© Reuters.
MUMBAI – The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) have imposed fines on Rail Vikas Nigam Limited (RVNL) and the Indian Railway Catering and Tourism Corporation (IRCTC) for failing to comply with certain corporate governance regulations. The penalties are in response to non-adherence to Regulation-17(1), which requires companies to have an appropriate number of independent directors on their boards.
RVNL has been fined a total of ₹5,42,800 due to the infraction as of the end of September. Despite this setback, RVNL emphasized that the appointment of directors is under the purview of their Administrative Ministry and assured stakeholders that their financial status or operations remain unaffected. Nonetheless, RVNL’s share price saw a decline from its fifty-two-week high of ₹166.5 recorded on September 12. This drop came even though the company reported an increase in profits for the second quarter, although revenues remained consistent with prior quarters.
Similarly, IRCTC faced fines adding up to ₹10.8 lakh for the same regulatory shortfall during the quarter ending in September 2023. The company countered by stating that its director appointments are managed by the President through the Ministry of Railways. IRCTC has proactively communicated with both exchanges to address this issue and is working towards meeting board composition norms. Following news of the fines, IRCTC’s stock experienced a marginal dip of ₹0.30, closing at ₹699.70 on BSE on Wednesday.
Despite these regulatory challenges, IRCTC disclosed a significant year-over-year growth in second-quarter profits, which increased by thirty percent to ₹294.7 crore. Moreover, the company’s revenues surged over twenty percent to approximately one billion rupees, indicating robust financial performance amidst consistent revenue figures.
The regulatory actions highlight the stringent requirements Indian exchanges place on listed companies to maintain high standards of corporate governance and transparency. Both RVNL and IRCTC have acknowledged the fines and are taking steps to comply with the regulations moving forward.
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