Rail Vikas Nigam Limited ( rail vikas nigam ) has announced the appointment of Shri N. C. Karmali as a Part-time Government Nominee Director on its Board. The appointment was approved by the President of India and communicated by the Ministry of Railways, Government of India, vide Order No. 2022/PL/57/10 dated May 20, 2024. This addition to the Board strengthens the government’s oversight role within the public sector undertaking.

The appointment is effective with immediate effect. Shri N. C. Karmali will serve in this capacity until he holds the post of Executive Director (Coord.)/ Gati Shakti, Railway Board, or until further orders are issued, whichever occurs earlier. He currently serves as Executive Director (Coord.)/ Gati Shakti at the Railway Board.

In compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Rail Vikas Nigam Limited disclosed the appointment to the National Stock Exchange of India Ltd. and BSE Ltd. on May 20, 2024. The company stated that it is taking necessary action to complete the appointment formalities in accordance with the Companies Act, 2013. Requisite disclosures regarding the completion of these formalities will be submitted in due course.

Key Details of Appointment

The order was signed by Tribhuvan Misra, Director (PSU), Ministry of Railways. Copies of the order were sent to the Secretary, Department of Public Enterprises; the Secretary, Appointments Committee of the Cabinet; and the Registrar of Companies, Delhi & Haryana, among other stakeholders.

Rail Vikas Nigam Limited ( rail vikas nigam ) has been fined ₹5,36,900 each by the National Stock Exchange of India Limited (NSE) and BSE Limited for breaching board composition norms in the quarter ended March 31, 2024. This penalty follows a similar fine imposed for the subsequent quarter ended June 30, 2024, bringing the total regulatory fines for these two quarters to ₹21,47,600. The penalties arise from the company’s failure to maintain the statutory requirement that half of the Board must comprise independent directors, including at least one woman Independent Director, as per Regulation 17(1) of the SEBI (LODR) Regulations, 2015.

The exchanges issued the fines for the Q4FY24 breach via letters and emails dated May 22, 2024. Management stated that the penalties have no material effect on the company’s financials, operations, or other activities. The disclosure was made pursuant to Regulation 30 read with Para-A of Part-A of Schedule-III of the SEBI (LODR) Regulations, 2015.

Regulatory Context and Company Response

In response to the Q4FY24 penalties, Rail Vikas Nigam clarified its position in a letter dated May 23, 2024, submitted to both exchanges. The company emphasized its status as a Government company under Section 2(45) of the Companies Act, 2013. Under this provision, the power to appoint Directors, including Independent Directors, rests with the President of India rather than the company itself.

All directors at Rail Vikas Nigam are appointed by the Government of India through its Administrative Ministry, the Ministry of Railways (MoR). Consequently, the company stated it has no role in the appointment process, which contributed to the delay in achieving the required independent director composition. The company requested the exchanges to waive off the fine based on this structural constraint.

Penalty Breakdown

Kalpana Dubey, Company Secretary & Compliance Officer, signed the disclosures on behalf of the company.

What the Numbers Show

The imposition of consecutive fines for Q4FY24 and Q1FY25 highlights persistent structural challenges faced by public sector undertakings in adhering to SEBI’s stringent corporate governance timelines. The inability to independently control director appointments creates a dependency on government administrative processes, leading to compliance gaps despite operational readiness. While the monetary impact is negligible relative to Rail Vikas Nigam’s scale, the repeated breaches underscore the tension between statutory corporate governance requirements and the centralized appointment mechanisms governing central public sector enterprises.