UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-22156
Millennium India Acquisition Company Inc.
(Exact name of registrant as specified in charter)
330 East 38th Street, Suite 27B, New York, NY 10016
(Address of principal executive offices) (Zip code)
Gemini Fund Services, LLC, 80 Arkay Drive, Suite 100, Hauppauge, NY 11788
(Name and address of agent for service)
Registrant's telephone number, including area code: 917 640-2151
Date of fiscal year end: 12/31
Date of reporting period: 12/31/2012
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
Millennium India Acquisition Company Inc.
Annual Report
December 31, 2012
Dear Shareholder:
This year remained challenging for governments, businesses and consumers around the world. Economic growth around the world slowed down. In the US and Europe, unemployment remained high and significant levels of deficits including the possibility of a fiscal cliff in the US and a sovereign debt crisis in Europe led to uncertainty in the financial markets and investors largely remaining cautious. Further, with the US presidential elections which took place towards the end of the year, there remained uncertainty around the direction of government policies, including tax and spending reform.
The Indian economy also slowed down, with a GDP growth of about 5-6% in 2012, less than the growth levels of 8-9% seen in recent years. In the first half of the year, market sentiment in India was mainly negative due to global uncertainty, as well as lack of strong reform initiatives by the Indian government. Towards the end of the year, the Indian government better demonstrated its economic reform credentials, and passed significant reforms in the retail and aviation sectors, along with changes in the leadership of the Union Cabinet including the Finance Ministry. This led to improved investor confidence, and markets in India rallied and foreign institutional investments into India grew.
Despite this volatility, SMC Global (SMC) maintained a steady position this year. SMC continued with the overall growth strategy, making planned investments into the business, consolidating operations, and strengthening its retail footprint across India. SMC has built one of the largest retail financial services platforms in India, with over 2,500 locations in 500 cities in India.
For three years in a row, SMC has received numerous prestigious awards recognizing its business excellence:
2012:
·
Indias Best Equity Broking House (awarded by Dun & Bradstreet and Bombay Stock Exchange)
·
Indias Best Derivatives Broker (awarded by Dun & Bradstreet and Bombay Stock Exchange)
·
Indias Best Currency Broker (awarded by Bloomberg UTV)
·
Broking House with the Largest Distribution Network in India (awarded by Dun & Bradstreet and Bombay Stock Exchange)
2011:
·
Indias Best Currency Broker (awarded by Bloomberg UTV)
·
Best Wealth Management Company in India (awarded by Business Sphere)
·
Broking House with the Largest Distribution Network in India (awarded by Dun & Bradstreet and Bombay Stock Exchange)
2010:
·
Indias Best Equity Broking House (awarded by Dun & Bradstreet and Bombay Stock Exchange)
·
Broking House with the Largest Distribution Network in India (awarded by Dun & Bradstreet and Bombay Stock Exchange)
These coveted awards testify to the quality, strength and scale of the SMC franchise, built by its experienced management team. Today, SMC has become a reliable and trustworthy financial brand in India, providing diverse financial products and services to over 720,000 customers.
We believe India remains an attractive long-term investment destination:
·
Large base: over 1.1 billion people, with about half the population under 25 years of age.
·
Strong domestic demand: Indias GDP is mainly driven off domestic consumption, with exports comprising a lesser portion of GDP (versus countries like China).
·
Solid fundamentals: highly regulated banking system and high domestic savings rates.
Millennium India Acquisition Company Inc. | |||||
PORTFOLIO OF INVESTMENTS | |||||
December 31, 2012 | |||||
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Security |
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| Shares |
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Fair Value |
PRIVATE PLACEMENT - 105.2% |
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SMC Global Securities LTD (a)* |
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(Cost $46,684,823) |
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| 1,586,738 |
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$ 23,547,391 |
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TOTAL INVESTMENTS (Cost $46,684,823) (b) - 105.2% |
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23,547,391 | |||
Liabilities less other assets - (5.2)% |
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(1,167,511) | |
NET ASSETS - 100.00% |
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$ 22,379,880 |
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*Non-income producing security. | |||||
(a) Security restricted as to resale. | |||||
(b) Represents cost for financial reporting purposes. Aggregate cost for federal tax purposes is $46,684,823 and differs | |||||
from market value and net unrealized appreciation (depreciation) of securities as follows: | |||||
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Unrealized appreciation: |
$ - | ||||
Unrealized depreciation: |
(23,137,432) | ||||
Net unrealized depreciation: |
$ (23,137,432) |
See accompanying notes which are an integral part of these financial statements.
Millennium India Acquisition Company Inc. | |||
STATEMENT OF ASSETS AND LIABILITIES | |||
December 31, 2012 | |||
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Assets: |
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Investments, at cost |
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$ 46,684,823 | |
Investments in securities, at fair value |
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$ 23,547,391 | |
Cash |
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813,137 | |
Prepaid expenses and other assets |
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2,698 | |
| Total Assets |
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24,363,226 |
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Liabilities: |
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Deferred officer fees |
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1,000,000 | |
Deferred revenue |
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375,000 | |
Accrued expenses and other liabilities |
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608,346 | |
| Total Liabilities |
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1,983,346 |
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Net Assets |
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$ 22,379,880 | |
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Preferred shares; par value $0.0001 per share, 5,000 shares authorized, no shares issued |
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$ - | |
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Net Assets: |
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Common Stock; par value $0.0001 per share, 45,000,000 shares authorized, |
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8,219,875 issued and outstanding |
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822 | |
Paid-in capital |
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51,057,989 | |
Accumulated net investment loss |
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(5,539,710) | |
Accumulated net realized loss on investments |
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(1,789) | |
Net unrealized depreciation on investments |
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(23,137,432) | |
Net Assets |
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$ 22,379,880 | |
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Net Asset Value Per Share: |
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| Net Assets |
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$ 22,379,880 |
| Basic and diluted shares of common stock outstanding |
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8,219,875 |
| Net asset value (Net Assets/Shares of Common Stock Outstanding) |
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$ 2.72 |
See accompanying notes which are an integral part of these financial statements.
Millennium India Acquisition Company Inc. | |||
STATEMENT OF OPERATIONS | |||
For the Year Ended December 31, 2012 | |||
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Investment Income: |
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Total Other Income |
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$ 665,457 |
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Operating Expenses: |
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Officer fees (see Note 2) |
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500,000 | |
Administration fees |
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65,146 | |
Insurance expense |
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27,447 | |
Audit fees |
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21,086 | |
Transfer agent and listing fees |
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11,751 | |
Directors' fees |
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11,557 | |
Printing expense |
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7,525 | |
Custodian fees |
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2,902 | |
Other expenses: |
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| |
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Franchise Tax (Delaware) |
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50,797 |
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Rent and Office |
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53,700 |
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Out of Pocket |
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22,474 |
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Business Travel |
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20,703 |
Miscellaneous expenses |
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23,115 | |
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Total Operating Expenses |
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818,203 |
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Net Operating Expenses |
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818,203 |
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Net Investment Loss |
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(152,746) | |
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Net change in unrealized appreciation from investments |
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852,766 | |
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Net Unrealized Gain on Investments |
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852,766 |
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Net Increase in Net Assets Resulting From Operations |
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$ 700,020 |
See accompanying notes which are an integral part of these financial statements.
Millennium India Acquisition Company Inc. | |||||
STATEMENTS OF CHANGES IN NET ASSETS | |||||
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Year Ended |
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Year Ended |
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December 31, |
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December 31, |
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2012 |
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2011 |
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Operations: |
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Net investment loss |
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$ (152,746) |
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$ (404,673) | |
Net change in unrealized appreciation (depreciation) on investments |
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852,766 |
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(2,776,664) | |
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Net increase (decrease) in net assets resulting from operations |
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700,020 |
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(3,181,337) | |
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Net Assets: |
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| Beginning of year |
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21,679,860 |
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24,861,197 |
| End of year* |
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$ 22,379,880 |
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$ 21,679,860 |
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| * Includes accumulated net investment loss at end of period |
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$ (152,746) |
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$ (404,673) |
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Share Transactions: |
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| Reclassification of common stock to permanent equity |
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- |
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- |
| Shares redeemed |
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- |
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- |
| Increase (decrease) |
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- |
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- |
See accompanying notes which are an integral part of these financial statements.
Millennium India Acquisition Company Inc. | ||||
STATEMENT OF CASH FLOWS | ||||
For the Year ended December 31, 2012 | ||||
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CASH FLOWS FROM OPERATING ACTIVITIES |
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| Net increase in net assets from operations |
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$ 700,020 |
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| Unrealized increase in fair market value of investments |
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(852,766) |
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| Adjustments to reconcile net increase in net assets from operations |
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| to net cash used in operating activities: |
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| Changes in operating Assets and Liabilities: |
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| Deferred revenue |
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(158,333) |
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| Deferred officer fees |
|
100,000 |
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| Increase in accrued expenses and other liabilities |
|
12,542 |
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| Increase in prepaid expenses and other assets |
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(2,698) |
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Net cash used in operating activities |
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(201,235) |
| |
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Net decrease in cash |
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(201,235) |
| |
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CASH: |
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| |
| Beginning balance |
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1,014,372 |
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| Ending balance |
|
$ 813,137 |
|
See accompanying notes which are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS | ||||||||||||||||
Per Share Data and Ratios for a Share of Common Stock Outstanding Throughout Each Year | ||||||||||||||||
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For the Year Ended December 31, | ||||||||
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2012 |
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2011 |
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2010 |
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2009 |
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2008 |
| Net Asset Value, Beginning of Year |
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$ 2.64 |
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$ 3.02 |
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$ 4.14 |
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$ 3.43 |
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$ 5.53 | |||
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Income (Loss) from Investment Operations: |
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| Net investment loss (1) |
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(0.02) |
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(0.05) |
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(0.11) |
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(0.11) |
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(0.18) |
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| Net realized and unrealized gain (loss) (1) |
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0.10 |
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(0.33) |
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(1.01) |
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0.82 |
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(1.92) | ||
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| Total from investment operations |
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0.08 |
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(0.38) |
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(1.12) |
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0.71 |
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(2.10) | ||
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| Net Asset Value, End of Year |
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$ 2.72 |
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$ 2.64 |
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$ 3.02 |
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$ 4.14 |
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$ 3.43 | ||
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| Market Value, End of Year |
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$ 0.75 |
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$ 0.67 |
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$ 2.55 |
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$ 1.51 |
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$ 1.21 | |
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| Total Return * |
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11.94% |
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(73.73)% |
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68.87% |
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24.79% |
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(84.66)% | |
| Ratios and Supplemental Data: |
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| Net assets, end of period (000s) |
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$ 22,380 |
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$ 21,680 |
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$ 24,861 |
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$ 34,059 |
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$ 28,205 | ||
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| Ratio of operating expenses to |
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| average net assets (2) |
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3.68% |
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3.75% |
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2.71% |
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3.21% |
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6.55% |
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| Ratio of net investment loss to |
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| average net assets (2) |
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(0.66)% |
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(1.74)% |
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(2.71)% |
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(3.18)% |
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(5.15)% |
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| Portfolio Turnover Rate |
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0% |
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0% |
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0% |
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0% |
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0% |
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| (1) |
Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the period. | ||||||||||||||
| (2) |
These ratios exclude the impact of expenses of the underlying security holdings as represented in the schedule of investments. | ||||||||||||||
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*Change in market value assumes reinvestment of all dividends and distributions, if any. Aggregate (not annualized) total return is shown for any period shorter than one year. Total return does not reflect the deduction of taxes that a shareholder would pay on distributions or on the redemption of Company shares. Performance shown is based on market value. |
See accompanying notes which are an integral part of these financial statements.
Millennium India Acquisition Company Inc.
Notes to Financial Statements
December 31, 2012
1.
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Millennium India Acquisition Company Inc. (MIAC or the Company) was incorporated in Delaware on March 15, 2006 for the purpose of effecting a merger, capital stock exchange, asset acquisition or other similar transaction (a Business Combination) with an operating business or businesses that have operations primarily in India (a Target Business). In January 2008, the acquisition of a 14.75% equity interest in the SMC Group was consummated by the Company upon approval by public stockholders. For stockholders who voted to not approve the acquisition 842,625 shares were redeemed for $6,736,949. As a result of its plan to invest substantially all of its assets in SMC Group stock, MIAC was required to register with the SEC as a closed-end, non-diversified investment company under the Investment Company Act of 1940 (the Act). In March 2008, MIACs interest was reduced to 14.44% due to Bennett Coleman & Co., a leading New Delhi based financial media and investment firm investing in SMC Group. In May 2009, the merger of SMC Groups two underlying companies, SAM Global Securities Limited ("SAM") and SMC Global Securities Limited ("SMC") was finalized. In June 2009, MIACs interest was increased to 15.14% with the shares of SAM and SMC (1,298,400 and 1,730,026 shares, respectively) converting to 1,586,738 shares of SMC Global Securities LTD. On July 2, 2011, as previously announced, Sanlam increased its stake in SMC Global to a total of approximately 8.36%, by purchasing an additional 3.25% equity stake in SMC. Per these agreements being completed, MIACs equity interest in SMC Global is approximately 14.03%. As a registered investment company, MIAC is subject to the Act and the related rules, which contain detailed requirements for the organization and operation of investment companies.
The following is a summary of significant accounting policies followed by the Company in preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the U.S.A. (GAAP).
(a)
Valuation of Investments
Fair Value of Financial InstrumentsThe Companys investments are valued at (1) the market price for those securities for which a market quotation is readily available and (2) for all other securities and assets, fair value as determined in good faith by the Companys Board of Directors pursuant to procedures approved by our Board of Directors. The Board of Directors has delegated the oversight of the implementation of the valuation procedures to its Valuation Committee, and delegated to the Companys officers the responsibility for valuing the Companys assets and calculating the Companys net asset value in accordance with the valuation procedures. Management has formed a Pricing Committee to discharge certain of its responsibilities with respect to valuation. As part of its duties, managements Pricing Committee must: (i) present to the Valuation Committee, quarterly, a report of the Pricing Committees activities in the previous quarter; (ii) respond to requests from the Board and the Valuation Committee; and (iii) participate in an annual review of these procedures and provide advice and recommendations in light of its experience in administering these procedures, information on evolving industry practices and any developments in applicable laws or regulations. Except, as otherwise specifically provided in the valuation procedures, the Company will value portfolio securities for which market quotations are readily available at market value. The Company values all other securities and assets, including the shares of SMC Global Securities LTD, at fair value as determined in good faith in accordance with the valuation procedures. Because of the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Companys investments determined under the Companys procedures may differ significantly from the values that would have been used had a ready market existed for the investments or from the values that would have been placed on the Companys assets by other market participants, and the differences could be material.
Determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment. The Company primarily holds SMC Global Securities LTD, which is listed, but not traded on the New Delhi Stock Exchange and Gauhati Stock Exchange, respectively. Because of the type of investments that the Company makes and the nature of its business, the Companys valuation process requires an analysis of various factors. Its valuation methodology includes the examination of, among other things, (1) the nature and price (if any) of the portfolio security; (2) whether any broker quotations for the portfolio security are available; (3) the last sale price of the portfolio security; (4) whether any other financial or derivative security traded on other markets or among dealers is indicative of the appropriate price; (5) whether values of baskets of securities, or indices, traded on other markets, exchanges, or among brokers are indicative of the appropriate price; (6) the extent to which the fair value to be determined for the portfolio security will result from the use of data or formula produced by third parties independent of management; (7) the liquidity or illiquidity of the market for the particular portfolio security; (8) the financial statements and condition of the issuer; (9) general information concerning the issuers business including, without limitation, material developments in product development, management changes, litigation, governmental approvals, actions and contracts and extraordinary events; (10) the competitive position of the issuers major products, the demand therefore or any material changes in the marketplace; (11) general and specific market trends and the existence of any merger proposals, tender offers or other similar corporate actions affecting the securities; (12) the financial position of the issuer; (13) the market value of any unrestricted securities of the same class; (14) the availability of registration rights; (15) legal or other restrictions on the disposition of the securities (including any registration expenses that might be borne by the Company in connection with such disposition); (16) the characteristics of the market in which the securities are purchased and sold; (17) the market value of similar securities of the same issuer or
Millennium India Acquisition Company Inc.
Notes to Financial Statements (Continued)
December 31, 2012
comparable companies; (18) the cost of the security at the date of purchase; (19) in the case of securities that trade primarily in markets that close before the valuation time, financial market or other developments that occur after such market close but before the valuation time; (20) changes in interest rates; (21) observations from financial institutions; (22) government (U.S. or non-U.S.) actions or pronouncements; (23) other news events; (24) for securities traded on non-U.S. markets, the value of non-U.S securities traded on other non-U.S. markets, ADR trading, closed-end fund trading, non-U.S. currency exchange activity, the trading prices of financial products that are tied to baskets of non-U.S. securities (such as ADRs and World Equity Benchmark Shares) and futures contracts or other derivative securities based on indices representative of the appropriate market; and (25) the nature and duration of any material event and the forces influencing the operation of financial markets, factors relating to the event that precipitated the problem, whether the event is likely to recur, whether the effects of the event are isolated or whether they affect entire markets, countries or regions.
For all other securities held by the Company, other than the shares of SMC Global Securities LTD, if applicable, when market quotations or other information used in valuing such securities is not readily available or current or otherwise appropriate, management may be required to supply an unobservable input or determine whether to adjust a supplied price, as described below.
Generally, management must act reasonably and in good faith in considering all appropriate information available to it in identifying fair valuation situations and may consult with, as appropriate, investment personnel, general news and financial market information sources, industry sources, regulatory authorities, other market participants and legal, compliance and accounting personnel. Management has also engaged the services of third-party vendors to assist it. Management may believe at times that a significant event affecting a portfolio security has occurred that would require it to adjust a supplied price. In the case of holdings denominated in foreign currencies, management converts the values of fund assets nominally reported in foreign currencies into U.S. Dollars daily at the valuation time. The Company is responsible for monitoring currency prices and related markets to identify significant events that call into question whether the exchange rate (established as of an earlier pricing time) applied to a security denominated in a foreign currency reliably represents the securitys market value at the valuation time.
In determining the fair value of securities held by the Company, no single factor is determinative. Each Director may have accorded a different weight, or no weight, to different factors and, thus, each Director may have had a different basis for his ultimate determination of value.
The fair values of the Companys assets and liabilities that qualify as financial instruments approximate their carrying amounts presented in the statement of assets and liabilities at December 31, 2012.
The Company utilizes various methods to measure the fair value of most of its investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of input are:
Level 1 Unadjusted quoted prices in active markets for identical assets and liabilities that the Company has the ability to access.
Level 2 Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument in an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Level 3 Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Companys own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Millennium India Acquisition Company Inc.
Notes to Financial Statements (Continued)
December 31, 2012
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following tables summarize the inputs used as of December 31, 2012 for the Companys assets and liabilities measured at fair value:
Assets | Level 1 | Level 2 | Level 3 | Total |
Private Placement | $ - | $ - |
$ 23,547,391 |
$ 23,547,391 |
Total |
$ - |
$ - |
$ 23,547,391 |
$ 23,547,391 |
|
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|
There were no transfers into or out of Level 1 and Level 2 during the year. It is the Companys policy to recognize transfers into and out of Level 1 and Level 2 at the end of the reporting period.
In valuing its investment in SMC Global Securities LTD, the Company uses a valuation model, in addition to the previously disclosed valuation factors, which considers revenue and earnings multiples of comparable companies as well as transactions with respect to similar securities.
The following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:
| Private Placement | Total |
Beginning balance | $ 22,694,625 | $ 22,694,625 |
Total realized gain (loss) | - | - |
Change in unrealized appreciation | 852,766 | 852,766 |
Reduction of cost basis | - | - |
Proceeds from sales | - | - |
Accrued interest | - | - |
Transfers in/out of Level 3 | - | - |
Ending balance | $ 23,547,391 | $ 23,547,391 |
The change in unrealized appreciation during the year ended December 31, 2012 is $852,766 which is included in the statement of operations. The cumulative net unrealized depreciation attributable to Level 3 investments at December 31, 2012 is:
$ (23,137,432) |
$ (23,137,432) |
The significant unobservable inputs used in the fair value measurement of the reporting entitys private investments are (i) an estimation of a normalized earnings level for the company and its peers and (ii) the discounts applied to the selection of comparable investments due to the private nature of the investment and the likelihood of achieving normalized earnings. Significant changes in either of those inputs in isolation would result in a significantly lower or higher fair value measurement. Generally, a change in the assumptions used for the normalized earnings level will be accompanied by a directionally similar change in the discounts applied to the list of comparable investments.
(b)
Foreign Currency Translation- The books and records of the Company are maintained in U.S. Dollars. Foreign currency amounts are translated into U.S. Dollars on the following basis: (i) market value of investment securities, assets, and liabilities at the closing daily rate of exchange, and (ii) purchases and sales of investment securities and dividend income at the rate of exchange prevailing on the respective dates of such transactions.
(c)
Use of Estimates- The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The accounting estimates that require managements most difficult and subjective judgments are reflected in managements valuation of its interests in SMC Group. Because of the uncertainty in such estimates, actual results may differ from these estimates.
Millennium India Acquisition Company Inc.
Notes to Financial Statements (Continued)
December 31, 2012
(d)
Income Taxes- Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts and are based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.
The Company recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained assuming examination by tax authorities. Management reviewed the tax positions during the year ended December 31, 2012 and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the Company did not incur any interest or penalties. Generally tax authorities can examine tax returns filed for the last three years.
(e)
Security Transactions and Other Income - Security transactions are recorded on the trade date. In determining the gain or loss from the sale of securities, the cost of securities sold is determined on the basis of identified cost.
(f)
Indemnification - Under the Companys organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Company. In addition, in the normal course of business, the Company enters into contracts with its vendors and others that provide for general indemnifications. The Companys maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Company. However, based on experience, the Company expects that risk of loss to be remote.
2.
ADMINISTRATION FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Administrative Fees
(a) There is a fee payable to the Officers of the Company annually. For 2009, the Company paid $175,000 each to Suhel Kanuga and F. Jacob Cherian. In consultation with the Board in January 2009, Messrs. Cherian and Kanuga voluntarily elected to defer 30% of the Board approved compensation of $250,000 for 2009. For 2010, both Messrs. Cherian and Kanuga voluntarily elected to defer 100% of the Board approved compensation of $250,000 each. For 2011, Messrs. Cherian and Kanuga voluntarily elected to defer 50% each of their annual director fees. For 2012, Messrs. Cherian and Kanuga voluntarily elected to defer 20% each of their annual director fees. Amounts deferred in 2012 have been included in the statement of operations. As of December 31, 2012, current fees payable are $500,000 for each Officer.
(b) Gemini Fund Services (GFS) provides administrative services to the Company including fund administration and fund accounting, pursuant to an Administration Agreement with the Company, for which it receives a minimum annual fee. Prior to March 2009, fees were billed at $5,625 per month for fund administration and fund accounting combined. Starting in March 2009 fees are billed at $3,000 per month for fund administration and $1,333 for fund accounting. The fund accounting fees plus 10% interest compounded monthly will be deferred until there is a subsequent public offering. Currently, the Company has deferred $73,809 through December 31, 2012; $21,488 was accrued for the year ended December 31, 2012. The Company also pays GFS for out of pocket expenses.
In addition, certain affiliates of GFS provide ancillary services to the Company as follows:
Gemcom, LLC (Gemcom), an affiliate of GFS, provides EDGAR conversion and filing services as well as print management services for the Company on an ad-hoc basis. For EDGAR services, Gemcom charges a per-page conversion fee and a flat filing fee. Printing services prices vary according to available discounts. For the year ended December 31, 2012, the Company paid Gemcom $5,930 for EDGAR and printing services performed. Such fees, a portion of which were accrued in the prior year, are included in the line item Printing expense on the statement of operations in this shareholder report.
3.
INVESTMENT TRANSACTIONS
For the year ended December 31, 2012, there were no cost of purchases and proceeds from sales of investment securities for the Company.
Millennium India Acquisition Company Inc.
Notes to Financial Statements (Continued)
December 31, 2012
4. INVESTMENTS IN RESTRICTED OR ILLIQUID SECURITIES
Restricted securities include securities that have not been registered under the Securities Act of 1933, as amended, and securities that are subject to restrictions on resale. An investment company may invest in restricted securities that are consistent with the companys investment objective and investment strategies. Investments in restricted securities are valued at fair value as determined in good faith in accordance with procedures adopted by the Board of Trustees. It is possible that the estimated value may differ significantly from the amount that might ultimately be realized in the near term, and the difference could be material. As of December 31, 2012, the Company was invested in the following restricted securities:
Security | Acquisition Date | Shares | Cost | Value | % of Net Assets |
SMC Global Securities LTD | January 21, 2008 | 1,586,738 | $46,684,823 | $23,547,391 | 105.2% |
On July 15, 2011, MIAC executed an Amendment Agreement to the Shareholders and Share Subscription Agreements with SMC, extending the term of the agreement to December 31, 2012 for the listing, given the continuing uncertainties in the global financial markets. SMC Global has also agreed to pay $1,000,000 as a service fee to the Company. This has been reflected in the statement of assets and liabilities and the statement of operations.
On October 27, 2012, MIAC executed an Amendment Agreement to the Shareholders and Share Subscription Agreements with SMC, extending the term of the agreement to June 30, 2013 for the listing. SMC Global has also agreed to pay $500,000 as a service fee to the Company.
5. INCOME TAXES
Deferred tax assets reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes and consist of the following:
|
|
December 31, 2012 |
Deferred Tax Assets Deferred Compensation |
|
$350,000 |
Unrealized Loss on Investments |
|
8,098,101 |
Net Operating Loss |
|
1,143,089 |
Total Deferred Tax Asset |
|
9,591,190 |
Less: Valuation Allowance |
|
(9,591,190) |
Net Deferred Taxes |
|
$- |
The difference between the provision for income taxes and the amounts computed by applying the federal statutory income taxes to the income before tax are explained below:
|
|
December 31, 2012 |
Tax at Federal Statutory Rate |
|
(35.0)% |
Other |
|
0.1 |
Change in Valuation Allowance |
|
34.9 |
Provision for Taxes |
|
(0.0)% |
The provision for income taxes consists of the following:
|
| December 31, 2012 |
|
Current Federal |
| $- |
|
State and Local |
| - |
|
Total Current Tax Expense (Benefit) |
| $- |
|
Deferred Federal |
| $- |
| |
State and Local |
| - |
| |
Total Deferred Tax Expense (Benefit) |
| $- |
|
Total Tax Expense (Benefit) |
| $- |
|
Millennium India Acquisition Company Inc.
Notes to Financial Statements (Continued)
December 31, 2012
Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Companys policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense. There were no amounts accrued for penalties or interest as of or during the period from February 14, 2007 (inception) through December 31, 2012. The Company does not expect its unrecognized tax benefit position to change during the next twelve months and is currently unaware of any issues that could result in significant payments, accruals or material deviations from its position. The Companys tax positions for 2009 to 2012 have been analyzed, and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years.
6.
NEW ACCOUNTING PRONOUNCEMENTS
In December 2011, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2011-11 related to disclosures about offsetting assets and liabilities. The amendments in this ASU require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The ASU is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The guidance requires retrospective application for all comparative periods presented. Management is currently evaluating the impact this amendment may have on the Companys financial statements.
7.
SUBSEQUENT EVENTS
The Company is required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the Statement of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Company is required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. Management has determined that there were no subsequent events to report through the issuance of these financial statements.
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees
Millennium India Acquisition Company Inc.
We have audited the accompanying statement of assets and liabilities and the related portfolio of investments of Millennium India Acquisition Company Inc. (the "Company") as of December 31, 2012, and the related statements of operations and cash flows for the year then ended, and the statements of changes in net assets for the years ended December 31, 2012 and 2011, and the financial highlights for the years ended December 31, 2012, 2011, 2010, 2009 and 2008. Millennium India Acquisition Company Inc.s management is responsible for these financial statements and financial highlights. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Millennium India Acquisition Company Inc. as of December 31, 2012, and its results of operations and cash flows for the year then ended, and the changes in its net assets for the years ended December 31, 2012 and 2011, and the financial highlights for the years ended December 31, 2012, 2011, 2010, 2009 and 2008, in conformity with accounting principles generally accepted in the United States of America.
/s/ CohnReznick LLP
Jericho, New York
February 28, 2013
Directors and Officers
Our business is managed under the direction of the Board of Directors. Subject to the provisions our Certificate of Incorporation, as amended (the Certificate), our By-laws, as amended (the By-laws) and Delaware law, the Directors have all powers necessary and convenient to carry out this responsibility, including the election and removal of our officers.
Our Directors and officers, their ages, the position they hold with us, their term of office and length of time served, a description of their principal occupations during the past five years, the number of portfolios in the fund complex (as defined in SEC regulations) that each Director oversees and any other directorships held by each Director are listed in the tables immediately following. Except as shown, each Directors and officers principal occupation and business experience for the last five years have been with the employer(s) indicated, although in some cases the Director may have held different positions with such employer(s). Unless otherwise indicated, the business address of the persons listed below is c/o Millennium India Acquisition Company Inc., 330 East 38th Street, Suite 27B, New York, New York 10016.
Independent Directors(a)
Name, Address and | Positions(s) | Term of | Principal Occupation(s) | Number of | Other During the Past 5 Years |
Gul Asrani(c) 74 | Director | 1 year term; served since inception. | Managing Director and Chairman, Kaymo Industries (manufacturing), since 1959; Partner, Kaymo Fasteners Co. (manufacturing and distribution), since 1996. | 1 | Director, Shree Laxmi Wollen Mills Estate Ltd. |
Thomas Mathew(d) 70 | Director | 1 year term; served since Jan. 25, 2008. | Retired. | 1 | None. |
C.P. Krishnan Nair(c) 90 | Director | 1 year term; served since inception. | Founder and Chairman, Leela Hotel Group, since 1957. | 1 | Leela Hotel Group |
Interested Directors(a)
Name, Address and Age | Positions(s) | Term of | Principal Occupation(s) | Number of | Other |
F. Jacob Cherian(e) 47 | Chairman, Chief Executive Officer, Principal Executive Officer & Director | 1 year term; served since inception. | Private Investor; Adjunct Professor of International Finance, St. Johns University, Tobin College of Business. Formerly, Partner, Computer Sciences Corporation; Director, KPMG LLP / KPMG Consulting. | 1 | Director, SMC, since 2008. |
Suhel Kanuga(e) 38 | President, Chief Financial Officer, Chief Compliance Officer, Principal Accounting Officer, Principal Financial Officer, Treasurer, Secretary & Director | 1 year term; served since inception. | Private Investor. Formerly, Principal, Computer Sciences Corporation; Manager, KPMG LLP; Director, SAM (2008-2009) | 1 | None |
(a)
Independent Directors are those Directors who are not Interested Persons (as defined in Section 2(a)(19) of the 1940 Act), and Interested Directors are those Directors who are Interested Persons of the fund.
(b)
The term Fund Complex as used herein references the fund and no other registered investment companies.
(c)
The Director has authorized the fund as agent in the United States to receive notice. The funds address is: c/o Millennium India Acquisition Company Inc., 330 East 38th Street, Suite 27B, New York, New York 10016.
(d)
Mr. Mathew is the father-in-law of Mr. Cherian.
(e)
Messrs. Cherian and Kanuga are each an interested person of the fund due to their positions as officers of the fund.
Officers
Name, Address and Age | Positions(s) | Term of Office | Principal Occupation(s) During the Past 5 Years |
F. Jacob Cherian 47 | Chairman, Chief Executive Officer, Principal Executive Officer & Director | Indefinite Served since Inception | Director of the fund since inception; Private Investor; Adjunct Professor of International Finance, St. Johns University, Tobin College of Business. Formerly, Partner, Computer Sciences Corporation; Director, KPMG LLP / KPMG Consulting. |
Suhel Kanuga 38 | President, Chief Financial Officer, Chief Compliance Officer, Principal Accounting Officer, Principal Financial Officer, Treasurer, Secretary & Director | Indefinite Served since Inception | Director of the fund since inception; Private Investor. Formerly, Principal, Computer Sciences Corporation; Manager, KPMG LLP; Director, SAM (2008-2009) |
PRIVACY NOTICE | ||||||||
FACTS |
WHAT DOES MILLENNIUM INDIA ACQUISITION COMPANY, INC. (MIAC) DO WITH YOU PERSONAL INFORMATION? | |||||||
Why? |
Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. | |||||||
What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: § Social Security number § Purchase History § Assets § Account Balances § Retirement Assets § Account Transactions § Transaction History § Wire Transfer Instructions § Checking Account Information
When you are no longer our customer, we continue to share your information as described in this notice. |
|||||||
How? |
All financial companies need to share customers personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers personal information; the reasons MIAC chooses to share; and whether you can limit this sharing. | |||||||
Reasons we can share your personal information | Does MIAC share? |
Can you limit this sharing? | ||||||
For our everyday business purposes such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | Yes |
No | ||||||
For our marketing purposes to offer our products and services to you | Yes |
No | ||||||
For our affiliates everyday business purposes information about your transactions and experiences | No |
No | ||||||
For our affiliates everyday business purposes information about your creditworthiness | No |
We dont share | ||||||
For nonaffiliates to market to you | No |
We dont share | ||||||
Questions? |
Call (917) 640-2151 | |||||||
Who we are | ||||||||
Who is providing this notice? |
Millennium India Acquisition Company, Inc. | |||||||
What we do | ||||||||
How does MIAC protect my personal information? |
To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. Our service providers are held accountable for adhering to strict policies and procedures to prevent any misuse of your nonpublic personal information. | |||||||
How does MIAC collect my personal information? |
We collect your personal information, for example, when you § Open an account § Provide account information § Give us your contact information § Make deposits or withdrawals from your account § Make a wire transfer § Tell us where to send the money § Tells us who receives the money § Show your government-issued ID § Show your driver’s license We also collect your personal information from other companies. | |||||||
Why can’t I limit all sharing? |
Federal law gives you the right to limit only ▪ Sharing for affiliates’ everyday business purposes – information about your creditworthiness ▪ Affiliates from using your information to market to you ▪ Sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing. | |||||||
Definitions | ||||||||
Affiliates |
Companies related by common ownership or control. They can be financial and nonfinancial companies. § MIAC does not share with our affiliates. | |||||||
Nonaffiliates |
Companies not related by common ownership or control. They can be financial and nonfinancial companies § MIAC does not share with nonaffiliates so they can market to you. | |||||||
Joint marketing |
A formal agreement between nonaffiliated financial companies that together market financial products or services to you. § MIAC does not jointly market. |
Additional Information
The Company files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Companys Form N-Q is available on the Commissions website at http://www.sec.gov and may also be reviewed and copied at the Commissions Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the Company uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling collect (917) 640-2151 and on the Commissions website at http://www.sec.gov.
Information regarding how the Company voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, upon request, by calling collect (917) 640-2151 and on the Commissions website at http://www.sec.gov.
The Companys Statement of Additional Information includes additional information about directors of the Company and is available, without charge, upon request, by calling collect (917) 640-2151.
Item 2. Code of Ethics.
(a) As of the end of the period covered by this report, the registrant has adopted a Code of Ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party (the "Code of Ethics").
(b) There have been no amendments, during the period covered by this report, to any provisions of the Code of Ethics.
(c) The registrant has not granted any waivers during the period covered by this report from any provisions of the Code of Ethics.
(d) Not applicable.
(e) Not applicable.
(f) A copy of the registrant's Code of Ethics is filed as an exhibit hereto pursuant to Item 12(a). The registrant undertakes to provide a copy of the Code of Ethics to any person, without charge upon written request to the registrant at its address at 330 East 38th Street, Suite 27B, New York, NY 10016.
Item 3. Audit Committee Financial Expert.
(a)(1) The registrant's board of directors has determined that the registrant has at least one audit committee financial expert serving on the audit committee.
(a)(2) The audit committee financial expert is Thomas Mathew. Mr. Mathew is independent as defined in Form N-CSR Item 3(a)(2).
Item 4. Principal Accountant Fees and Services.
Audit Fees
(a) The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were $20,000 for 2012 and $20,000 for 2011.
Audit-Related Fees
(b) The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item were $0 for 2012 and $0 for 2011.
Tax Fees
(c) The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were $0 for 2012 and $0 for 2011.
All Other Fees
(d) The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item were $0 for 2012 and $0 for 2011.
(e)(1) The registrant's Audit Committee pre-approves any audit or non-audit services provided by the independent auditors to the registrant, and pre-approves, if applicable, any non-audit services provided by the independent auditors to the registrants investment adviser, or any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant if the engagement relates directly to the operations and financial reporting of the registrant.
(e)(2) The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) Not applicable.
(c) 0%
(d) Not applicable.
(f) Not applicable.
(g) Not applicable.
(h) Not applicable.
Item 5. Audit Committee of Listed Registrants.
The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the committee are Thomas Mathew (chairman), C.P. Krishnan Nair and Gul Asrani.
Item 6. Schedule of Investments
Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
A copy of the registrant's proxy voting policies and procedures is filed as an exhibit hereto.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
(a)(1)
Our officers, their ages, their term of office and length of time served, a description of their principal occupations during the past five years are listed in the table immediately following. Except as shown, each officers principal occupation and business experience for the last five years have been with the employer(s) indicated, although in some cases the officer may have held different positions with such employer(s). Unless otherwise indicated, the business address of the persons listed below is c/o Millennium India Acquisition Company Inc., 330 East 38th Street, Suite 27B, New York, New York 10016.
Name, Address and Age | Positions(s) | Term of Office | Principal Occupation(s) During the Past 5 Years |
F. Jacob Cherian 47 | Chairman, Chief Executive Officer, Principal Executive Officer & Director | 1 year term; served since Inception | Director of the fund since inception; Private Investor; Adjunct Professor of International Finance, St. Johns University, Tobin College of Business. Formerly, Partner, Computer Sciences Corporation; Director, KPMG LLP / KPMG Consulting. |
Suhel Kanuga 38 | President, Chief Financial Officer, Chief Compliance Officer, Principal Accounting Officer, Principal Financial Officer, Treasurer, Secretary & Director | 1 year term; served since Inception | Director of the fund since inception; Private Investor. Formerly, Principal, Computer Sciences Corporation; Manager, KPMG LLP; Director, SAM (2008-2009) |
(a)(2)
Messrs. Cherian and Kanuga are not currently primarily responsible for the day-to-day management of the portfolio of any other account. However, the employees and officers of the registrant are not obligated to devote their full time to the registrant, but will devote such time as they deem necessary to carry out the operations of the registrant effectively. The employees and officers of the registrant may have investments or other interests in other companies or funds which have investment objectives similar to the registrant. This may result in a conflict of interest in the allocation of investment opportunities and there is no guarantee that any investment opportunities would be allocated to the registrant.
(a)(3)
Messrs. Cherian and Kanuga voluntarily elected to defer 20% of the Board approved compensation of $100,000 for 2012, until a liquidity event.
(a)(4)
For each officer, the following table discloses the dollar range of equity securities beneficially owned by the officer in the registrant and, on an aggregate basis, in any registered investment companies within the registrants family of investment companies as of December 31, 2012:
Name of Director | Dollar Range of Equity | Aggregate Dollar Range of Equity Securities in |
F. Jacob Cherian* | Over $100,000 | N/A |
Suhel Kanuga* | Over $100,000 | N/A |
* Elected concurrently with approval of the acquisition of SMC Group.
(b) Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls And Procedures.
(a) Based upon an evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this report, the registrant's principal executive officer and principal financial officer concluded that the registrants disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Commissions rules and forms.
(b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) The code of ethics that is the subject of disclosure required by Item 2 is attached hereto as 99.CODE.
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto as 99.302CERT.
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as 99.906CERT.
(b) The proxy voting policies and procedures that is the subject of disclosure required by Item 7 is attached hereto as [ ].
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Millennium India Acquisition Company Inc.
By (Signature and Title) /s/ F. Jacob Cherian
----------------------------------
F. Jacob Cherian, Principal Executive Officer
Date:
February 28, 2013
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ Suhel Kanuga
-------------------------------------------
Suhel Kanuga, Principal Financial Officer
Date:
February 28, 2013
Exhibit 99.CERT
CERTIFICATIONS
I, Suhel Kanuga, certify that:
1.
I have reviewed this report on Form N-CSR of Millennium India Acquisition Company Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4.
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation;
d)
disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date:
2/28/13
/s/ Suhel Kanuga
Suhel Kanuga, Principal Financial Officer
I, F. Jacob Cherian, certify that:
1.
I have reviewed this report on Form N-CSR of Millennium India Acquisition Company Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4.
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation;
d)
disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date:
2/28/13
/s/ F. Jacob Cherian
F. Jacob Cherian, Principal Executive Officer
EX-99.906CERT
CERTIFICATION
Suhel Kanuga, Principal Financial Officer of Millennium India Acquisition Company Inc. (the Registrant), certifies to the best of his or her knowledge that:
1.
The Registrants periodic report on Form N-CSR for the year ended December 31, 2012 (the Form N-CSR) fully complies with the requirements of Sections 15(d) of the Securities Exchange Act of 1934, as amended; and
2.
The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
/s/
Suhel Kanuga
Suhel Kanuga
Principal Financial Officer
Date:
2/28/13
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Millennium India Acquisition Company Inc. and will be retained by Millennium India Acquisition Company Inc. and furnished to the Securities and Exchange Commission (the Commission) or its staff upon request.
This certification is being furnished to the Commission solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Form N-CSR filed with the Commission.
EX-99.906CERT
CERTIFICATION
F. Jacob Cherian, Principal Executive Officer of Millennium India Acquisition Company Inc. (the Registrant), certifies to the best of his or her knowledge that:
1.
The Registrants periodic report on Form N-CSR for the year ended December 31, 2012 (the Form N-CSR) fully complies with the requirements of Sections 15(d) of the Securities Exchange Act of 1934, as amended; and
2.
The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
/s/
F. Jacob Cherian
F. Jacob Cherian
Principal Executive Officer
Date:
2/28/13
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Millennium India Acquisition Company Inc. and will be retained by Millennium India Acquisition Company Inc. and furnished to the Securities and Exchange Commission (the Commission) or its staff upon request.
This certification is being furnished to the Commission solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Form N-CSR filed with the Commission.
May 2006
CODE OF ETHICS
Millennium India Acquisition Company, Inc. (the Company) expects all of its employees, including its principal executive officer, principal financial officer and principal accounting officer, as well as the members of its board of directors, to act in accordance with the highest standards of personal and professional integrity in all aspects of their activities, to comply with all applicable laws, rules and regulations, to deter wrongdoing and to abide by other policies and procedures adopted by the Company that govern the conduct of its employees and directors. This Code of Ethics is intended to supplement any other policies and procedures adopted by the Company.
You agree to:
(a)
Engage in and promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
(b)
Take all reasonable measures to protect the confidentiality of non-public information about the Company and its subsidiaries and their customers obtained or created in connection with your activities and to prevent the unauthorized disclosure of such information unless required by applicable law or regulation or legal or regulatory process;
(c)
Produce full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company and its subsidiaries files with, or submits to, the Securities and Exchange Commission and other regulators and in other public communications made by the Company and its subsidiaries;
(d)
Comply with applicable governmental laws, rules and regulations, as well as the rules and regulations of self-regulatory organizations of which the Company or its subsidiaries is a member; and
(e)
Promptly report any possible violation of this Code of Ethics to the Companys Audit Committee.
You are prohibited from directly or indirectly taking any action to fraudulently influence, coerce, manipulate or mislead the Company or its subsidiaries independent public auditors for the purpose of rendering the financial statements of the Company or its subsidiaries misleading.
You understand that you will be held accountable for your adherence to this Code of Ethics. Your failure to observe the terms of this Code of Ethics may result in disciplinary action, up to and including termination of employment. Violations of this Code of Ethics may also constitute violations of law and may result in civil and criminal penalties for you, your supervisors and/or the Company.
If you have any questions regarding the best course of action in a particular situation, you should promptly contact the Companys Audit Committee. You may choose to remain anonymous in reporting any possible violation of this Code of Ethics.
MILLENNIUM INDIA ACQUISITION COMPANY INC.
PROXY POLICY & VOTE PROCEDURES
(Effective January 17, 2008)
I.
VOTING POLICY AND GUIDELINES
Millennium India Acquisition Company Inc. (MIAC) believes it has a fiduciary obligation to vote its clients proxies in favor of the economic interest of shareholders. MIAC's officers have a fiduciary responsibility that includes protecting and enhancing the economic interests of shareholders. The following guidelines have been established to assist the appropriate officers (the Officers) in evaluating relevant facts and circumstances that will enable the Officers to vote in a manner consistent with their fiduciary responsibility.
ROUTINE MANAGEMENT PROPOSALS
Election of Directors
Case by Case
The Officers operate on a belief that the structure and functioning of a company's board of directors are critical to that company's economic success, and therefore board-related issues are treated in a separate section below.
Appointment of Auditors
Approve
Fix Auditor Remuneration
Approve
Approval of Audited Financial Statements
Approve
Set/Eliminate Dividends
Approve
Grant Board Authority to Repurchase Shares
Approve
Approve Stock Splits or Reverse Stock Splits
Approve
Change Name of Corporation
Approve
Eliminate Preemptive Rights
Preemptive rights give current shareholders the opportunity to maintain their current percentage ownership through any subsequent equity offerings. These provisions are no longer common in the United States, and can restrict managements ability to raise new capital.
The Officers generally will approve the elimination of preemptive rights, but will oppose the elimination of limited preemptive rights, e.g., on proposed issues representing more than an acceptable level of dilution.
Employee Stock Purchase Plan
Approve
Establish 401(k) Plan
Approve
BOARD OF DIRECTORS
The Officers support measures that encourage and enable boards to fulfill their primary responsibility to represent the economic interests of shareholders. While they may take into consideration the specific needs of companies that are in early rapid growth phases, closely held, or in severe financial difficulties, the Officers view strong independent boards as a key protection for shareholder value.
Election of Directors
Case by Case
The Officers support management in most elections. However, they will withhold approval if the Board gives evidence of acting contrary to the best economic interests of shareholders. The Officers will also withhold approval of individual Directors whose remuneration appears to be blatantly excessive and exploitative of the shareholders.
Majority Voting
Approve
Many companies require directors to receive only a plurality of votes. This procedure allows directors to remain on the board even when the majority of votes are withheld. The Officers believe directors should garner at least a majority of the votes in order to serve on the Board.
Classified Board of Directors/Staggered Terms
Oppose
A classified board of directors is one that is divided generally into three classes, each of which is elected for a three-year term, but on a staggered schedule. At each annual meeting therefore, one-third of the directors would be subject to reelection.
The Officers belief is that all directors should be subject to reelection on an annual basis to discourage entrenchment, and will most frequently vote against classification and for management and shareholder proposals to eliminate classification of the board.
Occasionally, proposals to classify a board of directors will contain a clause stipulating that directors may be removed only for cause. We will oppose these proposals.
Confidential Voting
Approve
Confidential voting is most often proposed by shareholders as a means of eliminating undue management pressure on shareholders regarding their vote on proxy issues.
Cumulative Voting for Directors
Case by Case
Cumulative voting allocates one vote for each share of stock held times the number of directors subject to election. A shareholder may cumulate his/her votes and cast all of them in favor of a single candidate, or split them among any combination of candidates. Cumulative voting enables minority shareholders to secure board representation.
The Officers generally support cumulative voting proposals. However, they may withhold approval of proposals that further the candidacy of minority shareholders whose interests do not coincide with the Officers fiduciary responsibility.
Director Compensation
Case by Case
The Officers believe that compensation for independent outside directors should be structured to align the interests of the directors with those of shareholders, whom they have been elected to represent. To this end, the Officers have a preference toward compensation packages which are based on the companys performance and which include stock and stock options.
Independent Board Committees
Approve
The Officers believe that a boards nominating, compensation and audit committees should consist entirely of independent outside directors in order to avoid conflict of interests. The Officers will therefore normally approve reasonable shareholder proposals to that effect; an example of an unreasonable request would be a case where a board consists of only two or three directors.
Majority Independent Board Composition
Approve
The Officers will generally support shareholder proposals requesting that the board consist of majority independent outside directors, as the Officers believe that an independent board faces fewer conflicts and is best prepared to protect shareholder interests.
Separation of Chairman and CEO Positions
Case by Case
The Officers will support shareholder proposals requesting that the positions of chairman and CEO be separated if the board is composed of less than a majority of independent directors.
CORPORATE GOVERNANCE
Adjourn Meeting to Solicit Additional Votes
Oppose
Additional solicitation is costly and could result in coercive pressure on shareholders, who usually have sufficient information in the proxy materials to make an informed decision prior to the original meeting date.
Anti-Greenmail Provision
Approve
Eliminate Shareholders Right to Call Special Meeting
Oppose
Increase in Authorized Shares
Case by Case
The Officers approve proposals for increases of up to 100%. The Officers will consider larger increases if a need is demonstrated. The Officers may apply a stricter standard if the company has no stated use for the additional shares and/or has previously authorized shares still available for issue. Additionally, proposals which include shares with unequal voting rights may warrant opposition.
Indemnification of Directors and Officers
Approve
The Officers support the protection of directors and officers against frivolous and potentially ruinous legal actions, in the belief that failure to do so might severely limit a companys ability to attract and retain competent leadership. The Officers will support proposals to provide indemnification which is limited to coverage of legal expenses.
Liability Insurance of Directors and Officers
Approve
Proposals regarding liability insurance for directors and officers often appear separately from indemnification proposals. The Officers will generally support insurance against liability for acts committed in an individuals capacity as a director or officer of a company. However, the Officers will withhold approval of proposals which cover breaches of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, willful or negligent conduct in connection with the payment of an unlawful dividend, or any transaction from which the director derived an improper personal benefit.
Prohibit Shareholder Action Outside Meetings
Oppose
Reincorporate
Case by Case
Proposals to reincorporate in another state are most frequently motivated by considerations of anti-takeover protections or cost savings. Where cost savings are the sole issue, the Officers will favor reincorporation.
In cases where there are significant differences in anti-takeover protections, we will vote in favor of reincorporation only if shareholder discretion is not diminished by the change. As state corporation laws are continuously evolving, such determination requires case by case analysis.
Change of Location of Corporate Headquarters
Case by Case
Changes in location of headquarters must have clear economic benefits. Changing the physical location of headquarters to meet the personal geographic or lifestyle preferences of senior executives will be opposed.
Require more than simple majority vote to pass proposals.
Oppose
ANTI-TAKEOVER
Blank Check Preferred
Case by Case
These proposals are for authorization of a class of preferred stock in which voting rights are not established in advance, but are left to the discretion of the board of directors on a when issued basis. The authority is generally viewed as affording the board the ability to place a block of stock with an investor sympathetic to management, thereby foiling a takeover bid without reference to a shareholder vote. However, in some cases it may be used to provide management with the flexibility to consummate beneficial acquisitions, combinations or financings.
The Officers oppose these proposals as a transfer of authority from shareholders to the board and a possible entrenchment device. However, if there are few or no other anti-takeover measures on the books and the company appears to have a legitimate financing motive for requesting the authority, or has used blank check preferred stock for past financings, the Officers will approve the proposal.
Differential Voting Power
Oppose
Authorize a class of common having superior voting rights over the existing common or entitled to elect a majority of the board.
Poison Pill Plans
Oppose
Also known as shareholder rights plans, involve call options to purchase securities in a target firm on favorable terms. The options are exercisable only under certain circumstances, usually hostile tender offers. These plans are not subject to shareholder vote. However, the shares required to fund the plan must be authorized. Since these shares are generally blank check preferred, we oppose them.
Therefore, these proposals generally only appear on the proxy as shareholder proposals requesting that existing plans be put to a vote. The vote is non-binding. The Officers will vote in favor of shareholder proposals to rescind poison pills.
The Officers policy is to examine these plans individually. Most plans will be opposed, however. The Officers will approve most plans which include a permitted bid feature. Permitted bid features have appeared in some Canadian poison pill plans. They require shareholder ratification of the pill, stipulate a sunset provision whereby the pill expires unless it is renewed and specify that an all cash bid for all shares that includes a fairness opinion and evidence of financing does not trigger the pill, but forces a special meeting at which the offer is put to a shareholder vote.
Stakeholder Provision
Oppose
Stakeholder provisions introduce the concept that the board may consider the interests of constituencies other than shareholders in the evaluation of takeover offers.
The Officers believe that this concept is inconsistent with public ownership of corporations.
MANAGEMENT COMPENSATION
Golden Parachutes
Case by Case
Golden parachutes provide for compensation to management in the event of a change in control. The Officers view this as encouragement to management to consider proposals which might be beneficial to shareholders, but are very sensitive to excess or abuse.
Pay-for-Performance Plans
Approve
The Omnibus Budget Reconciliation Act requires companies to link executive compensation exceeding $1 million to preset performance goals and submit the plans for shareholder approval in order for such compensation to qualify for federal tax deductions. The law further requires that such plans be administered by a compensation committee comprised solely of outside directors. Because the primary objective of such proposals is to preserve the deductibility of such compensation, the Officers are biased toward approval in order to preserve net income. However, proposals which authorize excessive dilution or provide executives extraordinary windfalls will be opposed. Moreover, when an objectionable plan is coupled with poor performance, the Officers will consider withholding votes from compensation committee members.
OPTION PLANS
The Officers support option plans that provide incentive to directors, managers and other employees by aligning their economic interests with those of the shareholders while limiting the transfer of wealth out of the company. Option plan evaluations are therefore based on the total cost to shareholders and give effect to the incentive aspects of the plan. The Officers are wary of over-dilution or not-insignificant shareholder wealth transfer.
MERGERS, ASSET SALES & CAPITAL RESTRUCTURINGS
In reviewing merger and asset sale proposals, the Officers primary concern is with the best economic interests of shareholders. This does not necessarily indicate that the Officers will vote in favor of all proposals which provide a market premium relative to pre-announcement prices. Due to the subjective nature of the value of individual proposals, transaction-specific characteristics or conditions may prevail. Factors affecting the voting decision will likely include transaction consideration relative to intrinsic value, strategic reason for transaction, board approval/transaction history, and financial advisors fairness opinions.
OTHER SHAREHOLDER PROPOSALS
For those shareholder-proposed issues that are not covered specifically elsewhere.
Shareholder Proposal Requesting a Yearly Report on Director Attendance at Meetings
Approve
Shareholder Proposal Requesting a Minimum Stock Ownership by Directors
Oppose
Shareholder Proposal to Compensate Directors in Stock
Approve
SOCIAL ISSUES
The Officers receive proxies containing shareholder proposals which address social issues which are varied and tend to shift from year to year. However, the Officers philosophy in reviewing social proposals is consistent; that is, they will vote in all cases in the best economic interests of their clients.
II.
PROCEDURES
A.
Instructions to Bank/Broker Custodians
All custodian banks/brokers are to be notified that all proxy voting materials should be forwarded to MIAC upon receipt unless client has other instructions. This notification typically occurs at the time the account is opened at the custodian.
B.
MIAC Administrative Responsibilities for Proxy Voting
MIACs Executive Vice President will delegate and oversee the proxy voting process as Proxy Administrator..
(1)
Upon notification of an upcoming vote, the Proxy Administrator will create a file with the portfolio company (the Portfolio Company) name and meeting date on the tab. All proxies and related materials for this particular Portfolio Company will then be placed in this file until ready to be voted on.
(2)
When the Proxy Administrator completes his review of the proxy statement, he will complete the Proxy Instruction Form which instructs how to vote and briefly identifies reasons for voting against management, if applicable. The Proxy Administrator who will then vote the proxy.
(3)
Each proxy is then cross-referenced by the Proxy Administrator to make sure the shares we are voting on are the actual shares owned for that client.
(4)
All proxies received from the same company for all clients will be voted as the original without review by the Proxy Administrator unless specific client circumstances require otherwise.
(5)
After the proxy is voted, all Proxy Instruction Forms will be maintained in a separate file.
(6)
The Proxy Administrator will review the voting records for each security to ensure that all shares owned are voted.
(7)
Copies of each proxy are kept in the above mentioned folder along with a copy of the annual report, Proxy Instruction Form, and other notes related to each company vote.
A.
Treatment of Personal Conflicts of Interest
From time to time, individuals involved in the proxy voting process may have personal relationships with people connected to the Portfolio Company, including (a) individual members of the board of directors, (b) candidates for the board of directors, (c) proponents of proxy proposals, and (d) participants in proxy contests. Such relationships could create a conflict of interest with respect to the voting of a proxy. The following procedures are designed to hand over the proxy voting responsibility to a different Officer or to an Independent Director of MIAC in the event that such conflicts of interest arise in a particular proxy vote.
As part of the initial process in overseeing proxy voting and prior to the voting of any proxy, the Proxy Administrator shall determine whether a personal relationship exists between himself and the following people connected with the Portfolio Company: (a) individual members of the board of directors, (b) candidates for the board of directors, (c) proponents of proxy proposals, and (d) participants in proxy contests. In the event that such a personal relationship exists, the Proxy Administrator shall provide the proxy materials to the President if he does not have a personal conflict of interest or to an Independent Director of MIAC, who shall make the determinations required for voting.