SEBI cracks down on Brightcom Group for accounting irregularities
April 16, 2023
Markets regulator Securities and Exchange Board of India (SEBI) has cracked down on ed-tech and new-media company Brightcom Group Limited (BGL) through an order for non-compliance and violation of norms.
The Hyderabad-headquartered Brightcom Group has understated expenses and inflated profits after SEBI launched a financial probe for the period 2014-15 to 2019-20, the market regulator said.
It issued show-cause notices to top executives of the company, including Suresh Reddy, the company’s chairman and managing director.
“The scale of the fraud is really huge. The company tried to fudge more and more accounting entries 1,280 crore for giving a distorted picture of its financial position during 2018-19 and 2019-20, Sebi said in its order.
The promoters’ stake in BGL declined from 40.45 per cent as on March 31, 2014 to 13.96 per cent as on March 31, 2020 and 3.51 per cent as on June 30, 2022.
During the financial year 2021-22, the company had made preferential allotment of equity shares to 79 allottees and 836.38 cr.
“Such allottees included 4 entities which later became part of the promoter group. Based on the same, the shareholding of the promoters and promoter group of the company now stands at 18.47% as on December 31, 2022. The above preferential allotment was made at Rs 7.70 per share (face value of each share was Rs). .2). Subsequently, there were two Bonus Issues in the ratio of 1:4 and 2:3 during FY 2021-22, resulting in effective allotment for the preferential allottees at Rs.3.70 (approx.) per share. SEBI in its order
Sebi said that the promoter group of the company has ‘directly benefited as a result of the falsification of the financial statements’.
“However, prior to the above preferential allotment, the promoter group sold shares when the average price of the scrip was much higher than the effective allotment price. Keeping this in view, it is clear that the above increase in shareholding by the promoters was achieved at a cost much lower than the price at which the promoters offloaded a substantial percentage of their shareholding by way of said pledging.
The company and its directors have been ordered to examine their consolidated financial statements for the period 2014-15 to 2021-22 to ensure that they are in compliance with all applicable accounting standards.
SEBI has issued this direction in the light of several non-compliances as well as violations of the accounting standards as well as disclosure norms by the company.
The company is also ordered to disseminate on its website the standalone financial statements of each of its subsidiaries for the period between FY 2014-15 and FY 2021-22, as required under SEBI (LODR) Regulations, 2015, within fifteen days. Has been given.
Brightcom Group barely saw a jump in its share price to a high of 4 in April 2021 118 in December 2021. On Thursday, at the end of the trading day, the stock was trading 15.45.