IIP.L Regulatory News (IIP)

10 April 2015

Infrastructure India plc

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

DLI Update

Operational update

Infrastructure India plc, an AIM quoted infrastructure fund investing directly into assets in India is pleased to announce that Distribution Logistics Infrastructure Private Limited's ("DLI") Bangalore terminal facility has commenced initial domestic and export-import commercial operations. The facility has this week received and handled its first factory-stuffed containers by rail and road.

Bangalore is located in the south India state of Karnataka and DLI's terminal is strategically situated near major roads and railway lines. Construction for the remaining infrastructure at the facility is expected to complete in phases over the next six months.

The Nagpur terminal facility continues to ramp up with currently three fully loaded container trains per week for domestic and export-import containerised cargo. A Liquid Tank Farm is on-schedule for commissioning within the next 30 days followed by a Private Freight Terminal for handling bulk cargo. A planned Auto Logistics Park is also being commissioned later this month. The facility expects to be conducting customs supervision and clearance for export-import freight by the end of June 2015.

Construction has commenced at Palwal, in the National Capital Region, with the approach road complete and warehouse facilities underway. At Chennai, land acquisition is now complete and work has commenced on the approach road for the Free Trade Warehousing Zone.

Rail haulage charges, levied by Indian Railways, were recently increased materially (over 24 per cent), for different slabs of tonnage. Although the Company believes that it and other container train operators will be able to pass on substantially all these increases to customers, the rise in freight costs may reduce demand for rail transportation while also increasing the competitiveness of road transportation on certain routes. The Company continues to monitor and adapt to the effects of these regulatory changes.

The Company looks forward to providing shareholders with further operational updates in this regard in due course.

DLI Incentive Agreement

 IIP also announces that it has entered into an agreement (the "DLI Incentive Agreement") under which Vikram Viswanath, a non-executive director of the Company, has agreed to assume the role of advisor (the "Advisor"), to the management team of DLI, a 99.9% owned subsidiary of IIP.

The DLI Incentive Agreement provides that, in respect of each complete 12 month accounting period of DLI starting from the financial period ending 31 March 2016 up to the financial period ending 31 March 2025 ("Relevant Financial Period"), during which (i) the Advisor acts as adviser and guide to the management team of DLI and (ii) the net income of DLI, as published in DLI's audited accounts for a Relevant Financial Period ("Actual Income") exceeds the targeted net income of DLI as set out in its 10 year business plan (as used in respect of the preparation of IIP's interim financial statements for the period ended 30 September 2014) ("Target Income"), then the Advisor shall be entitled to an incentive payment, payable in cash (an "Incentive Payment"), calculated as 30% of the amount by which Actual Income exceeds Target Income (the "Excess"). The Incentive Payments will not be subject to a cap.

If an Excess is not achieved in any Relevant Financial Period, the Advisor shall have no entitlement to receive any Incentive Payment in respect of the Relevant Financial Period. However, in such circumstances, IIP may, in its absolute discretion, award the Advisor a discretionary bonus.

Actual Income is limited to net income derived from DLI's existing business. Should any acquisitions be made by DLI, IIP may, in its absolute discretion, award the Advisor a discretionary incentive bonus payment in respect of such acquired net income.

The Advisor will not become a full time employee of the Group and nor will he be entitled to receive any remuneration outside of the Incentive Payments for his role as an advisor to DLI. The Advisor will remain a non-executive director of the Company.

Any Incentive Payment to which the Advisor is entitled shall be paid in cleared funds within 20 business days following the adoption, by the DLI board, of the DLI audited accounts for the Relevant Financial Period, providing always that IIP has sufficient cash reserves to make the Incentive Payment.

IIP shall be entitled to defer making an Incentive Payment until such time as it deems that there are sufficient cash reserves in IIP to discharge the Incentive Payment, but in any event payment shall be effected no later than 24 months after the original due date for payment (a "Deferred Payment"). Deferred Payments shall carry interest at 8% per annum, for so long as a Deferred Payment remains outstanding. In the event of a change of control of IIP, or an initial public offering of the shares of DLI, IIP will estimate in good faith the amount of any Incentive Payments which might otherwise have become due to the Advisor for any remaining portion of the Relevant Financial Period and all financial periods of DLI up to and including the Relevant Financial Period ending 31 March 2025 and this amount shall be payable to the Advisor.

Related Party Transaction

As Vikram Viswanath is a director of IIP, he is a related party of the Company under the AIM Rules for Companies. As a result, the entry by the Company into the DLI Incentive Agreement with Vikram Viswanath constitutes a Related Party Transaction pursuant to Rule 13 of the AIM Rules for Companies.

The independent directors of IIP, being Tom Tribone, Sonny Lulla, M.S. Ramachandran, Rob Venerus and Tim Walker, consider, having consulted with the Company's nominated adviser, that the terms of the DLI Incentive Agreement are fair and reasonable insofar as IIP's shareholders are concerned.

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