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KIOCL, the state-owned enterprise under the Ministry of Steel in India, has reached out to major stock exchanges seeking relief from a substantial financial penalty. The company has been fined Rs 17 lakh by the Bombay Stock Exchange (BSE), National Stock Exchange (NSE), and Metropolitan Stock Exchange (MSE) for not complying with the rules regarding the appointment of independent directors for the quarter ending September 2023.
In its filings to BSE, KIOCL clarified that the non-compliance issue has not affected its financial performance or operational activities. The company stressed that it is in a situation where it has limited control over the appointment of its board members, as these appointments are made by the President of India and facilitated by the Ministry of Steel. Despite this challenge, KIOCL maintains that it is actively working towards meeting compliance requirements.
The penalty of Rs 5,42,800 imposed by each exchange resulted from KIOCL’s inability to adhere to Regulation-17(1), which mandates a certain composition of independent directors on the board. The company has petitioned the government to nominate sufficient independent directors in order to align with regulatory standards.
KIOCL operates significant manufacturing facilities at its Mangaluru site, which includes an iron-oxide pellet plant with an annual capacity of 3.5 million tonnes per annum (MTPA) and a pig iron production unit with an output of up to 2.16 lakh tonnes annually. These operations are crucial components of KIOCL’s business model and contribute significantly to its output.
The request for clemency from stock exchange fines underscores KIOCL’s commitment to regulatory compliance while highlighting the unique challenges faced by government-owned corporations in India regarding corporate governance.
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