IRCON International has disclosed the imposition of regulatory fines by both major Indian stock exchanges for non-compliance with board composition requirements. The Navratna company received penalty notices dated February 27, 2026, highlighting ongoing governance challenges faced by government-controlled entities.

Fine Details and Regulatory Violations

Both NSE and BSE have imposed identical fines on the company for the quarter ended December 31, 2025:

The violations specifically relate to non-compliance with SEBI's Listing Obligations and Disclosure Requirements (LODR) regulations concerning the composition of the board and its committees.

Company's Response and Justification

IRCON has responded to both exchanges explaining its unique position as a government company under Section 2(45) of the Companies Act, 2013. The company emphasized several key points:

• Government Control: The President of India holds the power to appoint all directors, including independent directors and woman directors
• Ministry Oversight: All director appointments are made by the Government of India through the Ministry of Railways
• Limited Authority: IRCON has no role in director appointments unless specifically nominated by the government
• Continuous Requests: The company has been persistently requesting the Ministry of Railways for appointment of requisite independent directors

Financial Impact and Classification

The company has assessed the financial implications of the regulatory penalty:

Historical Context and Future Outlook

IRCON noted that this situation has precedent, with both exchanges having previously waived similar fines upon the company achieving requisite compliance. The company expects similar treatment once the Ministry of Railways appoints the required number of independent directors.

The disclosure, signed by Company Secretary and Compliance Officer Pratibha Aggarwal, was made pursuant to Regulation 30 of SEBI (LODR) regulations. The event was recorded on February 27, 2026, at 17:43 hours, with the formal disclosure made on February 28, 2026.

This case highlights the ongoing challenges faced by government-controlled listed companies in balancing regulatory compliance with administrative processes inherent in government appointment procedures.

Ircon International has suffered a significant legal setback as the Patna High Court dismissed its writ petition challenging VAT assessments related to the Ganga Bridge Project. The court's judgment dated February 25, 2026, upheld the assessing authority's demands, leaving the company with substantial financial obligations.

Court Judgment Details

The Patna High Court's decision represents a major blow to Ircon International's legal strategy. The company had challenged VAT assessments through a writ petition and secured a stay on recovery proceedings. However, after hearings concluded in early December 2025, the court reserved its order and subsequently dismissed the petition on February 25, 2026.

Financial Impact and Outstanding Demands

The VAT assessments for the Ganga Bridge Project span multiple years from 2010-11 to 2016-17, resulting in a total demand of ₹108.75 crore. This amount has been appropriately reflected as a contingent liability in the company's books. Ircon has already deposited ₹27.39 crore toward this demand, leaving a net outstanding amount of ₹81.36 crore.

The outstanding amount of ₹81.36 crore is exclusive of up-to-date interest, which is yet to be calculated by the VAT department. This additional interest component could further increase the company's financial burden.

Company's Response and Future Actions

Following the adverse judgment, Ircon International is currently reviewing the detailed court order to assess its options. The company has indicated its intention to pursue appropriate further actions, including the possibility of filing an appeal to a higher court. This suggests that the legal battle may continue despite the current setback.

The company made this disclosure under Regulation 30 of the SEBI Listing Regulations, continuing from its previous communication dated August 14, 2023. The disclosure was signed by Company Secretary and Compliance Officer Pratibha Aggarwal on February 26, 2026.