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Brightcom Group: SEBI Slaps Rs35 Lakh Penalty on 2 Ex-directors for Accounting Irregularities
Moneylife Digital Team 07 October 2025
Investor Interest
Market regulator Securities and Exchange Board of India (SEBI) has imposed a total penalty of Rs35 lakh on two former non-executive, independent directors of Brightcom Group Ltd (BGL) for irregularities in the company’s financial statements. Allam Raghunath has been fined Rs30 lakh, while Subrato Saha has been penalised Rs5 lakh.
 
The penalties follow SEBI's investigation into BGL's financial statements from FY14-15 to FY19-20, triggered by complaints of financial irregularities. The probe, supported by a detailed forensic audit, revealed that BGL had misrepresented its accounts by overstating profits through improper accounting practices.
 
Key issues identified included wrongful treatment of impairment losses and misclassification of expenses. SEBI noted that these misstatements inflated BGL’s profits by nearly Rs1,280 crore over FY18-19 and FY19-20, enabling promoters to sell shares at higher prices.
 
The regulator found that the company failed to recognise impairment losses arising from GDPR-related changes and the failed Lycos acquisition. Losses were misclassified in consolidated results, research and development expenses worth Rs504.49 crore were wrongly capitalised and intangible assets were misreported. These lapses distorted the company’s true financial position.
 
Mr Raghunath, who served as an independent director from 2012 to 2021 and chaired the audit committee from 2017, was held liable for failing to exercise due diligence, despite attending most committee meetings and signing off on financial statements.
 
SEBI emphasised that as chairman of the audit committee, he should have questioned material irregularities, particularly given his IT expertise and long association with BGL. Further, he was found to have submitted a false declaration of independence, as his daughter had been employed with BGL group entities, rendering him ineligible to serve as an independent director from FY15-16.
 
Mr Saha, who was an independent director from 2015 to 2017, attended only a few audit committee meetings. He contended that his tenure ended before major irregularities surfaced in FY19-20. However, SEBI observed that several misstatements had begun during his tenure.
 
As a member of the audit committee, he was obligated to exercise oversight and his limited participation, coupled with reliance on the chairman and managing director (CMD) and chief financial officer (CFO), amounted to negligence in fulfilling his responsibilities, the market regulator says. 
 
SEBI concluded that both Mr Raghunath and Mr Saha violated Clause 49 III D of the Listing Agreement and Regulation 18(3) of LODR which require audit committees to ensure compliance with accounting standards and that financial statements present a true and fair view.
 
In addition, Mr Raghunath’s false declaration breached Regulation 16(1)(b) of LODR concerning the independence of directors. While SEBI noted that there was no direct evidence of illegal gains or investor losses caused by the two directors, the misrepresentation of financials undermined market integrity and price discovery. Considering the seriousness of their lapses, SEBI imposed penalties of Rs30 lakh on Mr Raghunath and Rs5 lakh on Mr Saha under Section 15HB of the SEBI Act. 
 
This action follows SEBI’s earlier final order against BGL and its executive directors which had found extensive misrepresentation of accounts between FY14-15 and FY19-20.
 
These recent penalties against the independent directors are part of a wider crackdown by SEBI on Brightcom Group. In a separate settlement, BGL director and two top officials paid Rs35.42 lakh to SEBI to resolve violations of disclosure norms, highlighting continued regulatory enforcement to ensure transparency in corporate governance.(Read: Brightcom Group’s Director, 2 Top Officials Pay Rs35.42 Lakh To Settle Disclosure Norm Violations Case with SEBI ).
 
Further, SEBI has also taken strict action against the promoters of Brightcom Group. The promoters were fined Rs34 crore and barred from the securities market for five years, including M Suresh Kumar Reddy and Vijay Kancharla, demonstrating SEBI’s firm stance against misrepresentation of accounts and market misconduct (Read: Brightcom Group: SEBI Suggests ED Examination in Overseas Loan Settlement by Ex-CMD Suresh Kumar Reddy)
 
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