New Delhi- India’s market regulator, Securities and Exchange Board of India (Sebi), has imposed fines totaling ₹35 lakh on two former independent directors of Brightcom Group Ltd (BGL). Between FY15 and FY20, serious accounting irregularities artificially inflated company profits by ₹1,280.06 crore, misleading investors and allowing promoters to sell shares at inflated prices.
Timeline of Events
- April 13, 2023: Sebi issued an interim order against BGL, its directors, and CFO, citing violations of securities laws.
- September 3, 2024: Sebi issued Show Cause Notices (SCNs) to seven individuals, including Allam Raghunath and Subrato Saha.
- February 6, 2025: Sebi’s final order confirmed BGL’s violations of accounting standards between FY15-FY20.
- October 7, 2025: Sebi imposed fines of ₹30 lakh on Raghunath and ₹5 lakh on Saha.
Accounting Irregularities
SEBI’s forensic investigation revealed that BGL had:
1. Incorrect Capitalization of R&D Costs: Expenses during research and development phases were wrongly treated as capital expenditure.
2. Delayed Recognition of Impairment Loss: Losses on subsidiary investments were not recorded in a timely manner.
3. False Declarations by Director: Allam Raghunath submitted annual declarations from FY15-16 claiming he met independence criteria, which were false.
Impact: These irregularities caused an artificial profit inflation of ₹1,280.06 crore during FY18-19 and FY19-20, misleading investors and benefiting promoters during share sales.
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Regulatory Significance and Market Impact
SEBI emphasized:
“Manipulation in financial statements directly undermines market transparency and fairness. We are committed to taking strict action against such violations.”
Analysts note that this action reflects increasing scrutiny on corporate governance in India and signals that even non-executive directors can be held accountable for oversight lapses
Broader Implications
Brightcom Group, a digital advertising and media technology company, has faced repeated controversies over its accounting practices. The SEBI order underscores:
- Growing regulatory vigilance in India’s capital markets.
- The critical importance of accurate financial reporting to maintain investor trust.
- Personal liability of directors for failing to ensure compliance with accounting standards.
Experts say this case is a wake-up call for Indian corporates, reinforcing that accounting violations will not be tolerated and investors’ interests will remain a top priority.
