Infra.india Regulatory News (IIP)

18 March 2013

Infrastructure India plc

("IIP" or the "Company" or, together with its subsidiaries, the "IIP Group")

VLMS Completes Acquisition of Freightstar

Update on Company Liquidity and SMHPCL

The Company is pleased to announce that on 15 March 2013, its subsidiary, Vikram Logistic and Maritime Services ("VLMS") completed the acquisition of the logistics division of ETA Engineering Pvt Ltd operating under the brand name "Freightstar", the terms of which were originally announced by the Company on 28 October 2011. With the closing of the transaction, VLMS has, effective from 15 March 2013, acquired all the assets and liabilities of Freightstar. These include, inter alia, a Category 1 license from the Indian Railways to operate container trains on a national basis, eleven (11) operating container trains, land and a partially constructed terminal facility at Nagpur in the state of Maharashtra and 46 acres (of a total 70 acres) of land for its proposed terminal facility at Palwal in Haryana - along with agreements to acquire the remaining 24 acres, various customer agreements, management and operating personnel and state-of-the-art information technology systems to support container transportation and terminal operations. Pursuant to approvals from the lending consortia of both VLMS and Freightstar, VLMS expects the release of previously approved debt facilities from each of the aforementioned consortia to enable it to expedite construction of the terminal facilities of VLMS and Freightstar.

Following the acquisition, the combined business with the fully built facilities of VLMS and Freightstar is believed to be one of the top three privately owned Indian logistics businesses incorporating inland container terminals and transportation operations.

Construction activities at VLMS' terminal facilities are further progressing at full pace, supported by the Company's investment. With the release of pre-approved debt funding, these activities are expected to be further expedited. VLMS expects the terminal facilities of the combined entity to be fully completed between July and the end of 2013, with commercial operations ramping up proportionately from each of these facilities. Further, VLMS expects benefits to accrue from the operational synergies of the two entities.

Since 30 September 2012, the Company has advanced a total of £10.8 million to VLMS to support the execution of the combined business plan of VLMS and Freightstar. A preliminary valuation using the discounted cash flow methodology used by the Company to calculate the Company's Net Asset Value or "NAV" indicates that the closing of the Freightstar acquisition is materially accretive to the Company's NAV. The NAV is expected to increase further following a refinancing of the merged VLMS and Freightstar businesses, discussions for which are underway with various lenders in India. Further details will be provided in the Company's full year audited financial report.

Liquidity and Working Capital

As discussed in the Company's half-yearly report for the period ended 30 September 2012, the Company expects to raise additional funding for its own working capital requirements during the first quarter of 2013. The Company is in advanced stages of discussions with respect to a working capital facility to meet these needs. The Board expects to update shareholders on these discussions shortly.

Shree Maheshwar Hydel Power Corporation Limited ("SMHPCL")

The promoters of SMHPCL, Entegra, in the wake of the difficult financing environment that exists in India, continue to face delays in raising the incremental equity needed to complete the remaining project area rehabilitation and construction works. Although Entegra is hopeful of completing these fundraising efforts it is not possible at this time to predict, with a reasonable degree of confidence, an estimated time frame for such financing. SMHPCL management expects that it will take approximately twelve months from the date of funding for the project to achieve full commercial operations, with incremental operations from already completed units to commence within three months from the date of funding.

Sonny Lulla, Chief Executive of IIP, said, "We are delighted to have completed what is a transformational deal for VLMS. We believe that the combined business will be one of India's top three privately owned logistics companies, with the ability to offer state-of-the-art warehousing facilities and transportation across road and rail, whilst also benefiting from modest capital costs relative to its competitors. Beyond that, the Indian logistics sector and supply chain management are both at an early stage of development and an expanded VLMS will be well placed to assume a leading role as these sectors grow to support on India's economic development in the years ahead."

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