 "Brightcom")
Shares of Brightcom Group (BGL) hit 5 per cent lower circuit on the BSE in Wednesday's intra-day trade after market regulator Securities and Exchange Board of India (Sebi) discovered lapses in utilisation of proceeds raised from preferential issues.
From the peak of Rs 117 apiece touched on November 11, 2021, the stock was off over 400 per cent on Wednesday's intra-day trade. Earlier this year, the stock had hit a 52-week low of Rs 9 per share on April 28, 2023.
"The preliminary findings of the investigation prima-facie indicated irregularities in the preferential allotments by BGL, which included circulation of funds to create false impression of receipt of warrant or share application money," said Sebi in an order on August 22, 2023.
The market regulator, alleged that the funds raised via preferential issue of shares that were meant to be given as loans and advances to its subsidiaries directly or indirectly appeared to be overstated.
Out of preferential issue proceeds of Rs 867.7 crore, Rs 824 crore was given as loans to two of its wholly-owned subsidiaries - LIL Projects (Rs 506 crore) and YReach Media (Rs 318 crore).
However, the total amount received by LIL Projects from BGL amounted to only Rs 257 crore, as against BGL's claim of Rs 506 crore loan grant.
Similarly, YReach's actual amount came to Rs 93.7 crore, as against BGL's claim of Rs 318 crore loan grant, said the Sebi order.
Furthermore, it was observed that around Rs 25.1 crore were transferred by BGL and its subsidiaries to CMD and Promoter M Suresh Reddy, though such payments to the promoter was never the objective of the said preferential issues.
That apart, the shares allotted on preferential basis to non-promoter allottees offloaded their holdings before the expiry of their lock-in period, which was for a period of three years.
Veteran investor Shankar Sharma is also under the radar as he was allotted 1.5 crore warrants at Rs 37.7 per share in fiscal year 2021-22 for total consideration of Rs 56.6 crore.
However, as per Sebi's order, BGL only received Rs 39.9 crore as against Rs 56.6 crore.
Hours after Sebi's release, Sharma took to X, formerly called Twitter and said that all required remittance data was submitted to Sebi.
"The delay was because of bank reconciliation data pending from the company. We look forward to early closure of the matter," he added in his tweet.
Given this, Sharma and 21 other individuals and entities have been prohibited from disposing off shares until further notice.
Moreover, Suren Kumar Reddy (CMD and promoter), and Chief Financial Officer Narayan Raju was restrained by Sebi from holding any directorial positions in the company until further notice. They were also barred from the securities market until further notice.
From the peak of Rs 117 apiece touched on November 11, 2021, the stock was off over 400 per cent on Wednesday's intra-day trade. Earlier this year, the stock had hit a 52-week low of Rs 9 per share on April 28, 2023.
"The preliminary findings of the investigation prima-facie indicated irregularities in the preferential allotments by BGL, which included circulation of funds to create false impression of receipt of warrant or share application money," said Sebi in an order on August 22, 2023.
The market regulator, alleged that the funds raised via preferential issue of shares that were meant to be given as loans and advances to its subsidiaries directly or indirectly appeared to be overstated.
Out of preferential issue proceeds of Rs 867.7 crore, Rs 824 crore was given as loans to two of its wholly-owned subsidiaries - LIL Projects (Rs 506 crore) and YReach Media (Rs 318 crore).
However, the total amount received by LIL Projects from BGL amounted to only Rs 257 crore, as against BGL's claim of Rs 506 crore loan grant.
Similarly, YReach's actual amount came to Rs 93.7 crore, as against BGL's claim of Rs 318 crore loan grant, said the Sebi order.
Furthermore, it was observed that around Rs 25.1 crore were transferred by BGL and its subsidiaries to CMD and Promoter M Suresh Reddy, though such payments to the promoter was never the objective of the said preferential issues.
That apart, the shares allotted on preferential basis to non-promoter allottees offloaded their holdings before the expiry of their lock-in period, which was for a period of three years.
Veteran investor Shankar Sharma is also under the radar as he was allotted 1.5 crore warrants at Rs 37.7 per share in fiscal year 2021-22 for total consideration of Rs 56.6 crore.
However, as per Sebi's order, BGL only received Rs 39.9 crore as against Rs 56.6 crore.
Hours after Sebi's release, Sharma took to X, formerly called Twitter and said that all required remittance data was submitted to Sebi.
"The delay was because of bank reconciliation data pending from the company. We look forward to early closure of the matter," he added in his tweet.
Given this, Sharma and 21 other individuals and entities have been prohibited from disposing off shares until further notice.
Moreover, Suren Kumar Reddy (CMD and promoter), and Chief Financial Officer Narayan Raju was restrained by Sebi from holding any directorial positions in the company until further notice. They were also barred from the securities market until further notice.
That said, the management on August 23, reassured investors that they would take right course of action.
"The company is evaluating potential action courses to address this situation effectively. We are in consultation with legal experts to ensure that all our responses are in the company's and its shareholders' best interest," they added.
