Non Performing Assets (NPA)

Non Performing Assets (NPA) became a major asset class in the five years following the Asian crisis of the late 1990’s. At that time, Asian banks saw a significant proportion of outstanding loans fall into default and in order to stabilise their banking systems, Asian governments’ encouraged domestic banks to sell their non-performing loans to specialist investment firms or western banks.

The Indian economy is currently the Fourth largest in the world based on purchasing power parity and has grown 6.6 per cent per annum on an average for the past decade (source: Grant Thornton International Business Report 2007). Economic growth in India has been fuelled by the progressive liberalisation of external trade and investment, encouraging large inflows of foreign direct investment and boosting the country's exports. With lndia's economy continuing to grow at a robust pace, the Directors believe that market conditions are favourable for investing in companies that ran into financial distress during the economic slowdown prior to the current phase of economic growth but that can now be returned to profitability through restructuring. They also believe that the Company is the first UK quoted vehicle to give western Fund managers direct access to the Indian NPA market.