories, calendar year 2001 was significant with its U.S.
operations reported as finally turning profitable; U.S. operations
reportedly accounted for 45% of its profitability. For calendar 2002, we
expect the company to more than double its profits from Rs2.3 billion to
around Rs5.9 billion, the main contributor being antibiotic Cefuroxime
axetil for which it would enjoy a virtual exclusivity for the rest of the
year. Also the company is reportedly close to licensing its Benign Prostatic
Hyperplasia ("BPH") molecule to a U.S. company, which in our opinion would
be a major positive.
PETROLEUM RELATED
13.9% OF THE FUND'S NET ASSETS
Our biggest holding in the petroleum related sector is RELIANCE INDUSTRIES,
which, if a proposed merger with subsidiary Reliance Petroleum goes through,
will reportedly become India's largest private sector company and a fully
integrated player with interests in oil exploration and production (E&P),
refining and marketing (R&M) and petrochemicals. The company recently bought
out the government's stake in petrochemical player IPCL at a substantial
premium to the market price. Based on our estimates, we believe Reliance has
overpaid but are positive on the company's long-term outlook. The
acquisition comes just prior to an up cycle we anticipate in the
petrochemical sector and this acquisition increases the company's leverage
to it.
8
THE INDIA FUND, INC.
We also hold a significant chunk (3.9%) in HINDUSTAN PETROLEUM ("HPCL"), the
public sector refining and marketing company. We believe the refining and
marketing sector will be a major beneficiary of the full decontrol of the
oil sector in terms of a significant jump in marketing margins and earnings.
After initial hiccups, the government has allowed companies to price auto
fuels freely leading to what we estimate as a doubling of margins. We
believe HPCL may be a major beneficiary of this development. The more
important story in the stock, however, is the anticipated sell-out by the
government as part of its privatization process. We believe HPCL will be the
first off the block (the other one being BHARAT PETROLEUM), ("BPCL") and
estimate that potential bid value for the company will be at least 40%
higher than current market prices.
VEHICLES
7.8% OF THE FUND'S NET ASSETS
Recovery in auto sales in most segments began in fiscal year 2002 and we
expect will be sustained over the medium term. Structural factors that will
sustain recovery include improved availability of consumer finance for
passenger vehicles and replacement demand for commercial vehicles, driven by
environmental concerns. The Fund maintains a significant weighting in the
vehicles segment.
HERO HONDA is our top holding in the sector, at 3.1% of net assets. The
company reported strong earnings growth of over 80% in fiscal 2002. The
trend continued into the first quarter of the current year with reported
earnings growth of 77% year-on-year. Our outlook continues to remain strong
with a projected volume growth of 26% in fiscal 2003. The management will be
filling gaps in the product portfolio through fiscal year 2003 and with
continued cost cutting we believe will maintain growth in earnings. The
management reportedly increased payout to 73% of earnings, which we see as
an indication of confidence in future business prospects.
FINANCE
7.4% OF THE FUND'S NET ASSETS
This is a sector where we have been adding on a lot. Retail finance in India
has been growing at a fast clip, offsetting to a good extent the slowdown in
the corporate book. While core interest margins have been under pressure due
to falling interest rates, banks have been booking substantial treasury
gains and increasing loan-loss provisioning cover. We believe the sector is
in for a positive structural change with an expected introduction of a new
foreclosure regulation, which will pass more power to lenders and enable
them to re-structure and/or recover their bad loans.
STATE BANK OF INDIA ("SBI") is our largest holding within the finance
sector. SBI is a government-owned entity and controls nearly one-fifth of
the banking business in India. The bank reported a 52% growth in net profit
for fiscal 2002 accompanied by a strong growth in the retail portfolio. The
stock trades at a 30% discount to its book value and relative profitability
valuations are inexpensive. Foreign ownership limits currently restrict
foreign investors from trading in the stock but we believe this matter will
be resolved over time as portfolio limits are de-linked from Global
Depositary Receipt "GDR" holdings.
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THE INDIA FUND, INC.
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OUTLOOK
Fundamentally, we believe that the Indian market presents a compelling
investment case for three main reasons: (1) With increasing concerns about
the prospects for the U.S. economy, it seems to us less likely that it will
remain a growth engine for the world economy as it has been in the past. We
believe this will shift the asset allocation focus towards emerging markets.
The insular nature of the Indian economy makes it relatively more attractive
in today's environment. (2) The market for Indian equities has become
extremely favorable with interest rates having come down by a substantial
300 basis points since January 2001 and corporate earnings continuing to
increase at a decent pace. The BSE Sensex is, on the other hand, down 20%
since the start of last year. In our opinion, there is a strong argument in
favor of higher equity flows. (3) The Indian economy looks poised for a mild
recovery. Indian companies have been aggressively cutting costs and a
leverage effect will lead to a more than proportionate increase in earnings
growth. That the commodity cycle is turning favorable across sectors is an
added advantage.
Consensus forecast for the BSE Sensex indicate an aggregate earnings growth
of 18% and values the index at 11.4x fiscal 2003 earnings. Given a
combination of improving economic prospects, easy liquidity and stable
interest rates, we believe valuations are extremely attractive both on an
absolute and a relative basis.
Being an insular economy (exports account for 10% of Indian GDP), the events
around the globe and in the US have had a limited impact on the real
economy. We believe the prime reason why the market has displayed a mute
reaction to positive fundamental developments is the geo-political
environment in the sub-continent. In our opinion, the de-escalation of
tensions between India and Pakistan will be a major trigger for the market.
This process, however, can only be gradual. Though global perception has
worsened since the issuance of travel restrictions by Western governments,
we believe the ground-level situation is not as bad and definitely improving
at the time of writing. We would view any sharp pullback of the Indian
equity market as an attractive opportunity.
Punita Kumar-Sinha
/S/ PUNITA KUMAR-SHINA
Portfolio Manager
Advantage Advisers, Inc.
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THE INDIA FUND, INC.
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CHANGE IN INVESTMENT POLICY
On April 30, 2002, the Board of Directors of the Fund approved a change
to the Fund's investment policies in connection with new Rule 35d-1
under the Investment Company Act of 1940. Under normal conditions, the
Fund will invest at least 80% of the value of its assets in equity
securities of Indian Companies (as defined in the Fund's prospectus).
Previously, the Fund's investment policies stated that the Fund would
invest at least 65% of the value of its assets in such securities. The
Board also adopted a policy to provide the stockholders of the Fund with
60 days' notice of any change to the investment policy adopted if such
notice is required by Rule 35d-1.
SHARE REPURCHASE PROGRAM
The Board of Directors of the Fund has authorized the Fund to repurchase
from time to time in the open market up to 4,000,000 shares of the
Fund's common stock at such times and in such amounts as management
believes will enhance shareholders value, subject to review by the
Fund's Board of Directors. During the six months ended June 30, 2002,
the Fund repurchased a total of 73,000 shares of its common stock. (For
details regarding shares repurchased by the Fund, see Note E to the
Financial Statements).
In accordance with the Board's directions, the Fund may from time to
time repurchase additional shares of its common stock in the open
market.
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THE INDIA FUND, INC.
JUNE 30, 2002
SCHEDULE OF INVESTMENTS (UNAUDITED)
INDIA (100% OF HOLDINGS)
COMMON STOCKS (99.95% of holdings)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
-------------------------------------------------------------------------------------------------------
CEMENT 1.90%
1,414,098 Associated Cement Companies Ltd ................ $ 4,096,942 $ 4,599,006
700 Gujarat Ambuja Cements Ltd ..................... 2,705 2,924
1,513,400 India Cements Ltd .............................. 2,220,100 947,842
15,762 Madras Cements Ltd ............................. 1,748,155 1,387,204
47,840 Panyam Cements and Mineral Industries Ltd*+ .... 481,083 43,866
----------- -----------
8,548,985 6,980,842
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CHEMICALS 0.49%
1,538,100 Indo Gulf Corporation Ltd+ ..................... 1,591,119 1,810,143
----------- -----------
1,591,119 1,810,143
----------- -----------
COMPUTER HARDWARE 1.97%
434,587 Digital Globalsoft Ltd+ ........................ 4,520,932 5,852,349
260,396 Moser-Baer India Ltd ........................... 1,652,738 1,370,774
----------- -----------
6,173,670 7,223,123
----------- -----------
COMPUTER SOFTWARE & PROGRAMMING 15.65%
807,930 HCL Technologies Ltd ........................... 4,087,420 3,704,097
483,634 Infosys Technologies Ltd ....................... 2,519,937 32,516,183
4,169,379 Satyam Computer Services Ltd ................... 1,617,265 19,648,599
1,300 Silverline Technologies Ltd+ ................... 4,371 993
53,100 Wipro Ltd ...................................... 1,780,980 1,611,038
----------- -----------
10,009,973 57,480,910
----------- -----------
COMPUTER TRAINING 0.84%
605,940 NIIT Ltd ....................................... 4,380,590 3,086,227
----------- -----------
4,380,590 3,086,227
----------- -----------
CONSUMER MISCELLANEOUS 1.64%
2,318,700 Zee Telefilms Ltd ............................. 12,515,374 6,015,242
----------- -----------
12,515,374 6,015,242
----------- -----------
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THE INDIA FUND, INC.
JUNE 30, 2002
SCHEDULE OF INVESTMENTS (CONTINUED) (UNAUDITED)
COMMON STOCKS (continued)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
-------------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES 11.82%
179,567 Godfrey Philips India Ltd ...................... $ 3,109,433 $ 1,396,596
6,703,710 Hindustan Lever Ltd ............................ 23,648,933 26,528,945
1,183,851 ITC Ltd ........................................ 20,593,794 15,504,927
----------- -----------
47,352,160 43,430,468
----------- -----------
DIVERSIFIED INDUSTRIES 3.71%
862,802 Grasim Industries Ltd+ ......................... 6,864,664 5,594,444
135,870 Gujarat Gas Company Ltd ........................ 1,618,156 1,394,617
216,100 Hinduja TMT Ltd ................................ 1,460,242 1,432,604
175 HMG Industries Ltd*+ ........................... 359 0
1,744 Indian Rayon and Industries Ltd+ ............... 6,451 3,546
1,208,794 Larsen & Toubro Ltd+ ........................... 7,893,578 4,436,017
342,508 Raymond Ltd .................................... 712,265 772,876
----------- -----------
18,555,715 13,634,104
----------- -----------
ELECTRICITY 0.22%
4 CESC Ltd+ ...................................... 29 2
306,950 Tata Power Company Ltd ......................... 811,310 817,973
----------- -----------
811,339 817,975
----------- -----------
ELECTRONICS & ELECTRICAL EQUIPMENT 2.50%
723 Alstom Power India Ltd+ ........................ 1,214 686
2,280,963 Bharat Heavy Electricals Ltd ................... 8,261,993 8,291,284
827,600 Crompton Greaves Ltd+ .......................... 811,981 883,355
----------- -----------
9,075,188 9,175,325
----------- -----------
ENGINEERING 0.84%
495,426 Asea Brown Boveri Ltd .......................... 5,551,958 2,725,134
141,097 Thermax India Ltd .............................. 381,671 368,348
----------- -----------
5,933,629 3,093,482
----------- -----------
EXTRACTIVE INDUSTRIES 3.60%
87,985 Gujarat Mineral Development Corporation Ltd. ... 174,963 221,050
382,855 Hindalco Industries Ltd ........................ 6,661,536 5,567,876
2,160,230 Hindustan Zinc Ltd+ ............................ 1,285,020 1,450,222
100 Indian Aluminium Company Ltd ................... 572 184
13
THE INDIA FUND, INC.
JUNE 30, 2002
SCHEDULE OF INVESTMENTS (CONTINUED) (UNAUDITED)
COMMON STOCKS (continued)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
-------------------------------------------------------------------------------------------------------
EXTRACTIVE INDUSTRIES (CONTINUED)
2,580,828 National Aluminium Company Ltd ................. $ 3,382,947 $ 5,139,638
127,500 Oil and Natural Gas Corporation Ltd ............ 836,305 849,288
600 Sesa Goa Ltd ................................... 4,568 1,461
----------- -----------
12,345,911 13,229,719
----------- -----------
FERTILIZERS 0.17%
876,945 Gujarat Narmada Valley Fertilizers Company Ltd. 542,545 630,897
700 Nagarjuna Fertilizers and Chemicals Ltd+ ....... 764 140
50 Southern Petrochemical Industries Corporation Ltd 43 12
----------- -----------
543,352 631,049
----------- -----------
FINANCE 7.57%
538,721 Bank of Baroda ................................. 469,005 701,264
1,228,260 Bank of Punjab Ltd ............................. 412,475 360,747
1,233,300 Centurion Bank Ltd+ ............................ 330,463 252,423
468,775 Corporation Bank ............................... 1,273,220 1,106,732
286,600 Federal Bank Ltd ............................... 539,007 576,327
933,820 HDFC Bank Ltd .................................. 4,474,955 3,853,135
26,100 HDFC Bank Ltd ADR .............................. 367,443 339,300
453,105 Housing Development Finance Corporation
Ltd++/+ ...................................... 6,226,973 6,040,050
1,820,823 ICICI Bank Ltd++ ............................... 4,708,891 5,120,532
31,125 ICICI Bank Ltd ADR++ ........................... 187,746 211,650
1,887,211 IDBI Bank Ltd++ ................................ 1,121,314 1,168,440
2,200 Oriental Bank of Commerce ...................... 2,008 1,997
1,473,206 State Bank of India ............................ 6,013,069 7,251,689
73,000 State Bank of India GDR ........................ 832,250 810,300
----------- -----------
26,958,819 27,794,586
----------- -----------
FOOD 2.03%
114,805 Britannia Industries Ltd ....................... 1,538,406 1,207,771
431,088 Nestle India Ltd ............................... 4,723,739 4,543,070
250,000 Rahul Dairy and Allied Products*+ .............. 79,643 0
50 Tata Tea Ltd ................................... 178 215
553,300 United Breweries Ltd ........................... 3,044,238 1,710,008
----------- -----------
9,386,204 7,461,064
----------- -----------
14
THE INDIA FUND, INC.
JUNE 30, 2002
SCHEDULE OF INVESTMENTS (CONTINUED) (UNAUDITED)
COMMON STOCKS (continued)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
-------------------------------------------------------------------------------------------------------
HOTELS & LEISURE 0.00%
21 Indian Hotels Company Ltd ...................... $ 343 $ 71
----------- -----------
343 71
----------- -----------
HOUSEHOLD APPLIANCES 0.00%
400 Phil Corporation Ltd ........................... 1,093 101
200 Samtel Color Ltd ............................... 395 188
450 Videocon Appliances Ltd ........................ 2,629 129
194 Videocon International Ltd ..................... 153 160
----------- -----------
4,270 578
----------- -----------
MEDIA 1.39%
209,048 Balaji Telefilms Ltd ........................... 1,827,975 2,146,384
716,459 ETC Networks Ltd+ .............................. 717,921 964,157
255,500 Mukta Arts Ltd ................................. 886,952 570,266
1,361,100 Pentamedia Graphics Ltd ........................ 4,349,211 944,388
550,000 Pritish Nandy Communications Ltd ............... 2,152,749 432,832
250,000 Vans Information Ltd+ .......................... 573,394 46,051
----------- -----------
10,508,202 5,104,078
----------- -----------
PETROLEUM RELATED 14.23%
806,253 Bharat Petroleum Corporation Ltd ............... 3,466,194 4,406,812
2,700 Chennai Petroleum Corporation Ltd .............. 3,200 1,879
2,675,278 Hindustan Petroleum Corporation Ltd ............ 17,299,102 14,518,479
820 Indian Petrochemicals Corporation Ltd .......... 1,741 2,555
268,713 Kochi Refineries Ltd ........................... 329,118 325,040
5,985,487 Reliance Industries Ltd+ ....................... 29,207,969 33,015,573
----------- -----------
50,307,324 52,270,338
----------- -----------
PHARMACEUTICALS 13.15%
246,101 Aventis Pharma Ltd ............................. 2,448,421 1,863,698
351,137 Cipla Ltd ...................................... 3,385,052 6,761,726
312,408 Dabur India Ltd ................................ 339,006 327,061
850,480 Dr. Reddy's Laboratories Ltd ................... 4,809,677 16,460,958
7,000 Dr. Reddy's Laboratories Ltd ADR ............... 150,918 136,220
405 Glaxosmithkline Pharmaceuticals Ltd ............ 3,165 3,049
100 IPCA Laboratories Ltd .......................... 309 262
219 Nicholas Piramal Ltd ........................... 2,326 1,164
15
THE INDIA FUND, INC.
JUNE 30, 2002
SCHEDULE OF INVESTMENTS (CONTINUED) (UNAUDITED)
COMMON STOCKS (continued)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
-------------------------------------------------------------------------------------------------------
PHARMACEUTICALS (CONTINUED)
100 Orchid Chemicals & Pharmaceuticals Ltd+ ........ $ 339 $ 162
1,061,316 Ranbaxy Laboratories Ltd ....................... 11,633,059 19,163,390
314,500 Sun Pharmaceutical Industries Ltd .............. 932,692 3,590,540
----------- -----------
23,704,964 48,308,230
----------- -----------
STEEL 2.26%
1,935,779 Steel Authority of India Ltd+ .................. 457,298 487,328
2,720,516 Tata Iron and Steel Company Ltd ................ 9,039,715 7,823,268
----------- -----------
9,497,013 8,310,596
----------- -----------
STEEL PRODUCTS 0.16%
177,950 Bharat Forge Ltd+ .............................. 600,457 584,020
----------- -----------
600,457 584,020
----------- -----------
TELECOMMUNICATIONS 3.49%
4,090,600 Mahanagar Telephone Nigam Ltd .................. 19,456,524 11,918,046
220,408 Videsh Sanchar Nigam Ltd ....................... 1,594,489 664,945
37,742 Videsh Sanchar Nigam Ltd ADR ................... 340,918 227,207
----------- -----------
21,391,931 12,810,198
----------- -----------
TELECOMMUNICATIONS EQUIPMENT 1.34%
300 Bhagyanagar Metals Ltd ......................... 724 295
400,000 GTL Ltd ........................................ 934,466 941,496
517,728 Himachal Futuristic Communications Ltd+ ........ 772,983 709,435
437,006 ITI Ltd ........................................ 314,513 313,052
1,267,600 Shyam Telecom Ltd .............................. 8,621,487 2,441,363
226,118 Sterlite Optical Technologies Ltd .............. 700,392 523,661
----------- -----------
11,344,565 4,929,302
----------- -----------
TEXTILES -- COTTON 0.09%
36 Arvind Mills Ltd+ .............................. 133 17
337,024 Pantaloon Fashions (India)+ .................... 333,918 321,445
----------- -----------
334,051 321,462
----------- -----------
16
THE INDIA FUND, INC.
JUNE 30, 2002
SCHEDULE OF INVESTMENTS (CONTINUED) (UNAUDITED)
COMMON STOCKS (continued)
NUMBER PERCENT OF
OF SHARES SECURITY HOLDINGS COST VALUE
-------------------------------------------------------------------------------------------------------
TEXTILES - SYNTHETIC 0.00%
300 Haryana Petrochemicals Ltd*+ ................... $ 343 $ 0
------------ ------------
343 0
------------ ------------
TRANSPORTATION 0.77%
392,651 Container Corporation of India Ltd ............. 1,989,180 2,396,486
174,900 South East Asia Marine Engineering and
Construction Ltd+ ............................ 1,132,009 424,198
------------ ------------
3,121,189 2,820,684
------------ ------------
UTILITIES 0.02%
487,650 BF Utilities Ltd+ .............................. 509,591 78,849
------------ ------------
509,591 78,849
------------ ------------
VEHICLE COMPONENTS 0.16%
125 FAG Bearings (India) Ltd ....................... 335 158
118,000 Swaraj Engines Ltd ............................. 1,298,970 606,201
------------ ------------
1,299,305 606,359
------------ ------------
VEHICLES 7.94%
993,279 Ashok Leyland Ltd+ ............................. 2,301,651 2,430,420
411,295 Bajaj Auto Ltd ................................. 3,187,594 4,272,606
1,855,446 Hero Honda Motors Ltd .......................... 6,330,241 11,711,790
600 Hindustan Motors Ltd+ .......................... 467 119
419,589 Mahindra & Mahindra Ltd ........................ 3,474,701 972,145
1,338,219 Punjab Tractors Ltd ............................ 3,443,538 4,464,526
1,657,258 Tata Engineering and Locomotive
Company Ltd+ ................................. 3,649,298 5,266,018
41,527 Tata Engineering and Locomotive
Company Ltd Warrants Expire 9/30/04+ ......... 0 48,277
------------ ------------
22,387,490 29,165,901
------------ ------------
TOTAL COMMON STOCKS ............................ 329,193,066 367,174,925
------------ ------------
17
THE INDIA FUND, INC.
JUNE 30, 2002
SCHEDULE OF INVESTMENTS (CONCLUDED) (UNAUDITED)
BONDS (0.05% of holdings)
PAR VALUE PERCENT OF
(000) SECURITY HOLDINGS COST VALUE
-------------------------------------------------------------------------------------------------------
DIVERSIFIED INDUSTRIES 0.05%
INR 4,096 DCM Shriram Consolidated NCD 13.00%,
11/6/02* ..................................... $ 130,627 $ 83,830
INR 4,096 DCM Shriram Consolidated NCD 13.00%,
11/6/03* ..................................... 130,626 83,830
------------ ------------
261,253 167,660
------------ ------------
TOTAL BONDS .................................... 261,253 167,660
------------ ------------
TOTAL INDIA .................................... 329,454,319 367,342,585
------------ ------------
TOTAL INVESTMENTS** ................... 100.00% $329,454,319 $367,342,585
============ ============
----------------
FOOTNOTES AND ABBREVIATIONS
ADR - American Depository Receipts
GDR - Global Depository Receipts
INR - Indian Rupee
NCD - Non Convertible Debenture
+ Non-income producing security.
++ Passive Foreign Investment Company.
* At fair value as determined under the supervision of the Board
of Directors.
** Aggregate cost for Federal income tax purposes is $334,904,223
The aggregate gross unrealized appreciation (depreciation) for
all securities is as follows:
Excess of value over tax cost $ 96,179,513
Excess of tax cost over value (63,741,151)
------------
$ 32,438,362
============
See accompanying notes to financial statements.
18
THE INDIA FUND, INC.
JUNE 30, 2002
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
ASSETS
Investments, at value (Cost $329,454,319) ............................................... $367,342,585
Cash (including Indian Rupees of $4,477,318 with a cost of $4,474,685) .................. 7,826,097
Receivables:
Dividends and reclaims of excess taxes withheld .................................... 1,414,707
Interest (net of withholding tax of $1,890) ........................................ 9,340
Securities sold .................................................................... 740,684
Prepaid expenses ........................................................................ 78,430
------------
TOTAL ASSETS .......................................................... 377,411,843
------------
LIABILITIES
Payable for securities purchased ........................................................ 1,676,359
Due to Investment Manager ............................................................... 335,979
Due to Administrator .................................................................... 65,490
Accrued expenses ........................................................................ 479,370
------------
TOTAL LIABILITIES ..................................................... 2,557,198
------------
NET ASSETS ............................................................ $374,854,645
============
NET ASSET VALUE PER SHARE ($374,854,645/30,650,333
SHARES ISSUED AND OUTSTANDING) ........................................ $ 12.23
============
NET ASSETS CONSIST OF:
Capital stock, $0.001 par value; 34,007,133 shares issued
(100,000,000 shares authorized) .................................................... $ 34,007
Paid-in capital ......................................................................... 460,635,809
Cost of 3,356,800 shares repurchased .................................................... (42,174,515)
Undistributed net investment income ..................................................... 133,670
Accumulated net realized loss on investments ............................................ (81,546,088)
Net unrealized appreciation in value of investments, foreign
currency holdings and on translation of other assets and liabilities
denominated in foreign currency .................................................... 37,771,762
------------
NET ASSETS ............................................................ $374,854,645
============
See accompanying notes to financial statements.
19
THE INDIA FUND, INC.
JUNE 30, 2002
STATEMENT OF OPERATIONS (UNAUDITED)
INVESTMENT INCOME
Dividends (net of Indian taxes withheld of $203,533) ............................... $ 3,676,182
------------
TOTAL INVESTMENT INCOME .......................................... 3,676,182
------------
EXPENSES
Management fees ...................................................... $2,119,920
Custodian fees ....................................................... 407,577
Administration fees .................................................. 398,163
Legal fees ........................................................... 132,232
Audit fees ........................................................... 89,945
Insurance ............................................................ 76,934
Transfer agent fees .................................................. 35,081
Printing ............................................................. 25,997
Directors' fees ...................................................... 24,660
NYSE fees ............................................................ 16,488
ICI fees ............................................................. 7,249
Interest expenses .................................................... 83
Miscellaneous expenses ............................................... 40,153
----------
TOTAL EXPENSES ................................................... 3,374,482
------------
NET INVESTMENT INCOME ............................................ 301,700
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY
HOLDINGS AND TRANSLATION OF OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN
CURRENCY:
Net realized loss on:
Security transactions ......................................................... (10,007,486)
Foreign currency related transactions ......................................... (67,554)
------------
(10,075,040)
Net change in unrealized appreciation in value of investments, foreign currency
holdings and translation of other assets and liabilities denominated in
foreign currency .............................................................. 18,896,001
------------
Net realized and unrealized gain on investments, foreign currency holdings and
translation of other assets and liabilities denominated in foreign currency ... 8,820,961
------------
Net increase in net assets resulting from operations ............................... $ 9,122,661
============
See accompanying notes to financial statements.
20
THE INDIA FUND, INC
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS
ENDED FOR THE YEAR
JUNE 30, 2002 ENDED
(UNAUDITED) DECEMBER 31, 2001
----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income .............................................. $ 301,700 $ 2,270,894
Net realized loss on investments and foreign currency
related transactions ............................................ (10,075,040) (26,293,962)
Net change in unrealized appreciation (depreciation) in value of
investments, foreign currency holdings and translation of
other assets and liabilities denominated in foreign currency .. 18,896,001 (107,009,155)
------------ -------------
Net increase (decrease) in net assets resulting from operations .... 9,122,661 (131,032,223)
------------ -------------
DISTRIBUTION TO SHAREHOLDERS
Net investment income ($0.07 per share) ............................ -- (2,150,634)
------------ -------------
Decrease in net assets resulting from distributions ................ -- (2,150,634)
------------ -------------
CAPITAL SHARE TRANSACTIONS
Shares repurchased under Stock Repurchase Plan
(73,000 shares and 480,000 shares respectively) ............... (759,319) (5,095,214)
------------ -------------
Net decrease in net assets resulting from capital share transactions (759,319) (5,095,214)
------------ -------------
Total increase (decrease) in net assets ............................ 8,363,342 (138,278,071)
NET ASSETS
Beginning of period ................................................ 366,491,303 504,769,374
------------ -------------
End of period (Including undistributed net investment income
of $133,670 and $57,940 respectively) ......................... $374,854,645 $ 366,491,303
============ =============
See accompanying notes to financial statements.
21
THE INDIA FUND, INC.
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE SIX
MONTHS ENDED FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
JUNE 30, 2002 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) DEC. 31, 2001 DEC. 31, 2000 DEC. 31, 1999 DEC. 31, 1998 DEC. 31, 1997
--------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period ............................ $ 11.93 $ 16.18 $ 23.21 $ 8.85 $ 8.11 $ 7.56
-------- -------- -------- -------- -------- --------
Net investment income (loss) ......... 0.01 0.07 (0.16) (0.10) (0.03) (0.03)
Net realized and unrealized gain (loss)
on investments, foreign currency
holdings, and translation of other
assets and liabilities denominated
in foreign currency ............... 0.29 (4.29) (7.27) 14.36 0.77 0.58
-------- -------- -------- -------- -------- --------
Net increase (decrease) from
investment operations ............. 0.30 (4.22) (7.43) 14.26 0.74 0.55
-------- -------- -------- -------- -------- --------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment
income .......................... -- (0.07) -- -- -- --
-------- -------- -------- -------- -------- --------
Total dividends and distributions .... -- (0.07) -- -- -- --
-------- -------- -------- -------- -------- --------
Capital share transactions
Anti-dilutive effect of Share
Repurchase Program ................ -- 0.04 0.40 0.10 -- --
-------- -------- -------- -------- -------- --------
Total capital share transactions ..... -- 0.04 0.40 0.10 -- --
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD ....... $ 12.23 $ 11.93 $ 16.18 $ 23.21 $ 8.85 $ 8.11
======== ======== ======== ======== ======== ========
Per share market value, end of
period ............................ $ 9.5000 $ 9.5000 $12.0625 $16.7500 $ 6.3125 $ 7.3750
TOTAL INVESTMENT RETURN BASED
ON MARKET VALUE* .................. 0.70% (20.69)% (27.99)% 165.35% (14.41)% (3.28)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in 000s) .... $374,855 $366,491 $504,769 $768,948 $300,523 $275,814
Ratios of expenses to average
net assets ........................ 1.75% 1.70% 1.59% 1.84% 2.03% 1.98%
Ratios of net investment income
(loss) to average net assets ...... 0.16% 0.57% (0.75)% (0.68)% (0.34)% (0.37)%
Portfolio turnover ................... 14.93% 16.06% 19.24% 18.65% 28.85% 42.61%
See page 23 for footnotes.
22
THE INDIA FUND, INC.
FINANCIAL HIGHLIGHTS (CONCLUDED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
* Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of each period reported. Dividends and
distributions, if any, are assumed, for purposes of this calculation, to
be reinvested at prices obtained under the Fund's dividend reinvestment
plan. Total investment return does not reflect brokerage commissions or
sales charges and is not annualized.
See accompanying notes to financial statements.
23
THE INDIA FUND, INC.
JUNE 30, 2002
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The India Fund, Inc. (the "Fund") was incorporated in Maryland on December
27, 1993, and commenced operations on February 23, 1994. The Fund operates
through a branch in the Republic of Mauritius. The Fund is registered under
the Investment Company Act of 1940, as amended, as a closed-end,
non-diversified management investment company.
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from those estimates.
SIGNIFICANT ACCOUNTING POLICIES ARE AS FOLLOWS:
PORTFOLIO VALUATION. Investments are stated at value in the accompanying
financial statements. All securities for which market quotations are readily
available are valued at:
(i) the last sales price prior to the time of determination, if there
was a sale on the date of determination,
(ii) at the mean between the last current bid and asked prices, if there
was no sales price on such date and bid and asked quotations are
available, and
(iii) at the bid price if there was no sales price on such date and only
bid quotations are available.
Securities that are traded over-the-counter are valued, if bid and asked
quotations are available, at the mean between the current bid and asked
prices. Securities for which sales prices and bid and asked quotations are
not available on the date of determination may be valued at the most
recently available prices or quotations under policies adopted by the Board
of Directors. Investments in short-term debt securities having a maturity of
60 days or less are valued at amortized cost which approximates market
value. Securities for which market values are not readily ascertainable,
which totaled $211,526 (0.06% of net assets) at June 30, 2002, are carried
at fair value as determined in good faith by or under the supervision of the
Board of Directors. The net asset value per share of the Fund is calculated
weekly and at the end of each month.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME. Investment transactions are
accounted for on the trade date. The cost of investments sold is determined
by use of the specific identification method for both financial reporting
and income tax reporting purposes. Interest income is recorded on the
accrual basis; dividend income is recorded on the ex-dividend date or, using
reasonable diligence, when known. The collectibility of income receivable
from Indian securities is evaluated
24
THE INDIA FUND, INC.
JUNE 30, 2002
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
periodically, and any resulting allowances for uncollectible amounts are
reflected currently in the determination of investment income.
TAX STATUS. No provision is made for U.S. Federal income or excise taxes as
it is the Fund's intention to continue to qualify as a regulated investment
company and to make the requisite distributions to its shareholders that
will be sufficient to relieve it from all or substantially all Federal
income and excise taxes.
Income and capital gain distributions are determined in accordance with
federal income tax regulations, which may differ from GAAP.
The tax character of distributions paid during year ended December 31, 2001:
Ordinary income ........................................... $ 2,150,634
============
At December 31, 2001, the components of net assets (excluding paid in
capital) on a tax basis were as follows:
Currently Distributable Ordinary Income .... $ 0
Plus/Less: Cumulative Timing Differences ... (120,505)
------------
Accumulated net investment loss ........................... $ (120,505)
-------------
Tax basis capital loss carryover ........... $(65,735,515)
Plus/Less: Cumulative Timing Differences ... (1,606,972)
------------
Accumulated capital loss .................................. (67,342,487)
-------------
Book unrealized foreign exchange loss ..................... (118,589)
-------------
Book unrealized appreciation ............... $ 18,994,351
Plus/Less: Cumulative Timing Differences ... (4,176,087)
------------
Unrealized appreciation ................................... 14,818,264
-------------
Net assets (excluding paid in capital) .................... $(52,763,317)
============
The differences between book and tax basis unrealized appreciation is
primarily attributable to wash sales, Passive Foreign Investment Companies
mark-to-market, and a dividend overdistribution. The cumulative timing
difference for ordinary income and capital loss carryover are due to Post
October Losses.
Net Asset Value ........................................... $366,491,303
Paid in Capital ........................................... (419,254,620)
------------
Net assets (excluding paid in capital) .................... $(52,763,317)
============
25
THE INDIA FUND, INC.
JUNE 30, 2002
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
At December 31, 2001, the Fund had a capital loss carryover of $65,735,515
which is available to offset future net realized gains on securities
transactions to the extent provided for in the Internal Revenue Code. Of the
aggregate capital losses, $9,970,780 will expire in 2005, $34,828,858 will
expire in 2006 and $20,935,877 will expire in 2009.
The Fund's foreign exchange losses and realized capital losses incurred
after October 31, 2001, but before December 31, 2001, are deemed to arise on
the first business day of the following year. The Fund incurred and elected
to defer such foreign exchange losses of approximately $118,141 and realized
capital losses of $1,606,972.
FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into
U.S. dollars on the following basis:
(i) market value of investment securities, assets and liabilities at
the prevailing rates of exchange on the valuation date; and
(ii) purchases and sales of investment securities and investment income
at the relevant rates of exchange prevailing on the respective
dates of such transactions.
The Fund generally does not isolate the effect of fluctuations in foreign
exchange rates from the effect of fluctuations in the market prices of
securities. However, the Fund does isolate the effect of fluctuations in
foreign currency rates when determining the gain or loss upon the sale of
foreign currency denominated debt obligations pursuant to U.S. Federal
income tax regulations; such amounts are categorized as foreign currency
gains or losses for federal income tax purposes. The Fund reports certain
realized foreign exchange gains and losses as components of realized gains
and losses for financial reporting purposes, whereas such amounts are
treated as ordinary income for Federal income tax reporting purposes.
Securities denominated in currencies other than U.S. dollars are subject to
changes in value due to fluctuations in foreign exchange. Foreign security
and currency transactions may involve certain considerations and risks not
typically associated with those of domestic origin as a result of, among
other factors, the level of governmental supervision and regulation of
foreign securities markets and the possibility of political or economic
instability, and the fact that foreign securities markets may be smaller and
have less developed and less reliable settlement and share registration
procedures.
DISTRIBUTION OF INCOME AND GAINS. The Fund intends to distribute annually to
shareholders, substantially all of its net investment income, including
foreign currency gains, and to distribute annually any net realized gains
after the utilization of available capital loss carryovers. An additional
distribution may be made to the extent necessary to avoid payment of a 4%
Federal excise tax.
26
THE INDIA FUND, INC.
JUNE 30, 2002
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
Distributions to shareholders are recorded on the ex-dividend date. The
amount of dividends and distributions from net investment income and net
realized gains are determined in accordance with Federal income tax
regulations, which may differ from accounting principles generally accepted
in the United States of America. These "book/tax" differences are either
considered temporary or permanent in nature. To the extent these differences
are permanent in nature, such amounts are reclassified within the capital
accounts based on their Federal tax-basis treatment; temporary differences
do not require reclassification. Dividends and distributions which exceed
net investment income and net realized capital gains for financial reporting
purposes but not for tax purposes are reported as dividends in excess of net
investment income and net realized capital gains. To the extent they exceed
net investment income and net realized gains for tax purposes, they are
reported as distributions of additional paid-in capital.
During the period ended December 31, 2001, the Fund reclassified $225,970
from accumulated net realized loss on investments to accumulated net
investment loss as a result of permanent book and tax differences relating
primarily to realized foreign currency losses. Net investment income and net
assets were not affected by the reclassifications.
NOTE B: MANAGEMENT, INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES
Advantage Advisers, Inc. ("Advantage"), a subsidiary of CIBC World Markets
Corp. ("CIBC WM"), serves as the Fund's Investment Manager (the "Investment
Manager") under the terms of a management agreement (the "Management
Agreement"). Imperial Investment Advisors Private Limited ("Imperial"), an
Indian company and subsidiary of CIBC WM and Advantage India, Inc., serves
since May 1, 2002 as the Fund's Country Adviser (the "Country Adviser")
under the terms of an advisory agreement (the "Country Advisory Agreement").
Pursuant to the Management Agreement, the Investment Manager supervises the
Fund's investment program and is responsible on a day-to-day basis for
investing the Fund's portfolio in accordance with its investment objective
and policies. Pursuant to the Country Advisory Agreement, the Country
Adviser provides statistical and factual information and research regarding
economic, political factors and investment opportunities in India to the
Investment Manager. For their services, the Investment Manager receives
monthly fees at an annual rate of 1.10% of the Fund's average weekly net
assets and the Country Adviser received from the Investment Manager a fee to
be agreed upon by the Investment Manager and the Country Adviser from time
to time. For the six months ended June 30, 2002, fees earned by the
Investment Manager amounted to $2,119,920.
From August 1, 2001 to April 30, 2002, Advantage India, Inc. served as the
Fund's Country Adviser. Prior to August 1, 2001, Infrastructure Leasing &
Financial Services Limited ("ILFS") served as the Fund's Country Adviser.
Because affiliations between ILFS and the Indian Government had precluded
27
THE INDIA FUND, INC.
JUNE 30, 2002
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
the Fund from making certain investments, the Board of Directors at its
February 2001 meeting authorized the Fund to terminate its agreement with
ILFS. The Board of Directors also approved the Country Advisory Agreement
between Advantage and Advantage India, Inc., a subsidiary of CIBC WM, which
was submitted and approved by stockholders at the annual meeting, held on
April 20, 2001. As part of the reorganization of its business, Advantage
India, Inc. transferred the County Advisory Agreement to Imperial, which was
approved by the Board of Directors of the Fund at its meeting on April 30,
2002.
CIBC WM, an indirect wholly-owned subsidiary of Canadian Imperial Bank of
Commerce, serves as the Fund's Administrator (the "Administrator"). The
Administrator provides certain administrative services to the Fund. For its
services, the Administrator receives a monthly fee at an annual rate of
0.20% of the Fund's average weekly net assets. For the six months ended June
30, 2002, these fees amounted to $385,440. The Administrator subcontracts
certain of these services to PFPC, Inc. In addition, Multiconsult Ltd. (the
"Mauritius Administrator") provides certain administrative services relating
to the operation and maintenance of the Fund in Mauritius. The Mauritius
Administrator receives a monthly fee of $1,500 and is reimbursed for certain
additional expenses. For the six months ended June 30, 2002, fees and
expenses of the Mauritius Administrator amounted to $12,723. At June 30,
2002, CIBC WM owned 7,133 shares of the Fund's common stock.
The Fund pays each of its directors who is not a director, officer or
employee of the Investment Manager, the Country Adviser or the Administrator
or any affiliate thereof an annual fee of $5,000 plus up to $700 for each
Board of Directors meeting attended. In addition, the Fund reimburses all
directors for travel and out-of-pocket expenses incurred in connection with
Board of Directors meetings.
NOTE C: PORTFOLIO ACTIVITY
Purchases and sales of securities, other than short-term obligations,
aggregated $56,154,994 and $65,902,829 respectively, for the six months
ended June 30, 2002.
NOTE D: FOREIGN INCOME TAX
The Fund conducts its investment activities in India as a tax resident of
Mauritius and expects to obtain benefits under the double taxation treaty
between Mauritius and India (the "tax treaty" or "treaty"). To obtain
benefits under the double taxation treaty, the Fund must meet certain tests
and conditions, including the establishment of Mauritius tax residence and
related requirements. The Fund has obtained a certificate from the Mauritian
authorities that it is a resident of Mauritius under the double taxation
treaty between Mauritius and India. Under current regulations, a fund
28
THE INDIA FUND, INC.
JUNE 30, 2002
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
which is a tax resident in Mauritius under the treaty, but has no branch or
permanent establishment in India, will not be subject to capital gains tax
in India on the sale of securities but is subject to a 15% withholding tax
on dividends declared, distributed or paid by an Indian company prior to
June 1, 1997 and after March 31, 2002. During the period June 1, 1997
through March 31, 2002, dividend income from domestic companies was exempt
from Indian income tax. The Fund is subject to and accrues Indian
withholding tax on interest earned on Indian securities at the rate of 21%
(20% prior to April 1, 2002).
The Fund will, in any year that it has taxable income for Mauritius tax
purposes, elect to pay tax on its net income for Mauritius tax purposes at
any rate between 0% and 35%.
In March 2000, the Indian tax authorities issued an assessment order ("March
2000 Assessment Order") with respect to the Fund's Indian income tax return
filed for the fiscal year ended March 31, 1997 which denied the benefits of
the tax treaty between India and Mauritius. In the March 2000 Assessment
Order, the Indian tax authorities held that the Fund is not a resident of
Mauritius and assessed tax on the dividend income for the year ended March
31, 1997 at the rate of 20%, instead of the 15% rate claimed by the Fund
under the tax treaty between India and Mauritius. Similar assessment orders
were issued to several other mutual fund companies relying on the tax treaty
between India and Mauritius. On April 13, 2000, the Central Board of Direct
Taxes ("CBDT") of the Ministry of Finance in India issued a circular
("Circular 789") "clarifying" its position on Indian taxation under the tax
treaty between India and Mauritius that, wherever a certificate of residence
is issued by the Mauritian authorities, such certificate will constitute
sufficient evidence for accepting the status of residence as well as
beneficial ownership for applying the tax treaty between India and
Mauritius. The Fund, relying on Circular 789 and in absence of a
rectification order from the assessing officer, filed an appeal against the
March 2000 Assessment Order with the Indian tax authorities. Hearings on the
appeal were scheduled in which the Fund made submissions to the Indian tax
authorities, however, the hearings were adjourned by Indian tax authorities,
each time without a decision.
Previously, however, an Indian public interest group had initiated
litigation in the Indian courts challenging the Circular 789. In connection
with this litigation, the Delhi High Court, in May 2002, passed an order
invalidating the Circular 789. The history of past assessments by the Indian
tax authorities (prior to issuance of Circular 789) and the arguments made
in the recent Delhi High Court ruling suggest that the Indian tax
authorities may adopt an aggressive position and investigate the taxability
of Mauritius based funds, i.e., the Indian tax authorities may look beyond
the tax residency certificate issued by Mauritius tax authorities to
Mauritius based funds. The Indian tax authorities may also seek to reopen
previously completed assessments of the Fund's Indian income tax returns and
deny the benefits of the tax treaty between India and Mauritius to the Fund.
During
29
THE INDIA FUND, INC.
JUNE 30, 2002
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
the period the public interest litigation was pending with the high courts
in India, the Indian tax authorities were generally allowing the benefits of
the tax treaty between India and Mauritius to Mauritius based funds relying
on Circular 789, however, the assessment orders issued were conditional upon
the outcome of the public interest litigation.
To the extent that it is later determined that the Fund would be unable to
obtain the benefits of the treaty, the Fund would be subject to tax on
capital gains in India on the sale of securities, which are currently at the
rates of 10.5% on long-term capital gains and 31.5% on short-term capital
gains (10% and 30%, respectively, prior to April 1, 2002). Further, the
Fund, if the treaty benefits are denied, would be subject to tax on dividend
income earned by the Fund prior to June 1, 1997 and subsequent to March 31,
2002, at a higher rate, which is currently 21% (20% prior to April 1, 2002),
instead of 15%.
In addition, for the fiscal years for which the assessment of the Fund's
Indian tax returns has been completed, the Indian tax authorities have
denied the carryforward of realized capital losses incurred by the Fund in
such fiscal years on the grounds that the Fund was not subject to taxes on
realized capital gains in India due to the application of the benefits of
the tax treaty between India and Mauritius to the Fund. Therefore, the Fund
may not, in a year in which it has net realized capital gains and the
benefits of the tax treaty between India and Mauritius are denied by the
Indian tax authorities, be able to offset capital losses realized in
previous years.
The Fund continues to: (i) comply with the requirements of the tax treaty
between India and Mauritius; (ii) be a tax resident of Mauritius; and (iii)
maintain that its central management and control resides in Mauritius and
therefore management believes that the Fund will be able to obtain the
benefits of the tax treaty between India and Mauritius. Accordingly, no
provision for Indian income taxes has been made in accompanying financial
statements of the Fund. Although the Fund expects to obtain the benefits of
the treaty, if the treaty benefits were to be denied to the Fund
retrospectively, the Fund may be subject to additional Indian income taxes
and interest and penalties, the amount of which currently cannot be
determined.
The foregoing is based upon current interpretation and practice and is
subject to future changes in Indian or Mauritian tax laws and in the treaty
between India and Mauritius.
While management currently feels that the likelihood is remote, to the
extent that the benefits of the longstanding treaty between India and
Mauritius were rescinded and were not available to the Fund, the cumulative
amount of related taxes could have a material impact on the financial
statements.
30
THE INDIA FUND, INC.
JUNE 30, 2002
NOTES TO FINANCIAL STATEMENTS (CONCLUDED) (UNAUDITED)
NOTE E: CAPITAL STOCK
During the six months ended June 30, 2002, the Fund purchased 73,000 shares
of capital stock on the open market at a total cost of $759,318. The
weighted average discount of these purchases, comparing the purchase price
to the net asset value at the time of purchase, was 16.72%. These shares
were purchased pursuant to the Fund's Stock Repurchase Plan previously
approved by the Fund's Board of Directors authorizing the Fund to purchase
up to 4,000,000 shares of its capital stock on the open market.
During the year ended December 31, 2001, the Fund purchased 480,000 shares
of capital stock at a total cost of $5,095,214 and at a weighted average
discount of 19.11%.
Subsequent to June 30, 2002, the Fund made additional purchases aggregating
16,000 shares of capital stock in the open market at a total cost of
$160,800. The weighted average discount of these purchases was 20.36%.
On February 1, 2002, the Fund announced a tender offer to be conducted
during the third quarter of 2002 for 10% of the Fund's outstanding shares.
NOTE F: CONCENTRATION OF RISKS
At June 30, 2002, substantially all of the Fund's net assets were invested
in Indian securities. The Indian securities markets are among other things
substantially smaller, less developed, less liquid, subject to less
regulation and more volatile than the securities markets in the United
States. Consequently, and as further discussed above, acquisitions and
dispositions of securities by the Fund involve special risks and
considerations not present with respect to U.S. securities. At June 30,
2002, the Fund has a concentration of its investment in computer and
technology-related industries. The values of such investments may be
affected by changes in such industry sectors.
31
THE INDIA FUND, INC.
RESULTS OF ANNUAL MEETING OF STOCKHOLDERS
The Fund held its Annual Meeting of Stockholders on April 26, 2002. At the
meeting, stockholders elected each of the nominess for Class I Directors
proposed for election to the Fund's Board of Directors. The following table
provides information concerning the matter voted on at the meeting:
I. ELECTION OF DIRECTORS
VOTES NON-VOTING TOTAL
NOMINEE VOTES FOR WITHHELD SHARES VOTING SHARES
------- --------- -------- ---------- -------------
Leslie H. Gelb 20,658,456 472,414 9,537,463 30,668,333
Luis F. Rubio 20,664,516 466,354 9,537,463 30,668,333
Gabriel Seeyave 18,714,614 2,416,256 9,537,463 30,668,333
At June 30, 2002, in addition to Leslie H. Gelb, Luis F. Rubio and Gabriel
Seeyave, the other directors of the Fund were as follows:
Charles F. Barber
Sir Rene Maingard
Bryan McKigney
Jeswald W. Salacuse
Howard M. Singer
ELECTION OF NEW DIRECTOR
Effective July 29, 2002, J. Marc Hardy was appointed to the Board of
Directors as a Class III Director of the Fund and will serve as a nominee
for election as Director by stockholders at the Fund's next annual meeting
of stockholders.
32
THE INDIA FUND, INC.
DIVIDENDS AND DISTRIBUTIONS
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The Fund intends to distribute annually to shareholders substantially all of
its net investment income, and to distribute any net realized capital gains
at least annually. Net investment income for this purpose is income other
than net realized long and short-term capital gains net of expenses.
Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
shareholders whose shares of Common Stock are registered in their own names
will be deemed to have elected to have all distributions automatically
reinvested by the Plan Agent in Fund shares pursuant to the Plan, unless
such shareholders elect to receive distributions in cash. Shareholders who
elect to receive distributions in cash will receive all distributions in
cash paid by check in dollars mailed directly to the shareholder by the
dividend paying agent. In the case of shareholders such as banks, brokers or
nominees, that hold shares for others who are beneficial owners, the Plan
Agent will administer the Plan on the basis of the number of shares
certified from time to time by the shareholders as representing the total
amount registered in such shareholders' names and held for the account of
beneficial owners that have not elected to receive distributions in cash.
Investors that own shares registered in the name of a bank, broker or other
nominee should consult with such nominee as to participation in the Plan
through such nominee, and may be required to have their shares registered in
their own names in order to participate in the Plan.
The Plan Agent serves as agent for the shareholders in administering the
Plan. If the directors of the Fund declare an income dividend or a capital
gains distribution payable either in the Fund's Common Stock or in cash,
nonparticipants in the Plan will receive cash and participants in the Plan
will receive Common Stock, to be issued by the Fund or purchased by the Plan
Agent in the open market, as provided below. If the market price per share
on the valuation date equals or exceeds net asset value per share on that
date, the Fund will issue new shares to participants at net asset value;
provided, however, that if the net asset value is less than 95% of the
market price on valuation date, then such shares will be issued at 95% of
the market price. The valuation date will be the dividend or distribution
payment date or, if that date is not a New York Stock Exchange trading day,
the next preceding trading day. If net asset value exceeds the market price
of Fund shares at such time, or if the Fund should declare an income
dividend or capital gains distribution payable only in cash, the Plan Agent
will, as agent for the participants, buy Fund shares in the open market, on
the New York Stock Exchange or elsewhere, for the participants' accounts on,
or shortly after, the payment date. if, before the Plan Agent has completed
its purchases, the market price exceeds the net asset value of a Fund share,
the average per share purchase price paid by the Plan Agent may exceed the
net asset value of the Fund's shares, resulting in the acquisition of fewer
shares than if the distribution had been paid in shares issued by the Fund
on the dividend payment date.
33
THE INDIA FUND, INC.
DIVIDENDS AND DISTRIBUTIONS (CONTINUED)
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Because of the forgoing difficulty with respect to open market purchases,
the Plan provides that if the Plan Agent is unable to invest the full
dividend amount in open market purchases during the purchase period or if
the market discount shifts to a market premium during the purchase period,
the Plan Agent will cease making open-market purchases and shareholders will
receive the uninvested portion of the dividend amount in newly issued shares
at the close of business on the last purchase date.
Participants have the option of making additional cash payments to the Plan
Agent, annually, in any amount from $100 to $3,000, for investment in the
Fund's Common Stock. The Plan Agent will use all such funds received from
participants to purchase Fund shares in the open market on or about February
15.
Any voluntary cash payment received more than 30 days prior to this date
will be returned by the Plan Agent, and interest will not be paid on any
uninvested cash payment. To avoid unnecessary cash accumulations, and also
to allow ample time for receipt and processing by the Plan Agent, it is
suggested that participants send in voluntary cash payments to be received
by the Plan Agent approximately ten days before an applicable purchase date
specified above. A participant may withdraw a voluntary cash payment by
written notice, if the notice is received by the Plan Agent not less than 48
hours before such payment is to be invested.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in an account, including
information needed by shareholders for personal and tax records. Shares in
the account of each Plan participant will be held by the Plan Agent in the
name of the participant, and each shareholder's proxy will include those
shares purchased pursuant to the Plan.
There is no charge to participants for reinvesting dividends or capital
gains distributions or voluntary cash payments. The Plan Agent's fees for
the reinvestment of dividends and capital gains distributions and voluntary
cash payments will be paid by the Fund. There will be no brokerage charges
with respect to shares issued directly by the Fund as a result of dividends
or capital gains distributions payable either in stock or in cash. However,
each participant will pay a pro rata share of brokerage commissions incurred
with respect to the Plan Agent's open market purchases in connection with
the reinvestment of dividends and capital gains distributions and voluntary
cash payments made by the participant. Brokerage charges for purchasing
small amounts of stock for individual accounts through the Plan are expected
to be less than the usual brokerage charges for such transactions, because
the Plan Agent will be purchasing stock for all participants in blocks and
prorating the lower commissions thus attainable.
34
THE INDIA FUND, INC.
DIVIDENDS AND DISTRIBUTIONS (CONCLUDED)
The receipt of dividends and distributions under the Plan will not relieve
participants of any income tax that may be payable on such dividends or
distributions.
Experience under the Plan may indicate that changes in the Plan are
desirable. Accordingly, the Fund and the Plan Agent reserve the right to
terminate the Plan as applied to any voluntary cash payments made and any
dividend or distribution paid subsequent to notice of the termination sent
to members of the Plan at least 30 days before the record date for such
dividend or distribution. The Plan also may be amended by the Fund or the
Plan Agent, but (except when necessary or appropriate to comply with
applicable law, rules or policies of a regulatory authority) only by at
least 30 days' written notice to participants in the Plan. All
correspondence concerning the Plan should be directed to the Plan Agent at
400 Bellevue Parkway, Wilmington, Delaware 19809.
35
ADVANTAGE ADVISERS, INC.
THE INDIA FUND, INC.
(A WHOLLY OWNED SUBSIDIARY OF CIBC WORLD MARKETS CORP.)
--------------------------------------------------------------------------------
CIBC OPPENHEIMER PRIVACY POLICY
YOUR PRIVACY IS PROTECTED
At CIBC Oppenheimer, the Private Client Division of CIBC World Markets Corp., an
important part of our commitment to you is our respect for your right to
privacy. Protecting all the information we are either required to gather or
which accumulates in the course of doing business with you is a cornerstone of
our relationship with you. While the range of products and services we offer
continues to expand, and the technology we use continues to change, our
commitment to maintaining standards and procedures with respect to security
remains constant.
COLLECTION OF INFORMATION
The primary reason that we collect and maintain information is to more
effectively administer our customer relationship with you. It allows us to
identify, improve and develop products and services that we believe could be of
benefit. It also permits us to provide efficient, accurate and responsive
service, to help protect you from unauthorized use of your information and to
comply with regulatory and other legal requirements. These include those related
to institutional risk control and the resolution of disputes or inquiries.
Various sources are used to collect information about you, including (i)
information you provide to us at the time you establish a relationship, (ii)
information provided in applications, forms or instruction letters completed by
you, (iii) information about your transactions with us or our affiliated
companies, and/or (iv) information we receive through an outside source, such as
a bank or credit bureau. In order to maintain the integrity of client
information, we have procedures in place to update such information, as well as
to delete it when appropriate. We encourage you to communicate such changes
whenever necessary.
DISCLOSURE OF INFORMATION
CIBC Oppenheimer does not disclose any nonpublic, personal information (such as
your name, address or tax identification number) about our clients or former
clients to anyone, except as permitted or required by law. We maintain physical,
electronic and procedural safeguards to protect such information, and limit
access to such information to those employees who require it in order to provide
products or services to you.
The law permits us to share client information with companies within the CIBC
family which provide financial, credit, insurance, trust, legal, accounting and
administrative services to CIBC Oppenheimer or its clients. This allows us to
enhance our relationship with you by providing a broader range of products to
better meet your needs and to protect the assets you may hold with us by
preserving the safety and soundness of our firm.
36
ADVANTAGE ADVISERS, INC.
THE INDIA FUND, INC.
(A WHOLLY OWNED SUBSIDIARY OF CIBC WORLD MARKETS CORP.)
--------------------------------------------------------------------------------
Finally, we are also permitted to disclose nonpublic, personal information to
unaffiliated outside parties who assist us with processing, marketing or
servicing a financial product, transaction or service requested by you,
administering benefits or claims relating to such a transaction, product or
service, and/or providing confirmations, statements, valuations or other records
or information produced on our behalf.
CIBC Oppenheimer is committed to upholding this Privacy Policy. We will notify
you on an annual basis of our policies and practices in this regard and at any
time that there is a material change that would require your consent. If you
have any questions regarding this matter we suggest that you speak with your
Account Executive.
37
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ADVANTAGE ADVISERS, INC.
THE INDIA FUND, INC.
SEMI-ANNUAL REPORT
JUNE 30, 2002
THE INDIA FUND, INC.
THE INDIA FUND, INC.
INVESTMENT MANAGER:
Advantage Advisers, Inc., a
subsidiary of CIBC World
Markets Corp.
ADMINISTRATOR:
CIBC World Markets Corp.
SUB-ADMINISTRATOR:
PFPC Inc.
TRANSFER AGENT:
PFPC Inc.
CUSTODIAN:
Deutsche Bank AG