Shares of Brightcom Group hit its 5 percent lower circuit of ₹22.98 on Wednesday after market regulator Securities and Exchange Board of India (Sebi) passed an interim order against the Group banning Suresh Kumar Reddy and Narayan Raju from holding any directorial positions until further notice.
Reddy is the promoter-cum-chairman and managing director of Brightcom Group whereas Raju is the chief financial officer. Sebi also restrained ace investor Shankar Sharma and 21 other investors from selling shares in the company. Overall, 25 entities and individuals have been restricted from trading the stock.
The market regulator Sebi has also barred the company from the securities market until further notice.
This comes after an investigation that revealed that money it raised via preferential issue of shares/warrants to entities that were directly or indirectly connected to it in the FY19-21 period. It further mentioned that the money raised was given as loans and advances to its subsidiaries and that the proper disclosures were not made in the annual report of the company with respect to the utilisation of the proceeds of the preferential issue.
“Brightcom Group has brazenly attempted to cover up its misdeeds by submitting forged and fabricated bank statements to Sebi,” Sebi Wholetime Member Ashwani Bhatia said in his interim order.
Brightcom Group had issued warrants/shares on a preferential basis on four occasions and raised ₹868 crore from a total of 82 allottees, which including ace investor Shankar Sharma. The Group had allotted 1,50,00,000 warrants to Shankar Sharma, which was later converted into shares in March 2022, at ₹37.70 for a total of ₹56.65 crore.
In the course of the investigation, Sebi also discovered that the 22 allottees were allotted 25,76,50,000 equity shares for ₹245.24 crore and the company had received only ₹52.51 crore. Meanwhile, the remaining amount of ₹192.73 crore was either not received by the company or was routed back to the said allottees through multiple layering of transactions.
Comparing the company's bank account statements and the direct statement from the bank, the market regulator observed that they did not match.
Sebi informed that BGL has only received ₹39.98 crore (including ₹14.19 crore which could not be verified) as against the total consideration due of ₹56.6555 crore and has not received the entire share application money from Shankar Sharma.
"However, even after repeated reminders, BGL failed to provide documentary evidence of receipts of warrant/share application money from Shankar Sharma in its bank accounts. It was observed that BGL had received ₹25.7936 crore from Shankar Sharma. Subsequently, Sharma vide emails dated July 25 & 26, 2023, informed Sebi that he paid ₹14.19 crore towards warrant application money to BGL’s HDFC Bank account. In this regard, he submitted a copy of his bank account statement. However, in the said statements, all the particulars of the transaction, except the amount, were concealed by redaction. Due to the same, the above payment could not be verified and the same is still under examination," Sebi said.
Sebi has also directed the Group to ensure that P Murali & Co. and M/s PCN & Associates, including their past and present partners, are not engaged with Brightcom Group or its subsidiaries in any capacity or manner whatsoever, until further order.
However, after the market regulator barred Shankar Sharma from selling shares of Brightcom Group, the ace investor took to X, formerly Twitter, to say he had submitted all required reconciled remittance data to the regulator.
The stock has fallen 48 percent in the last one year and 21 percent in 2023 YTD.
