Annual Financial Report

RNS Number : 2008B

New India Investment Trust PLC

15 June 2016

 

NEW INDIA INVESTMENT TRUST PLC

ANNUAL FINANCIAL REPORT

For the year ended 31 March 2016

FINANCIAL HIGHLIGHTS

Share price total return{A}			Net asset value total return{A}
2016	-11.0%		2016	-6.1%
2015	+56.4%		2015	+46.3%
Benchmark total return{A}
2016	-10.3%
2015	+35.6%
{A}Total return represents capital return plus dividends reinvested

OVERVIEW

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

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

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

Management

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

Financial Calendar

15 June 2016	Announcement of Annual Financial Report for the year ended 31 March 2016
6 September 2016	Annual General Meeting (12.30pm), Bow Bells House, 1 Bread Street, London, EC4M 9HH
November 2016	Announcement of Half-Yearly Financial Report for the six months ending 30 September 2016

CHAIRMAN'S STATEMENT

Dear Shareholder,

For the year ended 31 March 2016, your Company's net asset value decreased by 6.1%, in Sterling terms, to 362.07p per share, while the benchmark MSCI India Index fell by 10.3% in total return terms. The Company's ordinary share price decreased by 11.0% to 313.25p, reflecting a widening of the discount to net asset value from 8.7% to 13.5% as at 31 March 2016. The Company has not been immune from the increased discounts affecting single-country and other global emerging market funds, partly due to lower levels of market liquidity related to uncertainty over the EU referendum on 23 June 2016. Over the five years ended 31 March 2016, the Company's NAV and share price increased by 34.6% and 28.6%, respectively, as compared to a rise of 1.4% in the MSCI India Index (all figures in Sterling terms).

Indian equities declined in the period under review, adversely affected by both volatility in global markets and disappointing domestic events. Stockmarkets around the world endured a couple of severe sell-offs during the year. Declining commodity prices, the generally downcast state of the global economy - China's in particular - and a disconcerting lack of clarity over the intentions of major central banks were the principal reasons for the excessive risk aversion. Domestically, investors were perturbed by instances of periodic regulatory interventions, while the BJP's heavy defeat in a pivotal state election and the increased pressure on the balance sheets of public sector banks ("PSUs") further dampened the mood. Sentiment turned a corner late in the year, with foreign funds moving back into India as the developed world's cycle of monetary easing continued. However, this failed to entirely offset earlier losses.

The positive effect of Prime Minister Modi's election in 2014 began to dissipate through the year, as frustrations grew over the BJP's lack of visible progress on key reforms. The opposition majority in the upper house of parliament proved an impediment to legislative advancement, with both the Land Acquisition Act and the unified Goods and Services ("GST") Bill stalling due to political resistance. However, Mr Modi did make progress where he could, proposing an overhaul of cumbersome bankruptcy laws and liberalising foreign direct investment rules across fifteen sectors, including construction, banking, defence, wholesale, retail and e-commerce.

The BJP's populist budget in 2016 was well received, largely because of the absence of negative surprises. Notably, it promised assistance for farmers and a 20 per cent. boost in infrastructure spending. However, additional outlays would not come at the expense of fiscal prudence: the government reiterated its goal of capping the fiscal deficit at 3.9% of GDP this year and 3.5% in 2017. This was widely commended, as it would allow the Reserve Bank of India ("RBI") to continue with its policy of monetary easing. As it was, the RBI cut rates four times in a bid to generate economic momentum. There were plenty of headwinds: exports contracted, consumer and business spending remained subdued, while industrial production and manufacturing showed few signs of life. Still, India's economic durability was more sustained than most of its emerging market peers. Low commodity prices helped keep inflation and the current account under control, while GDP data put it among the world's fastest-growing major economies.

Continuation of the Company

Your Board considers that the Company's investment objective remains relevant and appropriate and therefore recommends that Shareholders vote in favour of resolution 7 at the Annual General Meeting ("AGM"), to allow the Company to continue as an investment trust until the AGM in 2017.

Manager

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

Annual General Meeting

The AGM, which will be held at Bow Bells House, 1 Bread Street, London EC4M 9HH on Tuesday 6 September 2016 at 12.30pm, provides shareholders with an opportunity to ask any questions that they may have of either the Board or the Manager. I look forward to meeting as many of you as possible over refreshments which will follow the AGM.

Board

Professor Victor Bulmer-Thomas, having served as a Director since February 2004, steps down from the Board at the AGM. Victor was instrumental in the restructuring of the Company in early 2005 which resulted in the current investment objective covering Indian equities. The other Directors should like to place on record their thanks to Victor for his considered counsel and contribution to the Board over the past 12½ years.

An independent search consultancy has been engaged to assist the Board with succession planning and the Directors intend to appoint a new, independent non-executive Board member by the end of 2016.

Structure of the Company

During the year, the Board reviewed the Company's corporate structure and concluded that, in order to minimise future operational and regulatory risk, it was no longer appropriate to retain a Mauritian subsidiary.  Accordingly, towards the end of the financial year, the Company's equity and other securities previously registered to New India Investment Company (Mauritius) Limited were transferred to direct ownership by the Company.

Outlook

While India is more insulated from external events than most of its regional peers, its markets are still affected by global events. Given the largely listless world economy and widespread investor sensitivity to fluctuating commodity prices and central bank rhetoric, further market volatility is likely. Indeed, as the date of this Report, the Company's NAV per share (including income) was 380.04p, which is 4.9% higher than the equivalent figure at 31 March 2016.

Indian companies remain fundamentally sound; however, earnings continue to be affected by sluggish demand. Share prices are unlikely to re-rate significantly until consumption and private investment recover. Nevertheless, the budget's focus on farmers should encourage rural spending, while the boost in funds allocated for infrastructure development bodes well for the materials sector in particular.

Elsewhere, the banking sector remains under considerable stress from the increase in non-performing loans. While this is largely confined to PSUs, which your Company does not hold, the repercussions are more widely felt. To its credit, the RBI has the issue firmly in its sights. Notably, it has taken steps to recapitalise PSUs, while encouraging indebted corporates to manage their obligations more actively. However, there is still some distance to cover to stabilise this sector. Meanwhile, progress on a unified GST remains crucial, both for Mr Modi's credibility and India's economic evolution. Encouragingly, there appears to be growing optimism that political differences will be put aside in a bid to advance the legislative agenda this year. Were this to happen it would augur well both for Indian equities and your Company.

Hasan Askari

Chairman

14 June 2016

STRATEGIC REPORT - OVERVIEW OF STRATEGY

Business Model

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

Investment Objective

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

Investment Policy

The Company (either directly or through its Mauritian subsidiary, New India Investment Company (Mauritius) Limited (the "Subsidiary")) primarily invests in Indian equity securities.

Risk Diversification

Delivering the Investment Policy

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

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

Gearing

The Company is permitted to borrow up to 25% of its net assets (measured when new borrowings are incurred). It is intended that this power should be used to leverage the Company's portfolio in order to enhance returns when and to the extent that it is considered appropriate to do so.

Gearing will be used in relation to specific opportunities or circumstances. The Directors will take care to ensure that borrowing covenants would permit flexibility of investment policy. As at 31 March 2016, the Company had no borrowing facility in place.

Currency and Hedging Policy

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

Investment Restrictions

It is the investment policy of the Company to invest no more than 15% of its gross assets in other listed investment companies (including listed investment trusts). The Company does not have any investments in other listed investment companies as at 31 March 2016.

Benchmark

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

Key Performance Indicator

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

KPI	Description
Performance of the Net Asset Value ("NAV") and share price compared to the MSCI India Index return (Sterling-adjusted)	The Board considers the Company's NAV return and share price return, relative to the MSCI India Index (Sterling-adjusted), to be the best indicator of performance over time. The figures for this year and for the past three and five years are set out in the published Annual Report together with a graph showing NAV total return performance against the MSCI India Index over the past five years.

Principal Risks and Uncertainties

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

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

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

Description	Mitigating Action
Market risk - falls in the prices of securities issued by Indian companies, which may be themselves be determined by local and international economic, political and financial factors and management actions;	The Investment Manager seeks to diversify market risk by investing in a wide variety of companies with strong balance sheets and the earnings power to pay increasing dividends. In addition, investments are made in diversified sectors in order to reduce the risk of a single large exposure; at present the Investment Manager may not invest more than 10% of the Company's net assets in any single stock (measured when the investment is made). The Investment Manager believes that diversification should be looked at in absolute terms rather than relative to the MSCI India Index. The performance of the portfolio relative to the MSCI India Index and the underlying stock weightings in the portfolio against their index weightings are monitored closely by the Board.
Foreign exchange - adverse movements in the exchange rate between Sterling and the Rupee, as well as between other currencies, affecting the overall value of the portfolio;	The Board monitors the Rupee/Sterling exchange rate at each meeting.
Discount - 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 can be traded on the London Stock Exchange;	The Board keeps under review the discount and may consider selective buyback of shares where to do so would be in the best interests of shareholders, balanced against reducing overall size of the Company. Any shares bought back would be either cancelled or held in treasury.
Depositary risk - insolvency of the depositary or custodian or sub-custodian, or a shortfall in the assets held by that depositary, custodian or sub-custodian arising from fraud, operational errors or settlement difficulties resulting in a loss of assets owned by the Company; and	The depositary, BNP Paribas, presents to the Board at least annually on the Company's compliance with AIFMD. The Manager separately monitors the activities of the depositary and reports to the Board on any exceptions arising.
Regulatory risk -  changes in or breaches of the complicated set of statutory, tax and regulatory rules within which the Company seeks to conduct its business.	The Board is responsible for ensuring the Company's compliance with applicable regulations. Monitoring of this compliance, and regular reporting to the Board thereon, has been delegated to the Manager. The Board receives updates from the Manager and AIC briefings concerning industry changes. From time to time, the Company also employs external professionals to advise on any specific areas of compliance. The Company may be liable to Indian short-term capital gains tax of 15% although this is likely to be partly mitigated through the Manager's investment process with its emphasis on buy-and-hold.

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

Promoting the Company

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

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

Board Diversity

The Board recognises the importance of having a range of skilled, experienced individuals with the right knowledge in order to allow the Board to fulfill its obligations.  At 31 March 2016, there were three male Directors and one female Director.

Environmental, Social and Human Rights Issues

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

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

Global Greenhouse Gas Emissions

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

Duration

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

Likely Future Developments

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

Hasan Askari

Chairman

14 June 2016

STRATEGIC REPORT - INVESTMENT MANAGER'S REPORT

Portfolio Overview

The Company's net asset value fell by 6.1% in sterling terms in the 12 months ended 31 March 2016, compared to the benchmark MSCI India Index's 10.3% decline, in total return terms. The relative outperformance was due largely to the resilience across the majority of our holdings.

Our consumer exposure contributed the most to performance. Godrej Consumer Products profited from the steady recovery in fast-moving consumer goods, capturing market share in core segments. The results also underscored the strength of its international business, particularly in Indonesia and Latin America. Another solid performer was Hero Motocorp, as its share price was buoyed by robust profits and expectations that the latest budget would increase rural demand for vehicles. Similarly, these hopes also mitigated auto-parts maker Bosch India's share price decline on profit-taking, following a run-up earlier in the year.

The underweight to health care proved beneficial, as the sector reeled from negative regulatory developments at home and repercussions from the US Food and Drug Administration's (FDA) plant inspections in late 2015. Among our holdings, Piramal Enterprises and Sanofi India did well on the back of decent earnings, but Sun Pharmaceutical and Lupin bore the brunt of stringent US FDA audits. As a result, the underweight to Sun was positive, but the non-benchmark position in Lupin detracted.

Our materials holdings contributed significantly, led by Kansai Nerolac Paints, as falling raw material costs boosted its margins. Cement stocks also outperformed, with the government committing to more infrastructure spending in rural areas and low-cost homes, bolstering demand. Ultratech Cement's share price rallied, indirectly benefiting its parent, Grasim Industries. Grasim's non-cement businesses were also in fine fettle, with improving prices and margins in the viscose fibre segment and a growing market share in caustic soda. Linde India, however, performed below par, as it suffered higher fuel costs as well as lower usage rates and project engineering margins.

While the underweight position to the resilient information technology held back relative performance, this was more than offset by the positive contributions from our individual holdings. Following a protracted period of underwhelming results, Mphasis posted a good quarterly performance in a robust comeback. Recently, its majority shareholder HP agreed to sell up to 60% of Mphasis to private equity investor Blackstone, with the latter also offering to buy another 26% from other investors. We are monitoring developments and plan to contact Blackstone to understand its intentions as a potential majority shareholder. We are also invested in Infosys, a core holding, but our underweight position detracted. The IT services provider delivered better-than-expected results, amid hopes that chief executive Vishal Sikka could engineer a return to its halcyon days.   

Our financial holdings were weak in light of the sector sell-off which was sparked by fears over stressed assets and poor lending practices among state banks. We hold only private-sector lenders, which are in far better shape than their state-owned peers. Our holding HDFC reported consistent loan growth, while asset quality remained stable. Our non-benchmark exposure to Kotak Mahindra Bank was positive, as its share price rose on optimism over its merger with ING Vysya, while the Reserve Bank of India (RBI) gave its blessings to Kotak's foray into general insurance, the only area where it has yet to be present. ICICI Bank, though, was hurt by deterioration in non-performing loans and a spike in provisions, after the RBI's tougher stance on high-risk assets.

Proving most costly for the portfolio was the lack of exposure to the energy sector, largely because we do not hold index heavyweight Reliance Industries. Despite low oil prices, Reliance was buoyed by the expected launch of its telecom venture, Reliance Jio, and a resilient petrochemical business. We maintain our view that we can find higher-quality alternatives with a better emphasis on shareholder value.

Economic News

Amid testing times for emerging markets, India was a bright spot, even overtaking China as the fastest-growing developing economy. This was despite external headwinds and domestic vulnerabilities. China's slowdown and volatility in its currency and equity markets triggered broad market sell-offs in August and January, and deepened concerns over global demand and recovery prospects. Policy divergence between the US and the rest of the developed nations resulted in a strengthening US dollar relative to depreciating emerging-market currencies, including the Indian rupee. Amid the broad commodity slump, a steep drop in the oil price proved advantageous for resource importers, such as India.

Domestically, low oil prices helped support the current account and keep inflation in check. While GDP growth rose to 7.4% in the latest quarter from 7% previously, protracted weakness in external demand hurt exports, outweighing the gains from less costly oil imports. Consumer spending remained subdued despite pockets of strength, such as passenger vehicle sales. Encouragingly, foreign investment flows rose to an all-time high of US$55 billion in the first 11 months of the fiscal year ended March 2016. This was good news, especially when domestic companies continued to put the brakes on capital expenditure because of concerns over debt and excess capacity. There were also signs of improving industrial activity, reflected in higher diesel consumption, cement production and steel demand.

Both Prime Minister Narendra Modi and Reserve Bank of India (RBI) governor Raghuram Rajan appeared single-minded in supporting the economy. Modi aggressively pushed infrastructure spending on roads, railways and the like. Growth in public investments was in double-digits, although the pace of implementation moderated. The recent budget also focused on developing rural areas, where two years of poor monsoons have dampened output. On his end, Rajan loosened monetary policy, cutting interest rates to a five-year low of 6.5%, and unveiled several measures aimed at alleviating the banking system's chronic liquidity squeeze. 

Modi deservedly gained credit for achieving several policy goals, albeit mostly lower-hanging fruit. Higher-profile reforms were a different story altogether. His efforts to pass key bills, such as legislation on land acquisitions and a unified goods and services tax, were thwarted time and again by the opposition-controlled upper house in highly acrimonious parliamentary sessions. All was not lost, however. The government succeeded in loosening curbs on foreign investments across fifteen sectors, including construction, banking and retail. Meanwhile, there was a regulatory blemish on Modi's track record, as he looked to reach the two-year milestone in May 2016. The mid-2015 proposal of a retroactive tax on foreign fund managers and the subsequent back-pedalling following a huge foreign outcry was a stark reminder of the still-unpredictable regulatory backdrop.

Sector Views

Information Technology

As developed markets slow, growth in the software sector has slackened in tandem. Despite this, some companies continue to win contracts in a competitive marketplace and deliver steady cash flows, backed by healthy balance sheets. India's best IT outsourcing companies count among them, given their software engineering expertise, attractive cost structures and professional management. We see such qualities in Infosys and Tata Consultancy Services (TCS), our core positions; they are complemented by smaller holdings, including Mphasis. Both Infosys and TCS released good scorecards for the December quarter, but market reactions contrasted, given that Infosys exceeded expectations for a second quarter, but TCS disappointed for the sixth quarter in a row. 

Energy

For decades, India has largely been remiss in supplying reasonably priced energy and power to its people, with the pace of reform slow and arduous. Recent progress, however, seems more promising. We saw a big step forward when Modi took advantage of the steep correction in oil prices to deregulate diesel, raise natural gas prices and revive direct benefit transfers for liquefied natural gas. 

While we are heartened by the developments, we remain sceptical about the sector. It suffers from cyclical earnings that typify a highly regulated sector, which are compelled to subsidise customers at the expense of profitability. There is still a worrying lack of clarity in how the subsidy burden should be shared. In the recent budget, lower oil and gas subsidies have increased the risk of the burden falling more heavily on state-run upstream companies. That has further vindicated our longstanding view on the sector and avoiding investing in these companies.

We also do not hold Reliance Industries, an index heavyweight, which has a history of expanding aggressively into upstream resource exploration as well as totally unrelated sectors, such as telecommunications and possibly financial services. Such diverse strategies often require extensive capital outlay in areas where it has neither a proven track record nor competitive advantage.

Financials

While the banking sector is competitive and fragmented, it remains attractive because it services an expanding pool of middle- and upper-class consumers. We favour banks that have entrenched deposit franchises and the ability to manage risks through the credit cycle.

Public-sector banks are dominant with a 70% share, and they have been the key casualties of a slowing credit cycle, with an increase in slippages in asset quality and restructuring. Some relief has come from the government, which will inject 250 billion rupees into state-owned banks to cover bad loans.

Meanwhile, the RBI faces a fine balancing act of cleaning up troubled spots in the banking system, while allowing sufficient liquidity to support growth when credit demand strengthens. It has reduced the risk weightings on mortgage assets for local banks and non-banking financial companies, freeing up capital for expansion. Although this move is clearly meant to help capital-constrained public banks, we expect our holdings, HDFC and Gruh Finance, to benefit, too, given that housing mortgages comprise the lion's share of their loan books.

On a less positive note, the RBI has become more prescriptive in requiring banks to write off loans since the December quarter. Implementation, however, was patchy, causing discrepancies among lenders. ICICI Bank was affected, with a spike in its non-performing loans, but our other bank holdings saw minimal impact, as they reported credit growth, maintained healthy asset quality and preserved their net interest margins.

Consumer Discretionary

We like the automotive story in India, as the sector stands to benefit from rising disposable incomes. We especially favour the two-wheeler segment, which is less crowded and, hence, less competitive, with better economies of scale compared to the car segment. Since motorcycles are seen as a necessity rather than a luxury, being more affordable, the segment is more resilient in difficult times compared to four-wheelers.

We are shareholders of Hero Motocorp, which posted impressive third-quarter net gains. Its margins expanded on the back of lower raw material prices and good cost control. In line with management's forecast, motorcycle sales cooled amid subdued demand. Hero also launched two scooter models that were developed in-house, a key test of its engineering capabilities after the split with Japan's Honda. This launch accentuated its efforts to regain lost ground in scooters, the fastest-growing part of the two-wheeler market in recent quarters.

Consumer Staples

We hold both local and multinational brands in the competitive, fast-moving consumer goods landscape. Home-grown brands cater to local tastes and regional preferences, while the multinationals have good brand recognition, particularly among the more aspirational products. We select the best from both worlds - Hindustan Unilever has the widest portfolio of household and personal products; ITC, an associate of British American Tobacco, has a thriving tobacco business; and Godrej Consumer Products is a leader in the personal care, hair, and household segments both locally and in other emerging markets.

It was a mixed performance from our holdings. Godrej reported revenue growth and margin expansion, supported by a conservative cost structure. In contrast, Hindustan Unilever felt the pinch from stiff competition. The company cut prices and boosted spending on marketing promotions, which ate into margins. Rural consumption continued to be soft, reflecting poor monsoons. 

ITC's numbers were also lacklustre, owing to lower cigarette sales and weakness in its other businesses. In the February budget, cigarette tariffs were raised by 10.3% on average, a more manageable hike compared with much higher increases previously. The government appears to be acknowledging that higher tariffs could be counter-productive, forcing smokers to switch to cheaper illegal brands that result in lower revenues collected.

Materials

While the fund has significant exposure to the sector, we do not hold any metals and mining companies, which are subject to regulatory and political risks. These companies are extremely cyclical, tend to be highly leveraged and are often backed by aggressive promoters. To us, the most attractive materials businesses are cement companies. We hold Grasim Industries, the flagship of the Aditya Birla Group, and complement this with its pure cement subsidiary UltraTech Cement, along with Ambuja Cements and ACC, which are owned by Swiss group Holcim. Although demand has stayed fragile, prices have gained traction in some regions. Among our cement holdings, Ultratech and Grasim have more effective cost control and better margins than their multinational counterparts, Ambuja Cement and ACC. They remain well-positioned for an eventual upturn in construction and infrastructure works. Meanwhile, the Ambuja-ACC merger is awaiting approval from the finance ministry.

We are also invested in well-run, financially stable and market-leading multinational subsidiaries, such as paint maker Kansai Nerolac, industrial gases and engineering firm Linde India, and industrial lubricant producer Castrol India.

Healthcare

India has a vibrant healthcare industry, given the operational strength of its pharmaceutical companies and access to a substantial scientific talent pool. Our holdings include a mix of multinational subsidiaries (GlaxoSmithKline Pharmaceuticals and Sanofi India) that channel their products into the domestic market, as well as leading generic-drug makers Lupin and Sun Pharmaceutical, along with a small position in biopharma company Biocon, which with its partner Mylan, has the potential to tap opportunities in global biosimilars, or biologic medical products that are almost identical copies of original products manufactured by a different company.

Sun Pharmaceutical remained focused on integrating Ranbaxy by selling lower-priority Ranbaxy brands. This followed the divestment of two divisions. Sun also acquired a US-based ophthalmic products company, Insite Vision, for US$50 million, as it continued to diversify away from pure generics into more specialised, branded niche areas, with less intense competition.

Industrials

The sector remains dogged by challenges, including a slowdown in industrial activity, infrastructure bottlenecks, regulatory uncertainty and high leverage. Our exposure is limited to ABB India, a manufacturer and distributor of power and automation equipment, and Container Corporation of India (Concor), a rail-freight operator.

Concor saw a muted December quarter, as international volumes stayed weak, while local customers switched to road transportation because of uncompetitive rail tariffs. Although we have yet to see any pick-up in capital equipment investment, our holdings are well positioned for the eventual turning of the cycle.

Utilities

This sector, made up of power and gas utilities, has been hamstrung by shortages of key inputs and regulatory uncertainty. The government has embarked on reform of power distribution companies, given the declining losses at state electricity boards. But more needs to be done with respect to tariff adjustments, the reduction of losses and timely subsidy payments by the states. Such restructuring will attract investments to the sector. 

We are invested in Tata Power, a diversified power generation company that is professionally managed but in a heavily regulated power sector. We continue to monitor this sector for attractive ideas.

Telecommunication Services

The local telecommunications market is one of the most competitive in the world and the larger players (e.g. Bharti Airtel, Reliance Communications, Vodafone and Idea) battle hard for market share. Although the competitive landscape has improved amid industry consolidation following the 2G licence scandal a few years ago, the impending entry of Reliance Jio, which plans to offer cheaper 4G services to capture market share, is expected to unleash a fresh price war. Jio has done a soft launch of its service but repeatedly delayed an official launch, which now seems likely sometime this year.

With an eye on Jio's entry, Bharti Airtel is committed to expanding its 3G and 4G coverage, setting aside up to US$3.4 billion in capital expenditure this year. Both Bharti Airtel and Bharti Infratel are benefiting from robust growth in mobile data traffic, although Bharti Airtel's African business remains sluggish.

Portfolio changes

During the review period, we sold GAIL India, the country's biggest gas distributor, because we were disappointed with its performance amid a difficult operating environment in the face of regulatory uncertainty. Conversely, we initiated a position in Emami, a fast-moving consumer goods company. Founded in 1974 and listed in 1995, the Kolkata-based company has an excellent portfolio of popular consumer brands. Its management includes members of the founding families and has a good track record of investing in the business to build up its brands. We also introduced Jyothy Laboratories, on account of its solid portfolio of household products, potential for nationwide expansion and the ability of its management to follow through on its plans.

We participated in Sun Pharmaceuticals' share placement at an attractive discount and added to holdings that had suffered short-term weakness but remained fundamentally firm, such as ICICI Bank, Infosys and ITC. Conversely, we took profits in Kansai Nerolac Paints and Mphasis following their good run over the year.

Outlook

The Indian market's weak performance seems to indicate that investors are increasingly impatient as they await a turnaround in demand and investment. External headwinds persist, with the economies in China and Europe continuing to struggle. On the domestic front, the recent budget has had little immediate impact on our holdings or the stockmarket. The economy continues to improve, albeit slower than what we would have liked. Private investment remains soft and credit demand muted. However, there are early indications that the cycle might be turning, with industrial production showing signs of life. That said, consumption is more likely to be the key driver of growth, supported by lower rates, energy cost-savings, government wage increases recommended by the 7th Pay Commission, and a possible hike in the minimum support price for wheat. While India still has its fair share of challenges, we believe there is cause for optimism. The RBI has moved beyond its scope of monetary policy and is starting a massive clean-up of banks, structurally strengthening the financial system over the longer term. Fiscal discipline is being enforced, debt levels are not excessive and inflation has been benign.

Given anaemic external demand, the corporate outlook remains subdued. We are confident that our holdings - well-run companies with sound fundamentals - have the wherewithal to withstand the current challenges, in contrast to more highly leveraged peers that are likely to decline. While the stockmarket has sold off quite a bit, valuations remain relatively high compared to other emerging Asian markets, such as China, Indonesia and the Philippines. High valuations can pose a hurdle - while we may like a company, its share price may hamper our plans to buy or, if we are already invested, accumulate a bigger stake. As in recent quarters, we will continue to capitalise on market volatility to add to preferred holdings on price weakness and pare them if their share prices have run up.

Aberdeen Asset Management Asia Limited

Investment Manager

14 June 2016

 

STRATEGIC REPORT - RESULTS

Financial Highlights

	31 March 2016	31 March 2015	% change
Total equity shareholders' funds (net assets)	£213,874,000	£227,708,000	-6.1
Market capitalisation	£185,037,214	£207,926,893	-11.0
Share price (mid market)	313.25p	352.00p	-11.0
Net asset value per share	362.07p	385.49p	-6.1
Discount to net asset value	13.5%	8.7%
Total (loss)/return per share	(23.42p)	121.94p
Revenue loss per share	(1.06p)	(0.39p)
Revenue reserves per share	(0.52p)	0.54p
Prospective gross portfolio yield{A}	1.4%	1.3%
MSCI India portfolio yield{A}	1.7%	1.4%
Prospective portfolio P/E ratio{B}	24.3x	26.2x
Operating costs
Ongoing charges ratio{C}	1.36%	1.40%
{A}         Source - AAMAL (estimated information)/Factset.
{B}         Consensus broker views.
{C}          Ongoing charges ratio is calculated in accordance with recent guidance issued by the AIC as the total of the investment management fee and administrative expenses of the Company and Subsidiary divided by the average cum income net asset value throughout the year.

Performance (total return)

	1 year	3 year	5 year
	% return	% return	% return
Share price	-11.0	+32.2	+28.6
Net asset value per Ordinary share	-6.1	+34.8	+34.7
MSCI India Index (sterling adjusted)	-10.3	+18.2	+1.4

Ten Year Financial Record

Year to 31 March	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016
Total income (£'000){A}	1,212	1,073	1,347	1,335	2,338	2,702	2,414	376	341	374
Per share (p)
Net revenue return	0.04	(0.89)	0.18	(0.63)	0.15	0.61	0.20	(0.36)	(0.39)	(1.06)
Total return	(5.75)	24.85	(41.03)	139.19	31.71	(24.95)	24.75	(5.16)	121.94	(23.42)
	______	______	______	______	______	______	______	______	______	______
Net asset value per share (p)
Basic	152.71	177.52	137.45	275.42	268.90	243.96	268.71	263.55	385.49	362.07
Diluted	141.58	161.18	129.36	239.44	n/a	n/a	n/a	n/a	n/a	n/a
	______	______	______	______	______	______	______	______	______	______
Shareholders' funds (£'000)	73,054	84,968	63,653	129,320	158,842	144,105	158,726	155,680	227,708	213,874
	______	______	______	______	______	______	______	______	______	______
{A}          Reflects consolidated amounts of the Company and its Subsidiary in the years 2007-2013 and for 2014 onwards reflects amounts relating to the Company only following the application of  IFRS 10 'Consolidated Financial Statements' including the Amendments, 'Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)(Investment Entity Amendments).

Investment Portfolio - Ten Largest Investments

As at 31 March 2016

		Valuation	Net assets	Valuation
		2016	2016	2015
Company	Sector	£'000	%	£'000
Infosys
One of the leading information technology companies in India.	Information Technology	17,155	8.0	15,873
Tata Consultancy Services
A major information technology and software service provider.	Information Technology	17,007	8.1	15,956
Housing Development Finance Corporation
Domestic mortgage provider with a leading distribution network, cost structure and balance sheet quality.	Financials	16,128	7.5	20,811
ICICI Bank
Leading commercial bank group with a strong presence in insurance, brokerage and asset management activities.	Financials	11,394	5.3	13,262
ITC
The leading manufacturer and distributor of cigarettes in India. It supplements this by selling other consumer products through its extensive distribution network. An associate of British American Tobacco.	Consumer Staples	10,797	5.1	8,549
Bosch
The listed subsidiary of Bosch in India, it manufactures and supplies automotive components for passenger vehicles and trucks.	Consumer Discretionary	9,379	4.4	12,057
Hero MotoCorp
A former joint venture between Honda of Japan and the local Munjal family, it is the world's largest producer of motorcycles.	Consumer Discretionary	9,079	4.2	7,963
Godrej Consumer Products
A manufacturer of personal care, hair care, household care and fabric care products.	Consumer Staples	8,734	4.1	7,151
Ambuja Cements{A}
A manufacturer of cement and owner of specially designed ships and terminals built for transportation of its goods.	Materials	8,633	4.0	8,737
Grasim Industries{A}
A diversified operating company, part of the Aditya Birla group which manufactures a wide range of products including viscose staple fibre, cement, chemicals and textiles.	Materials	8,334	3.9	6,295
Top ten investments		116,640	54.6
{A} Comprises equity and listed or tradeable ADR and GDR holdings.

Investment Portfolio - Other Investments

As at 31 March 2016

		Valuation	Net assets	Valuation
		2016	2016	2015{A}
Company	Sector	£'000	%	£'000
Hindustan Unilever	Consumer Staples	7,618	3.6	7,795
Kansai Nerolac Paints	Materials	6,478	3.0	6,293
Ultratech Cement{A}	Materials	6,283	2.9	5,038
Piramal Enterprises	Healthcare	6,091	2.8	5,222
Container Corporation of India	Industrials	6,062	2.8	7,912
Kotak Mahindra Bank	Financials	5,879	2.8	2,466
HDFC Bank	Financials	5,618	2.6	6,384
Nestlé India	Consumer Staples	5,471	2.6	7,022
Lupin	Healthcare	5,050	2.4	7,869
Gujarat Gas	Utilities	4,957	2.3	5,885
Top twenty investments		176,147	82.4
MphasiS	Information Technology	4,535	2.1	4,477
ABB India	Industrials	3,702	1.7	3,784
Sanofi India	Healthcare	3,571	1.7	3,395
ACC	Materials	3,388	1.6	3,922
Sun Pharmaceutical Industries	Healthcare	3,257	1.5	1,866
Bharti Airtel	Telecommunication Services	2,860	1.3	4,070
Gruh Finance	Financials	2,858	1.3	2,977
GlaxoSmithKline Pharmaceuticals	Healthcare	2,758	1.3	2,564
Linde India	Materials	2,092	1.0	3,455
Bharti Infratel	Telecommunication Services	1,606	0.8	1,160
Top thirty investments		206,774	96.7
Castrol India	Materials	1,527	0.7	1,995
Tata Power	Utilities	1,516	0.7	1,844
Biocon	Healthcare	1,223	0.6	1,207
Jammu & Kashmir Bank	Financials	630	0.3	2,033
Jyothy Laboratories	Consumer Staples	605	0.3	-
Emami	Consumer Staples	419	0.2	-
Total portfolio investments		212,694	99.5
Other net current assets held in subsidiaries		902	0.4
Total investments		213,596	99.9
Net current assets		278	0.1
Net assets		213,874	100.0
Unless otherwise stated, investments are in common stock. Purchases and/or sales effected during the year will result in 2016 and 2015 values not being directly comparable. Where 2015 valuation is "-" this indicates the company was not held at the previous year-end.
{A}         Comprises equity and listed or tradeable ADR and GDR holdings.

DIRECTORS' REPORT

The Directors present their Report and the audited financial statements of the Company for the year ended 31 March 2016, taking account of any events between the year end and the date of approval of this Report.

Results

The Company's results, including its performance for the year against its Key Performance Indicators ("KPIs"), may be found above. The Company is not declaring a dividend for the year ended 31 March 2016 (2015 - nil).

Investment Trust Status and ISA Compliance

The Company is registered as a public limited company in England & Wales under registration number 02902424 and has been accepted by HM Revenue & Customs as an investment trust for accounting periods beginning on or after 1 April 2012, subject to the Company continuing to meet the eligibility conditions of s1158 of the Corporation Tax Act 2010 (as amended) and S.I. 2011/2099. In the opinion of the Directors, the Company's affairs have been conducted in a manner to satisfy these conditions to enable it to continue to qualify as an investment trust for the year ended 31 March 2016. The Company intends to manage its affairs so that its shares will be qualifying investments for the stocks and shares component of an Individual Savings Account ("ISA").

Capital Structure

There have been no changes to the Company's issued share capital during the year. The issued Ordinary share capital at 31 March 2016, and at the date of approval of this Report, consisted of 59,070,140 Ordinary shares of 25p.

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

Manager and Company Secretary

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

Under the terms of the MA, investment management fees payable to the Manager have been calculated and charged on the following basis throughout the year ended 31 March 2016: a monthly fee, payable in arrears, calculated on an annual rate of 1.0% of total assets less current liabilities, with a rebate to the Company for any fees received in respect of any investments by the Company in investment vehicles managed by the Aberdeen Group. There is no performance fee.

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

The fees payable to Aberdeen Group companies during the year ended 31 March 2016 are disclosed in Notes 3 and 4 to the financial statements. The investment management fees are chargeable 100% to revenue.

Corporate Governance

The Company is committed to high standards of corporate governance. The Board is accountable to the Company's shareholders for good governance and, as required by the Listing Rules of the UK Listing Authority, this statement describes how the Company applies the Main Principles identified in the UK Corporate Governance Code published in September 2014 (the "UK Code") and which first applies to the Company's year ended 31 March 2016. The UK Code is available on the Financial Reporting Council's ("the FRC") website: frc.org.uk.

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

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

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

The UK Code includes provisions relating to:

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

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

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

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

Directors

The Board consists of a non-executive Chairman and three non-executive Directors, all of whom held office throughout the year under review. The Senior Independent Director is Victor Bulmer-Thomas.

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

The Directors attended scheduled Board and Committee meetings during the year ended 31 March 2016 as follows (with their eligibility to attend the relevant meeting in brackets):

Director	Board Meetings	Audit Committee Meetings
H. Askari, Chairman	4 (4)	3 (3)
Professor V. Bulmer-Thomas	4 (4)	3 (3)
S. White	4 (4)	3 (3)
R. Beagles	4 (4)	3 (3)

With effect from the year ended 31 March 2014, the Board has adopted a policy that all Directors will normally retire at each AGM and stand for re-election and, accordingly, all of the Directors will retire at the AGM.

Hasan Askari, Rachel Beagles and Stephen White, being eligible, offer themselves for re-election as Directors of the Company; Victor Bulmer-Thomas has indicated that he will not stand for re-election as a Director. The Board as a whole believes that each Director remains independent of the AIFM and free of any relationship which could materially interfere with the exercise of his or her independent judgement on issues of strategy, performance, resources and standards of conduct and confirms that, following formal performance evaluations, the individuals' performance continues to be effective and demonstrates commitment to the role. The Board therefore has no hesitation in recommending the individual re-elections at the AGM of Hasan Askari, Rachel Beagles and Stephen White as Directors.

All appointments to the Board of Directors are considered by the Board as a whole. The Board's overriding priority in appointing new Directors to the Board is to identify the candidate with the optimal range of skills and experience to complement the existing Directors. The Board also recognises the benefits, and is supportive, of the principle of diversity in its recruitment of new Directors. As described in the Chairman's Statement, the Board has engaged an independent search consultancy to assist the Board in identifying a new Director.

Directors' Insurances and Indemnities

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

Substantial Interests

The Company was aware of the following share interests above 3% in the Company as at 31 March 2016:

Shareholder	Number of shares held	% held
Lazard Asset Management	12,535,066	21.2
Clients of Aberdeen Asset Management	11,469,161	19.4
Clients of Hargreaves Lansdown	3,756,630	6.4
Aberdeen Investment Trusts - ISA and Share plans	2,554,503	4.3
Charles Stanley	1,899,295	3.2
W H Ireland	1,841,738	3.1

The above share interests were unchanged as at the date of approval of this Report other than Lazard Asset Management notifying the Company of a holding of 12,400,022 shares, equivalent to 21.0% of the Company's issued share capital.

Management of Conflicts of Interest and Anti-Bribery Policy

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

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

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

Board Committees

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

Audit Committee

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

Management Engagement Committee

For the year ended 31 March 2016, the Board was responsible for reviewing matters concerning the MA which exists between the Company and AFML.

The terms and conditions of the Manager's appointment, including an evaluation of performance and fees, are reviewed annually and were last considered at the meeting of the Board in March 2016.

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

The Directors considers that the continuing appointment of the Manager, on the terms agreed, to be in the interests of the shareholders because the Aberdeen Group has the investment management, promotional and associated secretarial and administrative skills required for the effective operation of the Company.  The Board also undertakes a review of the management fees in comparison with peers and believes that the Company's current level of management fees is competitive.

With effect from June 2016, the Board has established a Management Engagement Committee, which will assume responsibility for the annual review of the Manager and other service providers to the Company.

Accountability and Audit

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

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

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

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

Going Concern

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

This is also based on the assumption that Ordinary resolution 7, that the Company continues as an investment trust, which will be proposed at the AGM of the Company on 6 September 2016, is passed by shareholders as it has been in the years since it was put in place. The Directors consult annually with major shareholders and, as at the date of approval of this Report, had no reason to believe that this assumption was incorrect.

Viability Statement

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

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

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

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

-       the Company has a reasonably liquid investment portfolio; and

-       the Company has no borrowings.

In particular the Board recognises that this assessment makes the assumption that the resolution to continue the Company, which is put to shareholders at each Annual General Meeting ("AGM"), is passed at the next AGM on 6 September 2016, and at the two subsequent AGMs, as it has been previously. The Company's viability does depend on the Indian economy and its stock markets continuing to function.

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

Stewardship and Proxy Voting

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

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

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

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

Stewardship and Environmental, Social and Corporate Governance

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

Relations with Shareholders

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

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

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

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

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

Annual General Meeting

The AGM will be held on 6 September 2016 and the AGM Notice and related notes may be found in the published Annual Report. Resolutions relating to the following items will be proposed at the AGM:-

Continuance of the Company

In accordance with Article 160 of the Articles of Association of the Company adopted on 22 September 2011, the Directors are required to propose an Ordinary resolution at each AGM of the Company that the Company continue as an investment trust. Accordingly, the Directors are proposing, as Ordinary resolution 7, that the Company continues as an investment trust and recommend that shareholders support the continuance of the Company.

Share Repurchases

At the AGM held on 9 September 2015, shareholders approved the renewal of the authority for the Company to repurchase its Ordinary shares, which was unused at the date of approval of this Report.

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

Special resolution 8 in the Notice of AGM will, if passed, renew the authority to purchase in the market a maximum of 14.99% of shares in issue on 14 June 2016, being the nearest practicable date to the approval of this Report (equivalent to approximately 8.8m Ordinary shares). Such authority will expire on the date of the next AGM in 2017 or on 30 September 2017, whichever is earlier. This means in effect that the authority will have to be renewed at the next AGM or earlier if the authority has been exhausted.

Issue of Shares

Ordinary resolution 9 in the Notice of AGM will, if passed, renew the authority to allot unissued share capital up to an aggregate nominal amount of £738,376 (equivalent to approximately 3.0 million Ordinary shares, or 5% of the Company's existing issued share capital on 14 June 2016, being the nearest practicable date to the approval of this Report). Such authority will expire on the date of the next AGM in 2017 or on 30 September 2017, whichever is earlier, which means that the authority will have to be renewed at the next AGM or, if earlier, if the authority has been exhausted.

When shares are to be allotted for cash, the Companies Act 2006 (the "Act") provides that existing shareholders have pre-emption rights and that the new shares must be offered first to such shareholders in proportion to their existing holding of shares. However, shareholders can, by Special resolution, authorise the Directors to allot shares otherwise than by a pro rata issue to existing shareholders. Special resolution 10 will, if passed, give the Directors power to allot for cash equity securities up to an aggregate nominal amount of £738,376 (equivalent to approximately 2.95 million Ordinary shares, or 5% of the Company's existing issued share capital at 14 June 2016, being the nearest practicable date to the approval of this Report), as if Section 561(1) of the Act did not apply. This is the same nominal amount of share capital which the Directors are seeking the authority to allot pursuant to resolution 9. This authority will expire on the date of the next AGM in 2017 or on 30 September 2017, whichever is earlier, which means that the authority will have to be renewed at the next AGM or, if earlier, if the authority has been exhausted. This authority will not be used in connection with a rights issue by the Company.

The Directors intend to use the authorities given by resolutions 9 and 10 to allot shares, or sell shares from treasury, and disapply pre-emption rights only in circumstances where this will be clearly beneficial to shareholders as a whole. The issue proceeds would be available for investment in line with the Company's investment policy. No issue of shares, or sale of shares from treasury, would be made which would effectively alter the control of the Company without the prior approval of shareholders in general meeting.

Under the Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003 (as amended) (the "Treasury Share Regulations") the Company is permitted to buy back and hold shares in treasury and then sell them at a later date for cash, rather than cancelling them. The Treasury Share Regulations require such sale to be on a pre-emptive, pro rata, basis to existing shareholders unless shareholders agree by Special resolution to disapply such pre-emption rights.  Accordingly, in addition to giving the Directors power to allot unissued Ordinary share capital on a non pre-emptive basis, resolution 10, if passed, will give the Directors authority to sell Ordinary shares from treasury on a non pre-emptive basis. No dividends may be paid on any shares held in treasury and no voting rights will attach to such shares.

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

Recommendation

The Board considers Resolutions 7, 8, 9 and 10 to be in the best interests of the Company and its members as a whole and are likely to promote the success of the Company for the benefit of its members as a whole. Accordingly, the Board unanimously recommends that shareholders should vote in favour of the resolutions to be proposed at the Annual General Meeting, as they intend to do in respect of their own shareholdings, amounting to 48,820 Ordinary shares.

Additional Information

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

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

Hasan Askari

Chairman

14 June 2016

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable United Kingdom law and those International Financial Reporting Standards (''IFRSs'') as adopted by the European Union.

Under Company Law the Directors must not approve the Company's financial statements unless they give a true and fair view of the assets, liabilities, financial position and loss of the Company.

In preparing the Company's financial statements the Directors are required to:

-           select suitable accounting policies in accordance with IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors", and then apply them consistently;

-           present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

-           provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company's financial position and financial performance;

-           state that the Company has complied with IFRS, subject to any material departures disclosed and explained in the financial statements; and

-           make judgments and estimates that are reasonable and prudent.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The maintenance and integrity of the website maintained for the Company is the responsibility of the Directors; the work carried out by the Auditor does not involve consideration of these matters and, accordingly, the Auditor accepts no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Declaration

The Directors, being the persons responsible, hereby confirm to the best of their knowledge:

-           that the financial statements have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and loss of the Company;

-           that in the opinion of the Directors, the Annual Report and financial statements taken as a whole, is fair, balanced and understandable and it provides the information necessary to assess the Company's performance, business model and strategy; and

-           the Strategic Report includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties that the Company faces.

On behalf of the Board

Hasan Askari

Chairman

14 June 2016

 

STATEMENT OF COMPREHENSIVE INCOME

		Year ended			Year ended
		31 March 2016			31 March 2015
		Revenue	Capital		Revenue	Capital
		return	return	Total	return	return	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Income
Income from investments	3	369	-	369	340	-	340
Other income	3	5	-	5	1	-	1
(Losses)/gains on investments held at fair value through profit or loss	9(a)	-	(12,103)	(12,103)	-	72,254	72,254
Currency (losses)/gains		-	(1,107)	(1,107)	-	4	4
		________	_________	________	________	_______	________
		374	(13,210)	(12,836)	341	72,258	72,599
		________	_________	________	________	_______	________
Expenses
Investment management fees	4	(329)	-	(329)	(100)	-	(100)
Other administrative expenses	5	(610)	-	(610)	(471)	-	(471)
		________	_________	________	________	_______	________
(Loss)/profit before finance costs and taxation		(565)	(13,210)	(13,775)	(230)	72,258	72,028
Finance costs		(59)	-	(59)	-	-	-
		________	_________	________	________	_______	________
(Loss)/profit before taxation		(624)	(13,210)	(13,834)	(230)	72,258	72,028
Taxation	6	-	-	-	-	-	-
		________	_________	________	________	_______	________
(Loss)/profit for the year		(624)	(13,210)	(13,834)	(230)	72,258	72,028
		________	_________	________	________	_______	________
(Loss)/return per Ordinary share (pence)	8	(1.06)	(22.36)	(23.42)	(0.39)	122.33	121.94
		________	_________	________	________	_______	________
The Company does not have any income or expense that is not included in "(Loss)/profit for the year", and therefore this represents the "Total comprehensive income for the year", as defined in IAS 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 IFRS. The revenue and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies (see Note 2 to the Financial Statements).
All items in the above statement derive from continuing operations.
The accompanying notes are an integral part of these financial statements.

 

BALANCE SHEET

		As at	As at
		31 March	31 March
		2016	2015
	Notes	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss		212,694	9,082
Subsidiary held at fair value through profit or loss		902	216,616
		_________	________
	9	213,596	225,698
Current assets
Cash at bank		981	2,017
Receivables	10	126	127
		_________	________
Total current assets		1,107	2,144
		_________	________
Current liabilities
Payables	11	(829)	(134)
		_________	________
Total current liabilities		(829)	(134)
		_________	________
Net current assets		278	2,010
		_________	________
Net assets		213,874	227,708
		_________	________
Share capital and reserves
Ordinary share capital	12	14,768	14,768
Share premium account		25,406	25,406
Special reserve		15,778	15,778
Capital redemption reserve		4,484	4,484
Capital reserve	13	153,743	166,953
Revenue reserve		(305)	319
		_________	________
Equity shareholders' funds		213,874	227,708
		_________	________
Net asset value per Ordinary share (pence)	14	362.07	385.49
		_________	________

 

STATEMENT OF CHANGES IN EQUITY

Year ended 31 March 2016
		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 April 2015	14,768	25,406	15,778	4,484	166,953	319	227,708
Net loss on ordinary activities after taxation	-	-	-	-	(13,210)	(624)	(13,834)
	________	_________	________	________	________	_________	________
Balance at 31 March 2016	14,768	25,406	15,778	4,484	153,743	(305)	213,874
	________	_________	________	________	________	_________	________
Year ended 31 March 2015
		Share		Capital
	Share	premium	Special	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 April 2014	14,768	25,406	15,778	4,484	94,695	549	155,680
Net profit/(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
	________	_________	________	________	________	_________	________
The revenue reserve represents the amount of the Company's reserves distributable by way of dividend.

 

CASH FLOW STATEMENT

		Year ended		Year ended
		31 March 2016		31 March 2015
	Notes	£'000	£'000	£'000	£'000
Cash flows from operating activities
Dividend income received			364		164
Interest income received			4		1
Investment management fee paid			(158)		(99)
Other cash expenses			(541)		(403)
			__________		__________
Cash outflow from operations			(331)		(337)
Interest paid			(59)		-
			__________		__________
Net cash outflows from operating activities			(390)		(337)
Cash flows from investing activities
Purchases of investments		(188,282)		-
Sales of investments		188,743		1,996
		__________		__________
Net cash inflow from investing activities			461		1,996
			__________		__________
Net increase in cash and cash equivalents			71		1,659
Cash and cash equivalents of the start of the year			2,017		354
Effect of foreign exchange rate changes			(1,107)		4
			__________		__________
Cash and cash equivalents at the end of the year	2(h),15		981		2,017
			__________		__________
The accompanying notes are an integral part of the financial statements.

Notes to the Financial Statements for the year ended 31 March 2016

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

2.	Accounting policies
	(a)	Basis of preparation
		The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 March 2016.
		The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union, and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB ("IFRIC"). The financial statements have been prepared on a historical-cost basis, except for financial assets and financial liabilities held at fair value through profit or loss.
		The Company's financial statements are presented in Sterling, which is also the functional currency as it is the basis upon which shareholders operate and expenses are generally paid. All values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.
		Where presentational guidance set out in the November 2014 Statement of Recommended Practice ("SORP"): 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued by the Association of Investment Companies ("AIC"), is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.
		Significant judgements
		The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates which requires management to exercise its judgement in the process of applying the accounting policies. One of the key areas for consideration has been the application of IFRS 10 'Consolidated Financial Statements' including the Amendments, 'Investment entities (Amendments to IFRS 10, IFRS 12 and IAS 27) (Investment Entity Amendments). The amendments require entities that meet the definition of an investment entity to fair value certain subsidiaries through profit or loss in accordance with IAS 39 Financial Instruments: Recognition and Measurement, rather than consolidate their results. However, entities which are not themselves investment entities and provide investment related services to the Company will continue to be consolidated.
		Assessment as an investment entity
		Entities which meet the definition of an investment entity are required to fair value subsidiaries through profit or loss rather than consolidate them. To determine whether an entity meets the definition of an investment entity it is required to meet the following three criteria:
		(i)	an entity obtains funds from one or more investors for the purpose of providing those investors with investment services; the Company provides investment services and has several investors who pool funds to gain access to these services and investment opportunities which they might not be able to as individuals.
		(ii)	an entity commits to its investors that its business purpose is to invest funds solely from capital appreciation, investment income, or both; the Company's investment objective is to provide shareholders with long-term capital appreciation by investment in companies which are incorporated in India, or which derive significant revenue or profit from India, with dividend yield from the Company being of secondary importance.
		(iii)	an entity measures and evaluates the performance of substantially all of its investments on a fair value basis; the Company has elected to measure and evaluate the performance of all of its investments on a fair value basis 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 and its Subsidiary meet the definition of an investment entity, and, therefore, all investments are recognised at fair value through profit or loss.
		Standards issued but not yet effective
		At the date of authorisation of these financial statements, the following Standards and Interpretations were effective for annual periods beginning on or after 1 January 2016:
		IFRS 14 - Regulatory Deferral Accounts
		At the date of authorisation of these financial statements, the following Standards and Interpretations were effective for annual periods beginning on or after 1 January 2018:
		IFRS 9 - Financial Instruments (revised, early adoption permitted)
		IFRS 15 - Revenue from Contracts with Customers (early adoption permitted)
		IFRS 16 - Leasing
		The following amendments to Standards are all effective for annual periods beginning on or after 1 January 2016:
		IFRS 10, IFRS 12 and IAS 28 - Investment Entities:  Applying the Consolidation Exception
		IFRS 11 - Accounting for Acquisitions of Interests in Joint Operations
		IAS 1 - Disclosure Initiative
		IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortisation
		IAS 27 - Equity Method in Separate Financial Statements
		The following amendments to Standards are all effective for annual periods beginning on or after 1 January 2017:
		IAS 12 - Recognition of Deferred Tax Assets for Unrealised Assets
		In addition, under the Annual Improvements to IFRSs 2012 - 2014 Cycle, a number of Standards are included for annual periods beginning on or after 1 January 2016.
		The Directors do not anticipate that the adoption of these Amendments in future periods will materially impact the Company's financial results in the period of initial application although there will be revised presentations to the Primary Financial Statements and additional disclosures. The Company intends to adopt the standards in the reporting period when they become effective.
	(b)	Presentation of Statement of Comprehensive Income
		In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of revenue and capital nature has been presented in the Statement of Comprehensive Income.
	(c)	Segmental reporting
		The Board has considered the requirements of IFRS 8 'Operating Segments' and is of the view that the Company is engaged in a single segment business, of investing in Indian quoted equities and that therefore the Company has only a single operating segment. The Board of Directors, as a whole, has been identified as constituting the chief operating decision maker of the Company. The key measure of performance used by the Board to assess the Company's performance is the total return on the Company's net asset value, as calculated under IFRS, and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the financial statements.
	(d)	Income
		Dividends receivable on equity shares are recognised in the Statement of Comprehensive Income on the ex-dividend date, and gross of any applicable withholding tax. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company's right to receive payment is established. Special dividends are credited to capital or revenue, according to their circumstances. Where a company has elected to receive dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised in the Statement of Comprehensive Income. Provision is made for any dividends not expected to be received. Interest receivable from cash and short-term deposits is accrued to the end of the financial year.
	(e)	Expenses and interest payable
		All expenses, with the exception of interest expenses, which would be recognised using the effective interest method, are accounted for on an accruals basis. Expenses are charged to the revenue column of the  Statement of Comprehensive Income except as follows:
		-       expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the  Statement of Comprehensive Income and separately identified and disclosed in note 9 (b); and
		-       expenses are charged to the capital column of the Statement of Comprehensive Income where a connection with the maintenance or enhancement of the value of the investments can be demonstrated.
	(f)	Taxation
		The tax expense represents the sum of the tax currently payable and deferred tax. Tax payable is based on the taxable profit for the year. Taxable profit differs from profit before tax as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Balance Sheet date.
		Deferred tax
		Deferred tax is recognised in respect of all temporary differences at the Balance Sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the Balance Sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise, using tax rates that are expected to apply at the date the deferred tax position is unwound.
	(g)	Investments
		All investments have been designated upon initial recognition at fair value through profit or loss. This is done because all investments are considered to form part of a portfolio of financial assets which is evaluated on a fair value basis, in accordance with the Company's documented investment strategy, and information about the investments is provided internally on that basis. Purchases of investments are recognised on a trade date basis at the value of the consideration payable excluding transaction costs and designated upon initial recognition as held at fair value through profit or loss. Sales of assets are also recognised on a trade date basis. Proceeds are measured at fair value, which is regarded as the proceeds of sale less any transaction costs.
		The fair value of the financial instruments is based on their quoted bid price at the Balance Sheet date, without deduction for any estimated future selling costs. Any unquoted investments would be held at fair value, as measured by the Directors using appropriate valuation methodologies such as earnings multiples, recent transactions and net assets. In the case of the Company's investment in the subsidiary, of which the Company owns 100% of its Ordinary share capital, this has been measured at fair value, which is deemed to be its net asset value.
		Changes in the value of investments (including changes related to movements in foreign exchange) held at fair value through profit or loss and gains and losses on disposal are recognised in the  Statement of Comprehensive Income as "Gains/(losses) on investments at fair value through profit or loss". Also included within this caption are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase.
	(h)	Cash and cash equivalents
		Cash comprises cash in hand and at banks and short-term deposits. Cash equivalents are short-term, highly-liquid investments that are readily convertible to known amounts of cash, and that are subject to an insignificant risk of changes in value.
	(i)	Receivables and payables
		Other receivables and prepayments do not carry any interest and are short-term in nature, and are, accordingly, stated at their recoverable amount. Payables are non-interest bearing and are stated at their payable amount.
	(j)	Dividends payable
		Dividends are recognised from the date on which they are declared and approved by shareholders.
	(k)	Nature and purpose of reserves
		Special reserve
		The special reserve arose following Court approval in 1998 to transfer £30m from the share premium account. This reserve is distributable and its function is to fund any share buy-backs by the Company.
		Capital redemption reserve
		The capital redemption reserve arose when Ordinary shares were redeemed, and subsequently cancelled by the Company, at which point an amount equal to the par value of the Ordinary share capital was transferred from the Ordinary share capital to the capital redemption reserve.
		Capital reserve
		This reserve reflects any gains or losses on investments realised in the period along with any increases and decreases in the fair value of investments held that have been recognised in the Statement of Comprehensive Income.
		Revenue reserve
		This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income. The revenue reserve represents the amount of the Company's reserves distributable by way of dividend.
	(l)	Foreign currency
		Overseas monetary assets and liabilities are converted into Sterling at the rate of exchange ruling at the Balance Sheet date. Transactions during the year involving foreign currencies are converted at the rate of exchange ruling at the transaction date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss and recognised in the Statement of Comprehensive Income.

		Year ended 31 March 2016			Year ended 31 March 2015
		Revenue	Capital	Total	Revenue	Capital	Total
3.	Income	£'000	£'000	£'000	£'000	£'000	£'000
	Income from investments
	Overseas dividends	369	-	369	190	-	190
	Dividend from subsidiary	-	-	-	150	-	150
		_______	_______	_______	_______	________	_______
		369	-	369	340	-	340
		_______	_______	_______	_______	________	_______
	Other operating income
	Deposit interest	5	-	5	1	-	1
		_______	_______	_______	_______	________	_______
		374	-	374	341	-	341
		_______	_______	_______	_______	________	_______

		Year ended 31 March 2016			Year ended 31 March 2015
		Revenue	Capital	Total	Revenue	Capital	Total
4.	Investment management fees	£'000	£'000	£'000	£'000	£'000	£'000
	Investment management fees	329	-	329	100	-	100
		_______	_______	_______	_______	_______	_______
	For the year ended 31 March 2016 (2015 - same) management and secretarial services were provided by Aberdeen Fund Managers Limited ("AFML").
	During the year, the management fee was payable monthly in arrears and was based on an annual amount of 1% of the total assets of the Company less current liabilities, excluding the fair value of the subsidiary, New India Investment Company (Mauritius) Limited, valued monthly. The management agreement is terminable by either the Company or AFML on 12 months' notice. The amount payable in respect of the Company for the year was £329,000 (2015 - £100,000) and the balance due to AFML at the year end was £181,000 (2015 - £9,000).  All investment management fees are charged 100% to the revenue column of the Statement of Comprehensive Income.
	New India Investment Company (Mauritius) Limited also has an agreement with AFML to receive management services based on an annual amount of 1% of its net asset value. The amount payable during the year was £1,743,000 (2015 - £1,840,000) which was expensed through its own profit and loss account. The balance due to AAMAL at the year end was £1,000 (2015 -£184,000).
	Accordingly, the aggregate amount payable in respect of management services provided to the Company and its Subsidiary for the year was £2,072,000 (2015 - £1,940,000) and the balance due to AAMAL at the year end was £182,000 (2015 - £193,000).

		Year ended	Year ended
		31 March 2016	31 March 2015
5.	Other administrative expenses - revenue	£'000	£'000
	Directors' fees	110	116
	Promotional activities	142	122
	Auditor's remuneration:
	fees payable to the Company's auditor for the audit of the Company's annual accounts	27	27
	for other services relating to taxation provided to the Group	33	5
	Legal and advisory fees	82	68
	Custodian and overseas agents' charges	77	44
	Other	139	89
		_______	_______
		610	471
		_______	_______
	During the year under review, £33,000 (2015 - £5,000) was paid to the external auditor for other services relating to taxation and the Company's restructure; the majority of these fees consist of tax advice provided by EY in relation to the Company's restructure and the repurchase of warrants by the Subsidiary from the Company. EY also advised the Company at the time of its restructuring in November 2004 when the Mauritian Subsidiary was created. The amounts disclosed above for Auditor's remuneration are all shown net of VAT.
	The Company has an agreement with Aberdeen Asset Management PLC ('AAM PLC') for the provision of promotional activities in relation to the Company's participation in the Aberdeen Investment Trust Share Plan and ISA. The total fees paid and payable under the agreement during the year were £142,000 (2015 - £122,000) and £35,000 (2015 - £35,000) was due to AAM PLC at the year end.

		Year ended 31 March 2016						Year ended 31 March 2015
		Revenue		Capital		Total		Revenue	Capital	Total
6.	Tax on ordinary activities	£'000		£'000		£'000		£'000	£'000	£'000
	Current tax:
	Overseas taxation	-		-		-		-	-	-
		_______		_______		_______		_______	________	_______
	Factors affecting the tax charge for the year
	The tax charged for the year can be reconciled to the (loss)/profit per the Statement of Comprehensive Income as follows:
		Year ended 31 March 2016						Year ended 31 March 2015
		Revenue	Capital		Total		Revenue		Capital	Total
		£'000	£'000		£'000		£'000		£'000	£'000
	(Loss)/profit before tax	(624)	(13,210)		(13,834)		(230)		72,258	72,028
		_______	_______		_______		_______		________	_______
	Corporation tax on (loss)/profit at the standard rate of 20% (2015 - 21%)	(125)	(2,642)		(2,767)		(48)		15,174	15,126
	Effects of:
	Income taxable in different years	(1)	-		(1)		-		-	-
	Expenses not deductible for tax purposes	7	-		7		-		-	-
	Losses/(gains) on investments held at fair value through profit or loss not taxable (see note below)	-	2,421		2,421		-		(15,173)	(15,173)
	Currency losses/(gains) not taxable	-	221		221		-		(1)	(1)
	Movement in excess expenses	192	-		192		119		-	119
	Non-taxable dividend income	(73)	-		(73)		(71)		-	(71)
		_______	_______		_______		_______		________	_______
	Total tax charge	-	-		-		-		-	-
		_______	_______		_______		_______		________	_______
	The Company has excess expenses of £4,659,000 (2015 - £3,702,000) carried forward. This sum has arisen due to cumulative deductible expenses having exceeded taxable income over the life of the Company. It is considered too uncertain that there will be sufficient taxable profits against which these expenses can be offset and, therefore, in accordance with IAS 12, a deferred tax asset of £839,000 (2015 - £740,000) has not been recognised, based on the deferred tax rate of 18% (2015 - 20%). Any excess management expenses will be utilised against any taxable income that may arise in the future.
	The Company is exempt from corporation tax on capital gains provided it obtains agreement from HM Revenue & Customs that the tests within Section 1158 and 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 in the Subsidiary.

7.	Dividends on equity shares
	No final dividend is being proposed for the year ended 31 March 2016 (2015 - £nil).

		Year ended			Year ended
		31 March 2016			31 March 2015
8.	(Loss)/return per Ordinary share	Revenue	Capital	Total	Revenue	Capital	Total
	Net (loss)/profit (£'000)	(624)	(13,210)	(13,834)	(230)	72,258	72,028
	Weighted average number of Ordinary shares in issue			59,070,140			59,070,140
	(Loss)/return per Ordinary share (pence)	(1.06)	(22.36)	(23.42)	(0.39)	122.33	121.94
		_______	_______	_______	_______	________	_______

9.	Investments held at fair value through profit or loss
			Year ended 31 March 2016			Year ended 31 March 2015
			Investments			Investments
			In subsidiary	Parent	Total	In subsidiary	Parent		Total
	(a)	Company	£'000	£'000	£'000	£'000	£'000		£'000
		Opening book cost	50,150	5,040	55,190	50,150	6,717		56,867
		Opening investment holdings fair value gains	166,466	4,042	170,508	96,712	1,861		98,573
			_______	_______	_______	_______	________		_______
		Opening valuation	216,616	9,082	225,698	146,862	8,578		155,440
		Movements in the year:
		Purchases	-	188,759	188,759	-	-		-
		Sales - proceeds	(186,607)	(2,151)	(188,758)	-	(1,996)		(1,996)
		Sales - realised net gains	156,952	385	157,337	-	319		319
		(Decrease)/increase in investment holdings fair value gains	(186,059)	16,619	(169,440)	69,754	2,181		71,935
			_______	_______	_______	_______	________		_______
		Closing valuation	902	212,694	213,596	216,616	9,082		225,698
			_______	_______	_______	_______	________		_______
			Year ended 31 March 2016			Year ended 31 March 2015
			Investments			Investments
			In subsidiary	Parent	Total	In subsidiary	Parent		Total
			£'000	£'000	£'000	£'000	£'000		£'000
		Closing book cost	20,495	192,033	212,528	50,150	5,040		55,190
		Closing investment holdings fair value gains	(19,593)	20,661	1,068	166,466	4,042		170,508
			_______	_______	_______	_______	________		_______
		Closing valuation	902	212,694	213,596	216,616	9,082		225,698
			_______	_______	_______	_______	________		_______
							As at		As at
							31 March 2016		31 March 2015
		(Losses)/gains on investments					£'000		£'000
		Realised gains on sales of investments					157,337		319
		(Decrease)/increase in investment holdings fair value gains					(169,440)		71,935
							(12,103)		72,254
		As at 31 March 2016, all of the overseas investments held are in listed stocks (2015 - same).
		The Company owns 100% of the Ordinary share capital of its subsidiary, New India Investment Company (Mauritius) Limited, an investment holding company registered in Mauritius.
	(b)	Transaction costs
		During the year, expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through the capital column of the Statement of Comprehensive Income, and are included within (losses)/gains on investments at fair value through profit or loss in the Statement of Comprehensive Income. The total costs were as follows:
						Year ended		Year ended
						31 March 2016		31 March 2015
						£'000		£'000
		Purchases				229		-
		Sales				-		1
						_______		_______
						229		1
						_______		_______

		2016	2015
10.	Receivables	£'000	£'000
	Amounts due from brokers	15	-
	Prepayments and accrued income	111	127
		_______	_______
		126	127
		_______	_______
	None of the above amounts are past their due date or impaired (2015 - nil).

		2016	2015
11.	Payables	£'000	£'000
	Amounts due to brokers	476	-
	Other payables	353	134
		_______	_______
		829	134
		_______	_______

		2016		2015
12.	Ordinary share capital	Number	£'000	Number	£'000
	Issued and fully paid
	Ordinary shares of 25p each	59,070,140	14,768	59,070,140	14,768
		_______	_______	_______	_______
	The Ordinary shares give shareholders voting rights, the entitlement to all of the capital growth in the Company's assets, and to all the income from the Company that is resolved to be distributed.
	Ownership of Subsidiaries
	At the year end, the Company's wholly-owned Subsidiary, New India Investment Company (Mauritius) Limited ('the Subsidiary') had share capital of 4,275,000 (2015 - 4,275,000) Redeemable Participating Preference shares of £0.10 each ('Preference shares') and 50 Management shares of £1 each. The Company holds 100% of the share capital of the Subsidiary.
	In January 2005 the Subsidiary issued a Warrant instrument to the Company for a consideration of £32,270,000 giving the Company the right to purchase up to 38,350,900 Preference shares, at an exercise price per share of £20 per share ('the 2015 Warrant'). The 2015 Warrant was subsequently extended and is exercisable until 26 August 2020.
	In August 2010, the Subsidiary issued a further Warrant instrument to the Company for a consideration of £9,000,000, giving the Company the right to purchase up to 1,321,417 Preference shares, at an exercise price per share of £40 per share ('the 2020 Warrant'). The 2020 Warrant is exercisable for 10 years to 26 August 2020.
	Following the above, there are two separate Warrants issued by the Subsidiary. The Subsidiary has the right to repurchase both Warrants in part or in whole at any time for a consideration to be determined in the market at the time by an independent valuer.
	The Company also incorporated a wholly-owned subsidiary, registered in Singapore, on 27 November 2013 which is considered by the Directors to be dormant as at the year end (2015 - dormant).
	Partial repurchase of Subsidiary Warrant
	On 15 May 2008, the Subsidiary repurchased part of the 2015 Warrant, in relation to 405,900 Preference shares, at a valuation based on the subscription price of £20. In aggregate, proceeds of £3,004,000 were received by the Company in the form of a partial capital redemption. These proceeds were credited to the capital reserve of the Company.
	During February and March 2016, the Subsidiary repurchased a further part of the 2015 Warrant, in relation to 30,381,195 Preference shares, at a valuation based on the subscription price of £20. In aggregate, proceeds of £186,607,000 were received by the Company in the form of a partial capital redemption. These proceeds were also credited to the capital reserve of the Company.
	At the year end there were then two (2015 - two) Warrants in issue carrying the right for the Company to subscribe for 7,563,805 (2015 - 37,945,000) and 1,321,417 (2015 - 1,321,417) new Preference shares of 10p in the Subsidiary at £20 and £40 per share respectively.

		2016	2015
13.	Capital reserves	£'000	£'000
	At 1 April 2015	166,953	94,695
	Currency (losses)/gains	(1,107)	4
	Movement in investment holdings fair value gains	(169,440)	71,935
	Gains on sales of investments	157,337	319
		_______	_______
	At 31 March 2016	153,743	166,953
		_______	_______
	The capital reserve includes gains of £1,068,000 (2015 - gains of £170,508,000) which relate to the revaluation of investments held at the reporting date.

14.	Net asset value per Ordinary share
	The net asset value per Ordinary share is based on a net asset value of £213,874,000 (2015 - £227,708,000) and on 59,070,140 (2015 - 59,070,140) Ordinary shares, being the number of Ordinary shares in issue at the year end.

15.

Financial instruments

Risk Management

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

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

Risk management framework

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

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

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

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

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

Risk management

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

(i)

Market risk

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

Interest rate risk

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

Management of the risk

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

Financial assets

The interest rate risk profile of the Company's financial assets, excluding equity shares and short-term debtors which are non-interest bearing, as at 31 March 2016 and 31 March 2015 was as follows:

Total

(per Balance Sheet)

Floating rate

2016

2015

2016

2015

Type

£'000

£'000

£'000

£'000

Cash at bank - Sterling

981

2,017

981

2,017

_______

_______

_______

_______

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

Financial liabilities

The Company had no financial liabilities as at 31 March 2016 and 31 March 2015 which were exposed to interest rate risk.

Interest rate sensitivity

Movements in interest rates would not significantly affect net assets and total profit attributable to the Company's shareholders (2015 - same).

Foreign currency risk

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

Management of the risk

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

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

Foreign currency exposure by currency of denomination:

31 March 2016

31 March 2015

Net

Total

Net

Total

Overseas

monetary

currency

Overseas

monetary

currency

investments

assets

exposure

investments{A}

assets

exposure

£'000

£'000

£'000

£'000

£'000

£'000

US Dollar

9,565

-

9,565

9,082

-

9,082

Indian Rupee

204,031

-

204,031

216,616

-

216,616

_______

_______

_______

_______

________

_______

213,596

-

213,596

225,698

-

225,698

_______

_______

_______

_______

________

_______

{A} Investments held by the Company's Subsidiary are reported on a look-through basis. At 31 March 2016, the exchange rate of the Indian Rupee against the reporting currency Sterling was £1: INR 95.1816 compared with an exchange rate of £1: INR 92.902 at 31 March 2015. Based on continuing to hold the same investments in the same quantities from 1 April 2015 to 31 March 2016, all other things being equal, the impact of the exchange rate movement over the year would be to decrease the value of the investments by £5,188,000 (2015 - increase by £10,535,000).

At 31 March 2016, the exchange rate of the US Dollar against the reporting currency Sterling was £1: US$1.4373 compared with an exchange rate of £1: US$1.4845 at 31 March 2015. Based on continuing to hold the same investments in the same quantities from 1 April 2015 to 31 March 2016, all other things being equal, the impact of the exchange rate movement over the year would be to increase the value of the investments by £298,000 (2015 - increase by £1,056,000).

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

Foreign currency sensitivity

There is no sensitivity analysis included as the Company's significant foreign currency financial instruments are in the form of equity investments. The exposure to market risk, from movements in the value of equity investments has been included within the other price risk sensitivity analysis so as to show the overall level of exposure.

Price risk

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

Management of the risk

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

Price risk sensitivity

If market prices at the Balance Sheet date had been 15% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders for the year ended 31 March 2016 would have increased /(decreased) by £32,039,000 (2015 - increased/(decreased) by £33,855,000) and capital reserves would have increased /(decreased) by the same amount.

(ii)

Liquidity risk

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

Management of the risk

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

(iii)

Credit risk

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

Management of the risk

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

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

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

None of the Company's financial assets are secured by collateral or other credit enhancements (2015: same).

Credit risk exposure

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

2016

2015

Balance

Maximum

Balance

Maximum

Sheet

exposure

Sheet

exposure

£'000

£'000

£'000

£'000

Non-current assets

Investments designated at fair value through profit or loss

213,596

-

225,698

-

Current assets{A}

Cash at bank

981

981

2,017

2,017

_______

_______

_______

_______

214,577

981

227,715

2,017

_______

_______

_______

_______

{A} Excluding short-term debtors.

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

None of the Company's financial assets are past due or impaired (2015 - same).

Fair values of financial assets and financial liabilities

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

16.	Capital management policies and procedures
	The Company's capital management objectives are:
	-       to ensure that the Company will be able to continue as a going concern; and
	-       to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt. The policy is that debt should not exceed 25% of net assets.
		2016	2015
		£'000	£'000
	Debt	-	-
		_______	_______
	Equity
	Equity share capital	14,768	14,768
	Retained earnings and other reserves	199,106	212,940
		_______	_______
		213,874	227,708
		_______	_______
	Debt as a % of net assets	0.0%	0.0%
		_______	_______
	The Board, with the assistance of the Manager monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes:
	-       the planned level of gearing, which takes account of the Manager's views on the market;
	-       the need to buy back equity shares for cancellation, which takes account of the difference between the net asset value per share and the share price (ie the level of share price discount or premium);
	-       the need for new issues of equity shares; and
	-       the extent to which revenue in excess of that which is required to be distributed should be retained.
	The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.
	The Company had no loan gearing at the year end (2015 - nil).

17.	Fair value hierarchy
	IFRS 13 'Fair Value Measurement' requires an entity to classify fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used in making measurements. The fair value hierarchy has the following levels:
	Level 1: quoted (unadjusted) market prices in active markets for identical assets or liabilities;
	Level 2: valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and
	Level 3: valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
	The financial assets and liabilities measured at fair value in the Balance Sheet are grouped into the fair value hierarchy at the Balance Sheet date are as follows:
	Company
	As at 31 March 2016			Level 1	Level 2	Level 3	Total
			Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities		a)	212,694	-	-	212,694
	Investment in Subsidiary		b)	-	902	-	902
				_______	_______	_______	_______
	Net fair value			212,694	902	-	213,596
				_______	_______	_______	_______
				Level 1	Level 2	Level 3	Total
	As at 31 March 2015		Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities		a)	9,082	-	-	9,082
	Investment in Subsidiary		b)	-	216,616	-	216,616
				_______	_______	_______	_______
	Net fair value			9,082	216,616	-	225,698
				_______	_______	_______	_______
	a)	Quoted equities
		The fair value of the Group's investments in quoted equities has been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges.
	b)	Investment in Subsidiary
		The Company's investment in its Subsidiary is categorised in Fair Value Level 2 as its fair value has been determined by reference to the Subsidiary company's net asset value at the reporting date. The net asset value is predominantly made up of cash and receivables.

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

19.	Related party transactions
	Fees payable during the year to the Directors and their interests in shares of the Company are disclosed within the Directors' Remuneration Report in the published Annual Report.
	The Company has an agreement with Aberdeen Fund Managers Limited for the provision of management, secretarial, accounting and administration services and for the carrying out of promotional activities in relation to the Company. Details of transactions during the year and balances outstanding at the year end disclosed in notes 3 and 4.

This Annual Financial Report announcement is not the Company's statutory accounts. The above results for the year ended 31 March 2016 are an abridged version of the Company's full accounts. The 2016 and 2015 statutory accounts received unqualified reports from the Company's Auditor and did not include any reference to matters to which the Auditor drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s.498 of the Companies Act 2006. The financial information for 2015 is derived from the statutory accounts for 2015 which have been delivered to the Registrar of Companies. The 2016 statutory accounts will be filed with the Registrar of Companies in due course.

The Annual Report will be posted to shareholders in June 2016. Further copies may be obtained from the registered office, Bow Bells House, 1 Bread Street, London EC4M 9HH or from the Company's website at newindia-trust.co.uk.

The Annual General Meeting will be held at Bow Bells House, 1 Bread Street, London EC4M 9HH at 12.30 p.m. on 6 September 2016.

By Order of the Board Aberdeen Asset Management PLC Secretaries 14 June 2016

 

END

 

 

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