Brightcom group news: On Thursday, the Securities and Exchange Board of India (Sebi) banned M Suresh Kumar Reddy, chairman and managing director of Brightcom Group, and Vijay Kancharla, the full-time director and promoter, from the securities market for a period of five years each on charges of financial misrepresentation and disclosure violations.
What is wrong with Brightcom Group?
Kancharla and Reddy are also barred from holding any key positions in publicly traded companies.
The new media corporation had been given a show-cause notice-cum-interim order by the market authority in 2023. Reddy was barred from markets by a second interim order issued by Sebi.
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Regulator’s final verdict that has imposed Rs 34 crore as penalties on five entities, out of the total amount, an amount of Rs 15 crores has been ordered to be recovered from Reddy and Kancharla.
One of the disclosure and accounting standard violations listed in the order is a misstated shareholding pattern. These enabled Brightcom’s promoters to up their ownership stakes from 40.45% in March 2024 to 3.51% in June 2022.
Also, the acknowledgement of the major adverse impairment of assets had come in terribly belated.
The order stated that in FY19 and FY20, the profits were unduly inflated by Rs 1,280 crore due to accounting irregularities.
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Investors were deprived of a timely, accurate, and fair assessment of the company’s financial health because of the overstated earnings in the false financial statements and the disclosures violations. “It would certainly run contrary to investors’ interests to let this situation continue,” pointed out Ananth Narayan, a veteran Sebi member, in the order.
Sebi pointed out that Brightcom Group had disregarded the instructions in the previous interim order. It further stated that no computation of real illicit gains has been made because of the company’s non-cooperation.
