SEBI fines former Brightcom independent directors for governance lapses

The Securities and Exchange Board of India (SEBI) on Monday, October 6, imposed monetary penalties on Allam Raghunath and Subrato Saha, former independent directors and audit committee members of Brightcom

Group Ltd (BGL), for failing to exercise due diligence in overseeing the company’s financial reporting. While Raghunath has been fined ₹30 lakh, Saha has been directed to pay ₹5 lakh.

In its final order dated October 6, 2025, the market regulator held that both directors failed in their fiduciary responsibilities, contributing to the publication of misstated financial statements by Brightcom between FY2014-15 and FY2019-20, in violation of SEBI’s Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015.

SEBI’s investigation, supported by a forensic audit, found that Brightcom misrepresented its financial position and inflated profits by ₹1,280.06 crore during FY2018-19 and FY2019-20.

The audit revealed that BGL failed to recognise impairment losses arising from the implementation of the EU’s General Data Protection Regulation (GDPR), which significantly affected its operations. Instead, the company incorrectly recorded a loss of ₹868.3 crore under “Other Comprehensive Income” rather than in the profit and loss account for FY2019-20.

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Similarly, Brightcom did not account for an impairment loss of ₹411.76 crore related to a subsidiary’s failed acquisition of Lycos in FY2018-19. The company also wrongly capitalised research and development expenses worth ₹504.49 crore as assets between FY2014-15 and FY2019-20, thereby overstating its profitability.

The regulator noted that these irregularities distorted the company’s financial position, misled investors, and enabled promoters to offload shares at inflated prices—undermining investor confidence and market integrity.

As of June 2025, public shareholders hold nearly 82% of the company, including 43.4% by retail investors and 21.9% by high net-worth individuals (HNIs).

Brightcom Group reported a net profit of ₹710 crore in FY25, up 3.3% year-on-year, while revenue rose 10.4% to ₹5,147 crore.

However, the stock has plunged over 88% from its December 2021 peak. On Monday, shares of Brightcom closed 3.1% lower at ₹13.58 on the NSE, valuing the company at ₹2,740 crore.