Brightcom Group Hit 5% Lower Circuit On SEBI’s 2nd Interim Order On Promoters

Brightcom Group Hit 5% Lower Circuit On SEBI's 2nd Interim Order On Promoters

A day after the Securities and Exchange Board of India (SEBI) issued a second interim order against the company prohibiting Suresh Kumar Reddy and Narayan Raju from retaining any directorial roles until further notice on lapses found in preferential issue of shares, the share price of Brightcom Group hit its 5% lower circuit of Rs 22.98 at its opening on Wednesday.

Market specialist Shankar Sharma and 21 additional individuals and organisations are not allowed to sell shares till further notice, according to SEBI.

"We have submitted all reqd reconciled remittance data to SEBI today, totalling to RS.56.65 Cr for 1.5 Cr shares @ 37.7 RS= 56.65 Cr. Delay was because of bank reconciliation data pending from Co. We look forward to early closure of the matter," Shankar Sharma responded on the matter.

At the end of the June 2023 quarter, Shankar Sharma held 2.30 crore shares of the company, as per BSE.

Brightcom claimed to have provided loans totalling Rs 824 crore to its subsidiaries, but Sebi found that only Rs 350.75 crore had been transferred, and the remainder of the amount was mismatched in the bank statements. Brightcom Group and its promoters received penalties of 40 lakh by SEBI in June for violating rules. Geetha Kancharla received a penalty of 12 lakh, Vijay Kumar Kancharla HUF, Vijay Kumar Kancharla, Karta of HUF, and M Suresh Kumar Reddy (Chairperson and MD) received penalties of 6 lakh respectively, S V Rajyalaxmi Reddy received a fine of 5 lakh, and Brightcom Group Ltd. received a fine of 12 lakh.

Shankar Sharma received 1,500,000 warrants which were later converted into shares on March 9, 2022 with a face value of Rs 2 apiece, for a total price of Rs 56.65 crore, to be paid during the fiscal year 2021-2022. Brightcom Group said that it had been paid a total of Rs. 56.65 crore. According to Sebi, of the total consideration payable of Rs. 56.6555 crore, it appears that BGL has only received Rs. 39.98 crore, including Rs. 14.19 crore which could not be validated.

"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 Rs.25.7936 crore from Shankar Sharma. Subsequently, Sharma vide emails dated July 25 & 26, 2023, informed Sebi that he paid Rs.14.19 crore towards warrant application money to BGL's HDFC Bank account. In this regard, he submitted 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.

"BGL had received Rs.25.7936 Crore from Mr. Shankar Sharma. Subsequently, Mr. Shankar Sharma vide emails dated July 25 & 26, 2023 informed SEBI that he paid Rs.14.19 Crore towards warrant application money to BGL's HDFC Bank Account. In this regard, he submitted 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. Therefore, it appears that BGL has only received Rs.39.98 Crore (including Rs.14.19 Crore which could not be verified) as against total consideration due of Rs.56.6555 Crores and has not received the entire share application money from Mr. Shankar Sharma and that BGL's claims in this regard are false," the circular stated.

"Further, while BGL claimed that total consideration of Rs.56.6555 Crore had been received from Mr. Shankar Sharma between 29/10/2021 to 09/03/2022, BGL's bank statements showed that Rs.25.7936 Crore was transferred by Mr. Shankar Sharma to BGL between 11/07/2022 to 28/11/2022," the order said.

"During the investigation, SEBI delved into the receipt of warrant / share application money from some of the preferential allottees. It was observed that in respect of 22 allottees who were allotted 25,76,50,000 equity shares for Rs.245.24 Crore, the Company had received only Rs.52.51 Crore and the remaining amount of Rs.192.73 Crore was either not received by the Company or was routed back to the said allottees through multiple layering of transactions involving subsidiaries and conduits," the circular stated.

"In the fourth and last preferential issue, 1,50,00,000 warrants were allotted to Mr. Shankar Sharma at Rs.37.77 per warrant, which were converted into equity shares on March 09, 2022 and listed on the Exchanges on April 19, 2022," the order said.

Commenting on the outlook of the stock, AR Ramachandran from Tips2trades said "Brightcom Group stock price is bearish with strong resistance now at 25.4 on the Daily charts. A daily close below support of 23.3 could lead to a target of 20.5 in the near term."