Page 86 - KRCL ENglish

of independent directors. In absence of requisite number of independent directors, the
company has not complied with the mandatory requirement pertaining to the composition
of the Board of Directors for the year 2019-20.

To best of our understanding we are of the view that during the period under review the
company has complied with the provisions of the Act, Rules, Regulations, Guidelines,
Standards, etc mentioned above, subject to the following observations.

Observation Number 1: Non Compliance of Section 149 (4) of Companies Act, 2013,
Regulation 17 (b) of the SEBI Listing Obligation and Disclosure Requirement and Clause
3.1.4 of the Guidelines on Corporate Governance for Central Public Sector Enterprises
w.r.t. composition of the Board of Directors of the Company.

Observation Number 2: Non Compliance of Section 177 (2) and Section 178 (1) of
Companies Act, 2013 and Rule 6 of Companies (Meetings of Board and its Powers) Rules
2014 and Clause 18 (1) and 19 (1) of SEBI Listing Obligation and Disclosure Requirement
regarding composition of Audit Committee and Nomination and Remuneration
Committee.

Observation Number 3: Non Compliance of Section 62 (1) (a) (i) of Companies Act 2013,
regarding the closure of Right Issue within 30 days. The company has come out with the
Rights Issue for INR 196 Crore to the shareholders in their existing shareholding proportion
which was kept open from 1.12.2018 to 29.12.2018 (both days inclusive). During the Offer
Period only two shareholders i.e. Ministry of Railways (Central Government) and
Government of Maharashtra have subscribed the shares by contributing its subscription
amount. Against this, the allotment of shares to Government of Goa is being done on
22/04/2019.

However in Principal Approval for subscription to the right issue in the board meeting have
duly been received from Government of Kerala and the Government of Karnataka.

Further, it is observed that the Board of Director in their meeting held on 18.01.2019 have
allowed for receiving the subscription from the shareholders even after the closure of
Rights Issue.

Observation Number 4: There is variation in Authorised Capital of the company as per
master data on Ministry of Corporate affairs Portal and as per se Financial Statement of the
Company. The variation is due to the mismatch in preference shares reported to Registrar
of Companies as against the actual number of Preference shares. It was mentioned by the

84