The stock exchanges NSE (National Stock Exchange of India) and BSE Limited have imposed fines worth ₹5,42,800 each (total ₹21.7 lakh including GST) on both Rail Vikas Nigam Limited (RVNL) and Indian Railways catering arm IRCTC for not having enough independent board members as of September 30, 2023.
RVNL, in a stock exchange filing, says the company has been penalised "for the non-compliance with regulation-17(1) i.e., half of the board was not independent, for the quarter ended 30th September, 2023".
The civil construction company says it has clarified to NSE and BSE that it's a government company and that as per provisions of the Companies Act, 2013, and Articles of Association of the Company, the President vests with the power to appoint directors, including independent ones, on the board.
"All Directors in RVNL are appointed by the Government of India through its Administrative Ministry, Ministry of Railways (MoR) and RVNL has no role to play in the appointment of any Director," says the company, adding the fine levied by NSE and BSE has no impact on the "financial, operation or other activities of the company".
Another government company IRCTC also received notice from BSE and NSE regarding the imposition of fines for non-compliance for not having a requisite number of independent directors, including an independent woman director, on the board for the quarter ended September 2023.
The company has sought a review of the fine saying since it is a government company the power to appoint directors, including independent ones, vests with the President of India, represented through the Ministry of Railways. "The company follows up with the Ministry of Railways from time to time for appointing a requisite number of independent directors, including independent woman directors on its board and the matter is pending at the level of government of India," says IRCTC.
The company also says similar penalties in the past have resulted in waivers by the exchanges.
The RVNL stock meanwhile is down 0.57% today after a flat opening in the early morning trade. At the current share price of ₹166.5, the stock is trading 16.4% down against the 52-week high achieved on September 12, 2023, and its m-cap stands at ₹34,736.43 crore
RVNL's Q2 Fy24 profit rose 3.5% to ₹394.4 crore, while its revenue remained flat ₹4,914.32 crore. In standalone terms, the profit for the said quarter surged 24% to ₹296.45 crore against ₹217.69 crore in the previous quarter, while revenue remained flat at ₹4,909.79 crore.
The IRCTC stock dipped 0.76% down at ₹694.35, taking its m-cap down to ₹55,548 crore. At the current share price of ₹694.35, the stock is trading 8.3% down as compared to the 52-week high achieved on September 08, 2023.
The IRCTC's July-September quarter profit for the fiscal year 2023-24 surged 30% to ₹294.7 crore against ₹226 crore in the year-ago period. Its revenue increased 23.5% to ₹995.3 crore against ₹805.8 crore in the year-ago period.
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