SEBI Penalizes Former Brightcom Directors for Financial Oversight Failures

On October 6, 2025, the Securities and Exchange Board of India (SEBI) imposed monetary penalties on Allam Raghunath and Subrato Saha, former independent directors and audit committee members of Brightcom Group Ltd (BGL), for failing to uphold their oversight responsibilities in the company’s financial reporting processes.

Monetary Penalties on Directors

In its final order, SEBI stated that both individuals neglected their fiduciary duties, contributing to the dissemination of materially misstated financial statements by Brightcom over several years. The regulator concluded that this failure constituted a breach of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Therefore, Raghunath has been fined ₹30 lakh, while Saha has been penalised ₹5 lakh.

The penalties stem from findings of an SEBI investigation, which was backed by a forensic audit. The probe uncovered that Brightcom had significantly misrepresented its financial health and inflated profits by ₹1,280.06 crore across FY2018-19 and FY2019-20.

SEBI’s Investigation and Findings

Key audit findings revealed:

• Brightcom failed to recognise impairment losses caused by the operational impact of the European Union’s General Data Protection Regulation (GDPR). Instead of reflecting the ₹868.3 crore loss in the profit and loss statement for FY2019-20, the company incorrectly categorised it under “Other Comprehensive Income.”
• In FY2018-19, Brightcom neglected to report an impairment loss of ₹411.76 crore related to a failed acquisition involving its subsidiary and Lycos.
• The company also wrongly capitalised research and development expenses totaling ₹504.49 crore as assets between FY2014-15 and FY2019-20, thereby overstating its profits over multiple years.

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Brightcom reported a net profit of ₹710 crore for FY2024-25, marking a 3.3% year-on-year increase. Revenue for the same period rose 10.4% to ₹5,147 crore. As of June 2025, nearly 82% of Brightcom’s equity is held by public shareholders, including 43.4% by retail investors and 21.9% by high net-worth individuals (HNIs), underscoring the wide impact of the misstatements.

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