Sebi bars Brightcom Group chairman, whole-time director for 5 years

Chairman and whole-time director debarred from the markets for five years

The Securities and Exchange Board of India (Sebi) on Thursday debarred Brightcom Group’s chairman and managing director, M Suresh Kumar Reddy, and whole-time director and promoter, Vijay Kancharla, for five years each from the securities market, alleging financial misrepresentation and disclosure violations.

 

Reddy and Kancharla have also been restricted from taking any key position in listed companies.

 

The market regulator had issued a show-cause notice-cum-interim order to the new media company in 2023. In a second interim order, Sebi had barred Reddy from the markets.

 

On Thursday, the regulator issued the final order, imposing a total penalty of Rs 34 crore on Brightcom and four others. Of this, Reddy and Kancharla have been imposed with a penalty of Rs 15 crore each.

 

The order notes that various accounting standards violations and disclosure violations, including an incorrect shareholding pattern, enabled promoters of Brightcom to offload their shareholding from 40.45 per cent in March 2024 to 3.51 per cent in June 2022.

 

Further, there was a significant delay in the recognition of material adverse impairment of assets.

 

The accounting irregularities had led to an “artificial inflation” of profits to the extent of Rs 1,280 crore in FY19 and FY20, noted the order.

 

“The misrepresented financial statements with inflated profits, along with disclosure violations, led to investors not having a true, fair, and timely assessment of the financial position of the company. Permitting this situation to continue would undoubtedly harm the interests of investors,” noted Ananth Narayan, whole-time member of Sebi, in the order.

 

Sebi noted that Brightcom had not complied with directions issued in the earlier interim order. It added that due to the non-cooperation of the company, there is no computation of actual illegal gains.