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WTM/ASB/CFID/CFID_4/25730/2023-24
SECURITIES AND EXCHANGE BOARD OF INDIA
INTERIM ORDER CUM SHOW CAUSE NOTICE
Under Sections 11(1), 11(4), 11(4A), 11B(1) and 11B(2) of the Securities and
Exchange Board of India Act, 1992 and Section 12A(2) of Securities Contracts
(Regulation) Act, 1956 read with Rule 4(1) of the SEBI (Procedure for Holding
Inquiry and Imposing Penalties) Rules, 1995 and Rule 4(1) of Securities
Contracts (Regulation) (Procedure for Holding Inquiry and Imposing Penalties)
Rules, 2005
In respect of:
SL. No. NOTICEE(S) PAN

1 Brightcom Group Ltd. AAACL5827B
2 Mr. M. Suresh Kumar Reddy AOOPM8696J
3 Mr. Vijay Kancharla ATNPK0320K
4 Mr. Yerradoddi Ramesh Reddy AAHPY4543K
5 Mr. Y. Srinivasa Rao AAEPY9390B
(The aforesaid entities are hereinafter individually referred to by their respective names /
Noticee no. and collectively as “Noticees”, unless the context specifies otherwise)
In the matter of Brightcom Group Ltd.

__________________________________________________________________
Background:
1. Pursuant to receipt of certain complaints during the period October 2020 to
March 2021 inter alia alleging misstatements/ irregularities in the Financial
Statements of Brightcom Group Ltd. (“BGL” / “Brightcom” / “the Company”),
a listed company, Securities and Exchange Board of India (hereinafter
referred to as “SEBI”) initiated an investigation into the affairs of the Company
for the period covering financial years (FYs) from 2014-15 to 2019-20, with a
special focus on impairment of assets, so as to ascertain possible violations,
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Interim Order cum Show Cause Notice in the matter of Brightcom Group Ltd. Page 1 of 77
if any, of the provisions of the SEBI Act, 1992 and regulations thereunder and
the Securities Contracts (Regulations) Act, 1956 (“SCRA, 1956”).
2. Brightcom is in the business of Ad-Tech, New Media and digital advertising

and has subsidiaries and operations in various geographies including in the
US, Israel, Latin America, Western Europe and Asia Pacific regions. The
Company is headquartered in Hyderabad. As per the Company’s Annual
Report for the FY 2019-20, it has two Indian subsidiaries and 14 overseas
subsidiaries. The present promoters of the Company had taken over the
erstwhile listed company, Lanco Global Systems Ltd., and amalgamated it
with an unlisted company, Ybrant Digital Ltd., through a scheme of
amalgamation approved by the Hon’ble High Court of Andhra Pradesh dated
April 11, 2012. Pursuant to the same, the Company’s name was changed
from "LGS Global Ltd.” to "Ybrant Digital Ltd." with effect from June 14, 2012.
Later, the Company’s name was changed to “Lycos Internet Ltd.” with effect
from October 07, 2014 and to “Brightcom Group Ltd.” with effect from
September 05, 2018.
3. The Company claims to be a leading global provider of comprehensive online

or digital marketing services to direct marketers, brand advertisers, and
marketing agencies. The Company’s operations are divided into three major
divisions: (i) Media (Ad-Tech and digital marketing), (ii) Software services,
and (iii) Future technologies. The Company claims to have 25 office locations
with 1700 employees and consultants worldwide, including in the US, Israel,
Latin America, Western Europe and Asia Pacific regions. The reported
Promoter Shareholding in the Company during the FYs 2015 to 2019-20 has
ranged between 39.83% to 39.05%. It stood at 39.14% at the end of March
2020.
4. An overview of the audited annual financial results of BGL, as taken from its
Annual Reports, is provided below:
Consolidated figures for the financial year ended (Rs. Lakhs)

Particulars Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
Total Income 1,67,487 1,97,117 2,26,079 2,45,200 2,42,028 2,57,772 2,70,646
Profit before Tax 27,287 52,199 60,013 61,901 59,035 60,855 61,714
Net Profit/(Loss) 22,096 34,222 40,505 42,924 40,700 44,397 44,010
Total Assets/Liabilities 1,80,289 2,08,494 2,39,670 3,26,257 2,85,248 3,46,430 3,27,000
Cash Flow From Operations 21,097 27,559 24,370 15,143 31,480 50,981 8,905
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Particulars (Annual Standalone Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
INR Lakhs.)
Total Income 61,007 50,282 46,433 46,623 45,482 45,672 48,029
Profit before Tax 1,375 12 34 (323) (361) (213) (113)
Net Profit/(Loss) 916 174 34 (281) (294) (321) (143)
Total Assets/Liabilities 1,08,244 9,60,92 88,435 86,950 87,699 87,733 85,010
Cash Flow From Operations (2,563) 6,472 852 (16) (24) (883) (792)
Findings of the Investigation:

5. During investigation, in response to various summonses issued to the
Company seeking information and documents, the Company submitted
information in multiple tranches, which were incomplete in many aspects.
Further, the bulk of the documents and information sought, viz. accounting
data of BGL and its subsidiaries, ledgers of assets impaired, bank statements
of subsidiaries and other information remained pending. Even after providing
sufficient time i.e. almost a year to furnish the sought information, the same
was not forthcoming. Based on the information available on record, prima-
facie findings and observations were made in the matter, which were
communicated to BGL vide summons dated October 04, 2022. BGL was
advised to provide its detailed comments along with supporting documents.
Further, summons dated October 06, 2022 was also issued to the Chairman
and Managing Director of BGL, Mr. Suresh Reddy, to appear before the
Investigating Authority and provide comments to the prima facie findings /
observations of investigation.
6. BGL vide email dated October 12, 2022, furnished its detailed response along
with supporting documents. Further, Board of Directors of BGL, through its
representative Mr. S.L. Narayana Raju, appeared before the Investigating
Authority on October 13, 2022, and his statement was recorded.
Subsequently, Mr. Raju furnished further information and documents vide
emails dated October 17, 2022 and October 19, 2022, as undertaken by him
during the statement recording.
7. The final findings of investigation, after considering the replies of BGL and its
CFO in response to interim findings, are discussed in the subsequent
paragraphs under appropriate headings.
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A. Deficiencies in Books of Accounts of Foreign Subsidiaries of BGL:
8. A number of deficiencies in the Books of Accounts and other information

pertaining to the Company’s foreign subsidiaries, as furnished by BGL to
SEBI, were observed. The same mainly pertained to assets impaired in FY
2019-20 to the tune of Rs.868.30 Crores.It was observed that ledger
accounts/ transactions recorded were not maintained product-wise,
expenses were capitalized as a single journal entry at the end of the year and
detailed breakup of expenses incurred, invoices raised, and respective
payments were not furnished. As these details were not available, it could not
be ascertained as to which year's assets were impaired and which year's
assets were continuing in the balance sheet. Further, payments made for
corresponding expenses could not be ascertained. In order to confirm the
payments to vendors/employees, the bank account statements were sought
from the Company but the same were partially provided, from which, only on
an aggregate basis it could be verified whether payments were made to
vendors. The subsidiary wise impairment amounts are tabulated below:
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Name of the Online Max Dyomo Intl DA- Frontier
DA- Mexico YDL Brasil DA-Chile DA-Panama Total
Subsidiary Media Interactive Corp Expressions Argentina Data
Format in which the
Tally Tally Tally Tally Excel Excel Tally Tally Tally Excel
data was furnished
(Amount in USD)
Impaired OCA 1,67,54,380 42,24,536 40,09,691 1,08,52,785 45,32,714 28,49,946 51,81,880 68,63,842 25,20,188 1,33,86,267 7,11,76,229
Impaired Loans & adv 1,29,52,800 9,48,388 42,07,412 38,26,076 38,80,439 72,26,869 61,82,124 21,12,046 38,91,972 60,99,232 5,13,27,358
Total impairment 2,97,07,180 51,72,923 82,17,103 1,46,78,861 84,13,153 1,00,76,815 1,13,64,004 89,75,887 64,12,160 1,94,85,499 12,25,03,586
(Amount in INR)
Other current assets 1,18,75,50,467 29,94,35,096 28,42,06,886 76,92,45,390 32,12,78,789 20,20,04,200 36,72,91,651 48,65,09,089 17,86,30,936 94,88,18,591 5,04,49,71,095
Loans & adv 91,80,94,462 6,72,21,719 29,82,21,392 27,11,92,297 27,50,45,497 51,22,40,449 43,81,88,944 14,97,01,790 27,58,62,982 43,23,13,582 3,63,80,83,114
Total impairment in
INR 2,10,56,44,929 36,66,56,815 58,24,28,278 1,04,04,37,687 59,63,24,286 71,42,44,649 80,54,80,595 63,62,10,879 45,44,93,918 1,38,11,32,173 8,68,30,54,209
Note: Exchange rate of 1 USD = 70.88 INR is used in the above table which is arrived at BGL’ note on impairment of assets for the FY 2019-20 published on exchanges website on July 01, 2020.
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Online Max Intl DA- Frontier
DA- Mexico YDL Brasil Dyomo Corp DA-Chile DA-Panama Total (in USD)
Subsidiary Name Media Interactive Expressions Argentina Data
OTHER CURRENT ASSETS
Unable to ascertain which year’s assets were impaired and which year’s assets are continuing in the balance sheet As the expenses for which the payments were made could not be ascertained,
1 party-wise ledger accounts were not maintained for aforesaid expenses. Further, in absence of detailed break-up of the expenses, unable to verify the date of actual payments to the vendors/
employees.
Impaired OCA 1,67,54,380 42,24,536 40,09,691 1,08,52,785 45,32,714 28,49,946 51,81,880 68,63,842 25,20,188 1,33,86,267 7,11,76,229
2 Expenses (Salaries, tools, hardware, software) capitalized through a single journal entry into ‘Other current assets”on the last day of every financial year
Expenses capitalized during Review Period 1,97,66,444 43,90,544 68,89,221 1,09,74,726 71,02,881 91,06,389 27,60,115 6,09,90,320
Impaired OCA 1,67,54,380 42,24,536 40,09,691 1,08,52,785 51,81,880 68,63,842 25,20,188 5,04,07,301
3 Amounts impaired in the ledger, resulting in credit balance at the end of FY2019-20
Impaired OCA 1,33,86,267 1,33,86,267
4 Difference in the amount of impairment entry found in the ledgers
Impaired OCA 1000 1,000
LOANS AND ADVANCES
1 No advance payments were recorded in ledgers of vendors and only impairment entries and expenses adjustment entries were recorded
Impaired Loans & adv 21,12,046 21,12,046
2 Fresh advances were made to vendors in subsequent financial years, while the previous financial year’s advance was still outstanding
Impaired Loans & adv 92,62,222 9,48,388 42,07,412 38,26,076 61,82,124 38,91,973 2,83,18,195
3 Advances impaired in FY 2019-20 without any expense utilisation during Review Period
Impaired Loans & adv 34,42,661 14,90,114 49,32,775
4 In absence of a detailed break-up, unable to ascertain which period’s assets were impaired and which period’s assets continued in the books
Impaired Loans & adv 42,20,561 1,78,230 33,90,182 37,38,741 21,12,045 38,91,973 1,75,31,732
5 Amounts impaired in the ledgers having no balance
Impaired Loans & adv 37,32,957 40,03,842 77,36,799
6 Advances to parties impaired where same parties are appearing as creditors
Impaired Loans & adv 1,14,37,925 7,70,158 13,71,560 14,90,114 1,50,69,757
7 Difference in the amount of impairment entry found in the ledgers
Impaired Loans & adv 1,47,482 1,47,482
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9. From the above, it was observed that the books of account and other relevant
books, documents, minutes, etc. prepared and maintained by BGL & its
foreign subsidiaries including that of its branch office and foreign subsidiaries,
were are not sufficient to explain the transactions effected both by BGL and
its foreign subsidiaries.
10. It was thus observed that the financial statements of BGL did not conform to
the provisions of Section 129 of the Companies Act, 2013 which inter alia
provides that “The financial statements shall give a true and fair view of the
state of affairs of the company or companies, comply with the accounting
standards notified under section 133 and shall be in the form or forms as may
be provided for different class or classes of companies in Schedule III.”
11. Further, considering the requirements specified under Para B87 of

Accounting Standard ‘Ind AS 110 - Consolidated Financial Statements’ and
Para 20 & 21 of ‘Accounting Standard (AS) 21 Consolidated Financial
Statements’, it was observed that in case of an Indian company having
overseas subsidiaries, irrespective of the statutory requirement w.r.t
maintenance of books of account and audit of the standalone financial
statements in the jurisdiction of their incorporation, in order to achieve the
uniform accounting policies as required under AS-21/Ind AS 110, the parent
company has to ensure that the books of accounts of such subsidiaries are
maintained in such manner to assist the management in the preparation of
consolidated financial statements as per Indian GAAP.
12. As far as the parent company BGL was concerned, the requirement to
maintain books of accounts and the period for which the same had to be
maintained is prescribed in Section 128(1) of the Companies Act 2013. In
case of BGL, the investment in the subsidiaries was shown as investments
in the standalone financials statements of the parent company. In view of the
same, the Company was not only required to maintain the books of accounts
and records in respect of transactions entered into with its subsidiaries but
was also required to maintain the books of account of all its subsidiaries to
assist the management in the preparation of consolidated financial
statements as per Indian GAAP. As BGL failed to maintain the books of
accounts of its subsidiaries in the abovementioned required manner, the
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same led to the consolidated financial statements of BGL not giving a true
and fair view of the financial position/ performance of the Company.
B. Impairment of assets in FY 2019-20 amounting to Rs.868.30 Crore
13. BGL had recorded an impairment of Rs.863.80 Crore in the consolidated

financial statement for the FY 2019-20. However, on examining the
Standalone Financial Statements of BGL, no impairment of assets in FY
2019-20 was observed. This indicated that the said impairment was on
account of subsidiaries.
14. The breakup of the assets impaired by subsidiaries of BGL during FY 2019-
20 is given below:
# Particulars Amount (INR Crore)

A Loans and Advances: 363.80
Long-term loans given to service providers 26.89
Short-term loans given to 336.91
publishers/agencies
B Other Current assets: 504.50
Tools 218.12
Software 148.76
Hardware 98.77
Salaries 38.85
Total 868.30
15. Following is the subsidiary-wise break up of assets impaired with amount in

Crores:
(INR Crore)
Subsidiary Country Loans Other Total
given (A) current (A+B)
assets (B)
1 Online Media Solutions Ltd. Israel 91.81 118.76 210.56
2 Frontier Data Management USA 43.23 94.88 138.11
Inc
3 YDL brant Digital Services De Brazil 27.12 76.92 104.04
Publicidade
4 DreamAd -Argentina Argentina 43.82 36.73 80.55
5 International Expressions Inc USA 51.22 20.20 71.42
6 DreamAd -Chile Chile 14.97 48.65 63.62
7 Dyomo Corporation USA 27.50 32.13 59.63
8 Max Interactive Pty Ltd. Australia 29.82 28.42 58.24
9 DreamAd -Panama Panama 27.59 17.86 45.45
10 DreamAd -Mexico Mexico 6.72 29.94 36.67
Total 363.81 504.50 868.30
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16. Following is the subsidiary-wise break up of assets impaired with amount in
USD:
(In USD)
# Subsidiary Country Loans Other Total
given (A) current (A+B)
assets (B)
1 Online Media Solutions Ltd. Israel 16,754,380 12,952,800 29,707,180
2 Frontier Data Management USA 13,386,267 6,099,232 19,485,499
Inc
3 YDL brant Digital Services Brazil 10,852,785 3,826,076 14,678,861
De Publicidade
4 DreamAd -Argentina Argentina 5,181,880 6,182,124 11,364,004
5 International Expressions USA 2,849,946 7,226,869 10,076,815
Inc
6 DreamAd -Chile Chile 6,863,842 2,112,046 8,975,887
7 Dyomo Corporation USA 4,532,714 3,880,439 8,413,153
8 Max Interactive Pty Ltd. Australia 4,009,691 4,207,412 8,217,103
9 DreamAd -Panama Panama 2,520,188 3,891,972 6,412,160
10 DreamAd -Mexico Mexico 4,224,536 948,388 5,172,923
Total 71,176,229 51,327,358 122,503,586
17. BGL provided the books of accounts of the following 10 subsidiaries (in which
impairment had occurred in FY 2019-20) for the Investigation period:
# Subsidiary Format of Data provided Whether

subsidiary’s
financials are
audited
1 Online Media Solutions Ltd. (‘OMS’) Yes
2 DreamAd Mexico (‘DA Mexico’) No
3 Max Interactive Pty Ltd. (‘Max Int’) Books of accounts provided No
4 YDL Brant Digital Services De in Tally ERP No
Publicidade (‘YDB’)
5 DreamAd Argentina (‘DA Argentina’) No
6 DreamAd Panama (‘DA Panama’) No
7 DreamAd Chile (‘DA Chile’) No
8 Dyomo Corporation (‘Dyomo’) Ledger extracts provided in Yes
9 International Expressions Inc (‘IE’) Excel Spreadsheet Yes
10 Frontier Data Management Inc (‘FDM’) (narration was not found in Yes
most entries)
The books of accounts of subsidiaries were maintained in USD, while the books of
account of BGL were maintained in Indian Rupees.
C. Accounting Policy in respect of Intangible Assets:
18. The impaired products/platforms of Rs. 504.50 Crore were classified under
the head ‘Other current assets’ in the Consolidated Balance Sheet of BGL.
Further, on examination of the audited Consolidated Financial Statements of
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BGL, separate heads such as ‘Other Intangible Assets’ and ‘Intangible Assets
Under Development’ were noted in the in the Balance Sheet, as shown below:
19. Vide summons dated February 23, 2022, BGL was asked to provide
bifurcation of impaired current assets in two categories, viz. Assets
Created/Owned by the Company and Third Party Assets, and their usage
terms. The Company was further asked whether the discontinued products
were being developed for customers, and if so, to provide the respective
contracts with customers. Further, the Company was also asked why
Impaired products formed a part of Current Assets under the head ‘Other
Receivables’ in the Balance Sheet, instead of Intangible assets/CWIP.
20. The Company replied vide letter dated March 02, 2022 and submitted that all
impaired current assets were under the category "created/owned" and were
used for internal purposes only. The part which was under the head "current
assets", which were related to products under development, remained in that
category. The finished products move into intangible assets.
21. Further, the past CFO of BGL, Mr. Yepuri Srinivasa Rao, in his statement
recorded before the Investigating Authority, SEBI (“IA”) on June 01, 2022
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stated, “As per my knowledge, expenditure incurred on products developed
for internal use is shown as “Other Current assets” and expenditure incurred
on products which results in patents etc., are recorded as “Intangible under
development”.
22. CFO of BGL, Mr. Narayana Raju S. L., during his statement recording before
the IA on October 13, 2022 was asked about the accounting policy followed
by BGL and its subsidiaries in recognizing its intangible assets. The CFO
responded by referring to BGL’s letter dated October 11, 2022, wherein it was
stated:
“At BCG, we keep investing on our products on a continuous basis. This will
help us to stay up to date with changing market / statutory compliance related
requirements and to provide robust and holistic solutions to our customers
that meets regulatory requirements as well.
For example, if we launch the Content Optimization product in 2014, we keep
upgrading it on an annual basis and the relevant expenditure is recognized
as addition to Other Current Assets / Intangible Assets Under Development /
Other Intangible Assets based on the product development status of each
product. A brief note explaining the process and nomenclature is given below:
Other Current Assets: All the expenses incurred towards Salaries, Software,
Tools and Hardware during the Concept, Design and prototype building stage
are classified as Other current assets
Intangible Assets Under Development and Capital Work in Progress: Once
the prototype is build is complete, the product / component will then move to
testing and soft launch stage. The soft launch is required to test for bugs and
customer-level testing. The bug fixing is also part of this stage.
In addition to the expenses related to this activity, portion of “Other Current
Assets” relevant to each product / component for which testing and soft
launch is completed will be moved to this head of account.
Other Fixed Assets/Intangible Assets: Once the product/component is
commercially launched all the expenses related to the product/component
are then classified / recognised as:
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1. Fixed Assets: Expenditure related to Computer Equipment, Furniture &
Fixtures, Software Licenses, Tools etc., will be recognized under this head.
2. Other Intangible Assets: All the expenditure towards Salaries, Cost of
Outsourced Services and similar costs will be recognized under this head.”
23. Further, BGL had also furnished its Accounting Policy for Classification of
Product Development Expenditure vide its response dated October 11, 2022,
which is given below:
Accounting Policy for Classification of Product Development

Expenditure
Brightcom group keeps investing in Product Development activities viz.,
upgrading existing products and developing new products on a continuous
basis. The relevant expenditure is recognized as addition to Other Current
Assets / Intangible Assets Under Development / Other Intangible Assets
based on the product development status of each product.
Other Current Assets: All the expenses incurred towards Salaries,
Software, Tools and Hardware during the Concept, Design and prototype
building stage are classified as Other current assets
Intangible Assets Under Development and Capital Work in Progress:
Once the prototype is build is complete, the product / component will then
move to testing and soft launch stage. The soft launch is required to test for
bugs and customer-level testing. The bug fixing is also part of this stage.
In addition to the expenses related to this activity, portion of “Other Current
Assets” relevant to each product / component for which testing and soft
launch is completed will be moved to this head of account.
Other Intangible Assets / Fixed Assets: Once the product / component is
commercially launched all the expenses related to the product / component
are then classified / recognized as:
1.Fixed Assets: Expenditure related to Computer Equipment, Furniture &
Fixtures, Software Licenses, Tools etc., will be recognized under this head
2. Other Intangible Assets: All the expenditure towards Salaries, Cost of
Outsourced Services and other similar costs will be recognized under this
head
The monthly expenses incurred are maintained separately in Excel
workbooks for Operational convenience. At the end of a given financial year
each product / component will be in a different stage of development. At the
year end, the status of each product / component is assessed, and the
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expenditure is classified into different heads of account by passing one single
entry. This process is adopted consistently since inception.
24. Mr. S L Narayana Raju, the CFO of the Company, during his statement
recording before IA, provided his responses on the accounting policies
followed by the Company. Vide email dated October 17, 2022, he also
provided a flow chart explaining the accounting treatment followed for
recognition of Intangible Assets, which is as under:
Product Life Cycle – Accounting Treatment

Intangible Assets Under Development
Other Current Assets – Iterative Process / Capital Work in Progress
Concept Design Prototype Testing Soft Launch
Bugs found – Back to

Market Requirements Design / Prototype
Assessment
Bugs found – Back to
Design / Prototype Commercial
Launch
If new requirements are defined
Intangible Assets /
Fixed Assets
Note:
1. It takes about 12 months for a product to be commercially launched
2. At the end of every year, we capitalize the Opening Balance in Intangible Assets under Development and Capital Work-in-
progress. The total opening balance of these two accounts have been transferred to Intangible Assets as a result of this
25. After analyzing the responses provided by the Company and its CFO, the
following observations were made in respect of the accounting policy of BGL
vis-à-vis the applicable accounting standards:
(a) BGL doesn’t classify the asset generation life-cycle into Research Stage
and Development Stage, as required under Accounting Standard 26
and IND AS 38 for accounting purpose.
(b) All the expenses incurred towards Salaries, Software, Tools and
Hardware during the Concept, Design and prototype building stage
were classified as ‘Other current assets’. These stages could not be
clearly distinguished into the research and development phase and
hence, should have been treated as if they were incurred in the research
phase only and, hence, treated as expenses when they are incurred.
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(c) Once the prototype was complete, the product/component then had to
move to testing and soft launch stage which would fall into Development
phase. However, in addition to the expenses related to this development
phase, portion of “Other Current Assets” (i.e. expenses incurred during
research phase which should have been treated as expenses) relevant
to each product/component for which testing and soft launch was
completed, also got recognized as Intangible Assets Under
Development and Capital Work in Progress. The same was not in
accordance with Accounting Standard 26 and IND AS 38.
(d) Though BGL’s product development involved research and

development phases, expenditure incurred did not get recognized as
expense when it was incurred. The expenditures may either get
capitalized directly or get recognized as current assets initially and then
get reclassified as Intangible assets under development or intangible
asset.
26. In view of the above, it was observed that the accounting policy followed by
BGL led to overcapitalization of the Intangible assets which resultantly led to
inflation of profits.
D. Inconsistencies in the data provided with respect to initial

recognition of impairment:
27. Investigation revealed that assets recorded in books of accounts (prior to and
during the Investigation Period) were partially impaired. However, the time
when these assets were initially recognized and the period for which they
continued to be recognized could not be ascertained. BGL furnished four
different responses with respect to initial recognition of the impaired assets
in the books of accounts of its subsidiaries and consolidated financial
statements. The details of these sets are given below:
Data Set 1 – As per BGL’s response vide letter dated 23 Feb 2022, the ‘Other
Current Assets’ impaired by the subsidiaries of BGL in FY 2019-20,
aggregating to Rs.504.28 Crore (USD 7.12 Crore) were initially recorded in
FY 2018-19.
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Data Set 2- From BGL’s email dated June 24, 2022, it was observed that the
above-mentioned assets of Rs.504.28 Crore were recorded during the period
FY 2016-17, FY 2017-18 and FY 2018-19.
Data Set 3 - On review of books of accounts, it was noted that ‘Other current
assets’ had started getting initially recorded even prior to April 2014 and
continued till FY 2019-20. However, from the ledger account, individual
mapping of the impaired asset could not be carried out with the recognized
assets and hence it could not be ascertained in which year the impaired
assets were initially recognized.
Data Set 4 – As per the product-wise and year-wise breakup of impaired

expenses provided by BGL vide letter dated Oct 11, 2022, the other current
assets had started getting initially recorded even prior to April 2014 and
continued till FY 2019-20.
28. An example of inconsistencies in four data sets, as regards the accounting

records of YDB, in the ledger “Salaries -OCA”, is provided below:
Amount in USD
Period As per books of accounts (Data set 3) Impaired Impaired Impaired
Ledger Transaction Balance asset asset asset
Amount amount recorded breakup breakup
as per Data as per as per
set 1 Data set 2 Data set 4
Opening bal. 127,025 127,025 - - 127,025
FY 2014-15 Salaries for OCA 472,934 599,959 - - 456,046
FY 2015-16 Salaries for OCA 23,372 623,331 - - 21,354
FY 2016-17 Salaries for OCA 97,982 721,313 - 344,706 97,982
FY 2017-18 Salaries for OCA 16,150 737,463 - 239,930 16,150
FY 2018-19 Salaries for OCA 180,402 917,865 8,98,961 314,325 180,402
FY 2019-20 Salaries for OCA 208,431 1,126,296 - -
FY 2019-20 Impairment (898,961) 227,335 - -
Total 898,961 898,961 898,961
29. As a result of wrong classification of expenditure during the research phase

(and/or during the phase which cannot be clearly distinguished into research
and development phases) and wrongful capitalization of subsequent
expenditure on intangible assets, the financial statements of BGL were found
to be misstated. However, it was not possible to clearly pinpoint as to which
years’ financial statements are misstated as the same would be dependent
_________________________________________________________________________________________
on which data set is correct. All the four possibilities are given in the Table
below:
Annual Consolidated figures for the financial years (INR Lakhs.)
Prior to 2014- Investigation Period

Particulars Total
15
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Reported Profit
52,199 60,013 61,901 59,035 60,855 61,714
Before Tax
Reported Profit
34,222 40,505 42,924 40,700 44,397 44,010
After Tax
The FY wise break up of expenditure wrongly recognised as "Other Current Assets":
As per data Set 1 - - - - - 50,449.71 - 50,450
As per data
- - - 11,533.79 14,003.37 25,015.87 -
Set 2 50,553
As per data In absence of detailed breakup, individual mapping of the impaired asset could not be carried with the recognised
Set 3 assets and hence it could not be ascertained in which year the impaired assets were initially recognised.
As per data
1,964.74 11,399.78 7,010.24 12,208.81 8,037.69 9,007.69 1,065.93
Set 4 50,695
Profit Before Tax if correct accounting treatment was followed:
Data set 1 52,199.00 60,013.00 61,901.00 59,035.00 10,405.29 61,714.00
Data set 2 52,199.00 60,013.00 50,367.21 45,031.63 35,839.13 61,714.00
Data set 3 Not Ascertainable
Data set 4 40,799.22 53,002.76 49,692.19 50,997.31 51,847.31 60,648.07
Profit After Tax if correct (Ignoring Taxation impact) accounting treatment was followed:
Data set 1 34,222.00 40,505.00 42,924.00 40,700.00 -6,052.71 44,010.00
Data set 2 34,222.00 40,505.00 31,390.21 26,696.63 19,381.13 44,010.00
Data set 3 Not Ascertainable
Data set 4 22,822.22 33,494.76 30,715.19 32,662.31 35,389.31 42,944.07
30. Notwithstanding which data set is correct, it was inferred that BGL had
wrongly classified the expenditure incurred during the research phase and
research-cum-development phase (the phase in which BGL could not
distinguish the research phase from the development phase) of the creation
of intangible assets to the tune of 504.49 crores as current assets. However,
this expenditure should have been recognized as expenses in Profit & Loss
Account, in conformity with the Accounting Standard 26 (FY 2014-15 & 2015-
16) and IND AS 38 (FY 2016-17 to FY 2019-20. However, the Company failed
to do so.
31. The non-compliance by BGL with Accounting Standard AS 26 in preparation

and presentation of the financial statements for the FY 2014-15 was in
violation of Clauses 49 (I)(C)(1)(a) and 50 of the erstwhile Listing Agreement.
Further, the non-compliance by BGL with Accounting Standard 26 (for FY
_________________________________________________________________________________________
2015-16) & Indian Accounting Standards (“Ind AS”) 38 (FY 2016-17 to FY
2019-20) was in violation of Regulation 4(1)(a), (b), (c), (d) (e), (g), (h), (i), (j),
4(2)(e)(i), 33(1)(c) & 48 of SEBI (LODR) Regulations 2015.
E. Accounting treatment of impaired assets:
32. As per Auditor’s report, the consolidated financial statements of BGL for FY
2019-20 were prepared in accordance with Ind AS, as prescribed under
Section 133 of the Companies Act, 2013 and the rules therein.
33. Para 60 of the Ind AS 36 which deals with the recognition of impairment loss,
provides that “An impairment loss shall be recognised immediately in profit or
loss, unless the asset is carried at revalued amount in accordance with
another Standard (for example, in accordance with the revaluation model in
Ind AS 16). Any impairment loss of a revalued asset shall be treated as a
revaluation decrease in accordance with that other Standard.”
34. Further, para 61 of the said Ind AS 36 provides that “An impairment loss on
a non-revalued asset is recognised in profit or loss. However, an impairment
loss on a revalued asset is recognised in other comprehensive income to the
extent that the impairment loss does not exceed the amount in the revaluation
surplus for that same asset. Such an impairment loss on a revalued asset
reduces the revaluation surplus for that asset.”
35. From the above, it was observed that in the absence of any revaluation of
assets, as per Ind AS 36, the Company was required to give effect of the
impairments in the Profit or Loss in the same financial year.
36. On examining the Audited Financial Statements of FYs 2014-15 to 2019-20,

it was observed that there were no disclosures pertaining to revaluation
surplus in relation to any asset during the aforesaid financial years. However,
on examining the Audited Consolidated Financial Statements of BGL for FY
2019-20, it was observed that the impairment of assets of Rs.868.30 Crore
was disclosed under ‘Other Comprehensive Income’ (“OCI”).
37. In respect of the above, BGL vide response dated March 03, 2022 stated,
“The impairment loss incurred for the year ending 31-3-2020 is extraordinary
in nature. The Impairment of assets was to be done due to regulatory
_________________________________________________________________________________________
changes i.e. introduction of the General Data Protection Regulation
(GDPR) laws. This Impairment was included under the other comprehensive
income because the expenditure incurred was yet to be realized as of 31-3-
2020 but was impaired due to the change in GDPR laws.”
38. Further, the statutory audit firm of BGL for FY2019-20 vide email dated 15
June 2022, stated that the impairment of assets was extra-ordinary item and
not a direct expenditure of Indian Parent and hence did not have direct
bearing on the profitability of the Company, because of which it was
recognized under Other Comprehensive Income. As regards compliance with
Ind AS 36, the Audit Firm stated that the treatment of impairment of assets,
as mentioned in the para 60 & 61 of the Ind AS 36, was applicable to the
Parent Company only. In the instant case, the assets impaired pertained to
subsidiaries and hence the treatment followed by the Company was correct
for comprehensive presentation of the financial statements.
39. In the instant matter, as the assets impaired were in the nature of ‘trade
advances’, ‘capital work in progress’ and ‘intangible assets under
development’, none of which was revalued, the Company was required to
give effect of their impairment in Profit or Loss, as required under Ind AS 36.
Thus, the recognition of impairment losses of these assets under OCI was
not in compliance with Ind AS 36. Had the impairment losses of these assets
been recognized in Profit or Loss, the loss for the FY 2019-20 would have
been Rs.428.20 Crore (ignoring impact of taxation due to additional
expenditure) as against reported profit of Rs.440.10 Crore.
In Rupees
Figures after correct

Particulars Reported Figures accounting treatment
(Ignoring Taxation impact)
Total Revenue 26,92,31,83,759 26,92,31,83,759

Total Expenditure 20,89,32,25,648 29,57,62,79,913
Profit before tax 6,17,14,25,776 (2,65,30,96,154 )
Profit after Tax 4,40,10,47,305 (4,28,20,06,960 )
_________________________________________________________________________________________
40. The non-compliance by BGL with Ind AS 36 in the preparation and
presentation of the financial statements was in violation of Regulation 4(1)(a),
(b), (c), (d) (e), (g), (h), (i), (j), 4(2)(e)(i), 33(1)(c) & 48 of SEBI (LODR)
Regulations, 2015.
F. Disclosure as per Ind AS 36 - Impairment of Assets:
41. On examining the audited financial statements of BGL for FY 2019-20, it was
observed that though there was impairment loss of Rs.868.30 Crore, no
disclosure of the events and circumstances that led to the recognition of such
impairment losses was made, as required under Para 130 of “Ind AS 36 –
Impairment of Assets”.
42. Further, Mr. Suresh Kumar Reddy, CMD of BGL, during his statement
recording before the IA on March 17, 2022, agreed with SEBI’s observations
that the disclosures required under Para 130 of Ind AS 36 were not made by
the Company.
43. From the above, it is evident that BGL did not make the disclosures w.r.t the
events and circumstances that led to the recognition of the impairment loss
in the preparation and presentation of the financial statements for the FY
2019-20, as required under Ind AS 36. The same was in violation of
Regulation 4(1)(a), (b), (c), (d) (e), (g), (h), (i), (j), 4(2)(e)(i), 33(1)(c) & 48 of
SEBI (LODR) Regulations, 2015.
G. Review of Impairment Assessment for the assets carried out by BGL
44. The following sequence of events were observed based on BGL’s reply dated
September 27, 2021 and February 23 2022:
Period Event
April 2016 GDPR was introduced
Prior to April 2014 to March Recording the ‘Loans and advances’ of INR 364 Crore and ‘Other
2020 Current Assets’ of INR 504 Crore (based on the ledger extracts and
books of accounts of respective subsidiaries)
May 2018 GDPR became effective; BGL declared itself as GDPR compliant
March 2020 Impairment of INR 868 Crore
(Loans and Advances - INR 364 Crore and Other Current Assets -
INR 504 Crore)
March 2020 onwards Covid-19 pandemic
_________________________________________________________________________________________
45. Para 9 of Ind AS 36 states “An entity shall assess at the end of each reporting
period whether there is any indication that an asset may be impaired.”
Further, paragraph 12 of the said standard states that in assessing whether
there is any indication that an asset may be impaired, an entity shall consider,
as a minimum, various indications, including significant changes with an
adverse effect on the entity that have taken place during the period, or will
take place in the near future, in the technological, market, economic or legal
environment in which the entity operates or in the market to which an asset
is dedicated.
46. From the Official Journal of the European Union dated May 04, 2016, it was
observed that GDPR was enacted by European Parliament in April 2016 and
became applicable w.e.f May 25, 2018. The Company had claimed that the
introduction of GDPR had an adverse impact which led to impairment of
assets in FY 2019-20.
47. It was noted from BGL’s Minutes of the Board meeting dated 29 May 2018
that BGL had declared itself as GDPR compliant in May 2018. Further, BGL
also made a similar announcement dated 25 May 2018 on its website as well
as in its Annual Report for FY 2019-20. Further, BGL in its letter dated
October 11, 2022, to SEBI, had stated:
“GDPR was originally proposed on April 14, 2016 with a primary aim of
providing the individuals control and rights over their personal data and
applies to any enterprise—regardless of its location and the data subjects'
citizenship or residence—that is processing the personal information of
individuals inside the EU.
For Digital Marketing Industry, in which BCG operates, personal data forms
the core of business. The personal data gathered is used for different
purposes like assessing the consumer behavioral patterns, providing relevant
advertisements based on customer’s age group, income group, gender,
geographic location, interests, habits / hobbies, seasonality of purchases and
so on.
Going by general perception, it is this huge increase in collection and usage
of data for personalized marketing which has triggered introduction of GDPR.
The GDPR is a sweeping attempt to put the individual back in control of their
personal data, which means marketers need to work harder for their access
to and use of it.
_________________________________________________________________________________________
Once GDPR regulations came into effect, BCG has started reviewing all the
products components for compliance and to understand the changes that
need to be made to each of them to ensure that the consumer data is collected
in a way that meets the GDPR requirements.
During the course of review there were several products / components which
were identified as non-compliant and some of the products / components
needed tweaks to make them meet the requirements. Please find attached
the entire Product List in Exhibit 5.”
48. The Board minutes of BGL dated June 25, 2020 highlighted that “The
management with the advice of the competent technical teams had taken
decision of impairing the assets.”
49. With respect to non-impairment of assets due to introduction of GDPR, BGL

vide its response dated March 03, 2022 had stated as follows:
“The official implementation date was 21 May 2018 and we were compliant
as per our internal testing and load testing prior to going to production on that
said date. However, its company’s practice to observe the functionality of the
compliance for an additional 6 months to make sure no bugs or glitches would
surface. In that context by the time it was all said and done, to be thinking of
the lightened assets and their impaired value, we entered into FY2019-20”.
50. From the above, it was observed that impairment due to introduction of GDPR
had to be done latest by November 2018, whereas it was done in FY 2019-
20 and there was a delay of more than a year in observing the functionality
and the actual impairment date (i.e. Nov 2018 to Mar 2020).
51. BGL’s in its response dated October 11, 2022 had stated that the Company
was still in the process of upgrading the products to meet GDPR requirements
by tweaking, testing and observing functionality both for compliance and
stability. Hence, because of this exhaustive testing, identifying bugs and
assessing if such bugs could be fixed for each product and its components,
the decision to impair was taken in FY 2019-20.
52. BGL was asked to furnish the reports of the testing performed in 2018 and
2020 by the technical team of the Company. However, BGL failed to provide
the same.
_________________________________________________________________________________________
53. Further, BGL vide response dated March 03, 2022 stated that it did not test
the assets for impairment during FY 2016-17 and FY 2018-19. Also, BGL in
its response dated October 11, 2022 stated: “While testing of products and
components is an ongoing activity, we did not test any assets during FY 2016-
17 and 2018-19 with a view to impair them. There was no intention to Impair
the assets. We were continuously trying to upgrade our products /
components to meet GDPR requirements. The assets to impair was only
taken after an extensive effort and after confirming that those assets will not
be useful in future.”
54. However, it was observed that the note forming part of consolidated financial
statements of BGL for FY 2018-19, stated “Impairment of Non-financial
assets”- “The carrying amounts of assets are reviewed at each balance sheet
date if there is any indication of impairment based on internal/external factors.
An impairment loss is recognized wherever the carrying amount of an asset
exceeds its recoverable amount. The recoverable amount is the greater of
the asset’s net selling price and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value at the
weighted average cost of capital. After impairment, depreciation is provided
on the revised carrying amount of the asset over its remaining useful life”.
55. As observed above, the GDPR was introduced in April 2016 and the same
became effective two years later in May 2018, which was indicative of
significant changes with an adverse effect on BGL in the technological,
market, economic or legal environment in which the Company operated or in
the market to which its assets were dedicated. However, it was found that the
Company had not followed its own declared accounting policies pertaining to
review of assets for impairment.
56. Had BGL tested the assets that were impaired in 2019-20 for impairment in
2016-17 to 2018-19, the impairment of these assets would have been taken
place in earlier years itself. Even after declaring itself compliant with GDPR
in April 2018, BGL continued to show these assets at their carrying amounts,
without recognizing impairment loss.
_________________________________________________________________________________________
57. The argument of the Company that impairment loss was not recorded in the
earlier years as it was observing the functionality of the compliance for an
additional six months was unacceptable as the Ind AS 36 required an entity
to assess at the end of each reporting period whether there was any
indication that an asset might be impaired. If any such indication existed, the
Company was required to estimate the recoverable amount of the asset. If,
and only if the recoverable amount of an asset was less than its carrying
amount, then the carrying amount of the asset was required to be reduced to
its recoverable amount and such reduction was to be taken as an impairment
loss. An impairment loss was required to be recognized immediately in profit
or loss.
58. Further, the Company’s contention was also untenable for the fact that after
recognizing the impairment loss, at a later date, if the asset that was impaired
due to GDPR was upgraded to meet the GDPR requirements, then it was
open to BGL to reverse the impairment loss in accordance with para 110 &
111 of Ind AS 36.
59. The abovementioned non-compliance by BGL with requirements of Ind AS

36 w.r.t not carrying out annual impairment testing in the preparation and
presentation of the financial statements for the FYs 2016-17 to 2018-19
resulted in violation of Regulation 4(1)(a), (b), (c), (d) (e), (g), (h), (i), (j),
4(2)(e)(i), 33(1)(c) & 48 of SEBI (LODR) Regulations, 2015.
H. Observations in respect of Impairment of Investment/ loans to

subsidiaries amounting to of INR 411.76 Crore in FY 2018-19:
60. On examining the Audit Report of Consolidated Financial Statements of BGL

for FY 2018-19, it was observed that BGL’s subsidiary, Ybrant Media
Acquisition Inc. recorded an impairment of assets of INR 411.76 Crore in FY
2018-19. The details, as mentioned in the Audit Report, are as under:
“f) The Subsidiary company M/s. Ybrant Media Acquisition Inc. has acquired
M/s. Lycos Inc. M/s. Ybrant Media Acquisition Inc. has failed to pay part
consideration of USD 16 Million for acquisition of M/s. Lycos Inc., to Daum
Global Holdings Corporation and the district court of New York has given
judgment to handover back 56 % equity in M/s. Lycos Inc. to M/s. Daum
_________________________________________________________________________________________
Global Holdings Corporation. In the current financial year M/s. Ybrant Media
Acquisition Inc. has written off its investment in M/s. Lycos Inc., an amount of
USD 38 Million in the statement of profit & loss under the head other
comprehensive income and the outstanding liability of USD 16 Million is
continuing in the financials as the dispute still going on. Also the Reserves
which are in existence as at 1st April 2018 in respect of previous financial
year consolidation of Lycos Inc., into Ybrant Media Acquisition Inc. has been
written off in the current financial year 2018-2019 amounting to Rs. 244.06
crores.”
61. BGL in its response to SEBI dated 11 November 2021 stated: “We wish to
inform you that the subsidiary (Ybrant Media Acquisition Inc., USA) has failed
to pay part consideration due to Daum Global Holding Corporation in respect
of acquisition of Lycos Inc., considering which the district court of New York
has granted receivership of 56% shares of the Lycos Inc. back to Daum
Global Holding Corporation. In the view of the same, the profits earned after
acquisition and initial goodwill both put together came to $ 63,102,165. This
amount is written off and after conversion in INR it came to INR 411.76
Crore”.
62. On review of the Standalone Financial Statements of BGL for FY 2018-19, it

was observed that BGL, it had reported an investment of INR 126.52 Crore
in its wholly owned subsidiary, Ybrant Media Acquisition Inc. (“YMA”).
Further, as per the Consolidated Financial Statements for FY 2018-19, there
was a write-off of Rs. 411.76 Crore pertaining to YMA.
63. On examination of the Financial Statements of YMA for FY 2018-19, it was

observed that it had written off INR 411.76 Crore in its balance sheet and
there was a corresponding write-off in the P&L in FY 2018-19. Further, its
revenue from operations, expenses and profit/Loss for FY 2018-19 and FY
2019-20 was NIL and following balances were noted as on 31 March 2020:
- Total Assets – Rs. 61.46 Crore (Loans)

- Other current liabilities – Rs. 165.56 Crore
- Negative Equity – (Rs. 104.10 Crore)
_________________________________________________________________________________________
64. On conducting public domain searches, it was further observed that YMA had
filed for bankruptcy in 2016. This was further confirmed by Statutory auditors
in their report on Audited Financial Statements for FY2016-17.
65. YMA had negative equity in FY2018-19 of –Rs.95.51 Crore and in FY2019-
20 of -Rs.104.10 Crore). Further, it was noted that BGL had neither created
any provision against the investment in its subsidiary (YMA) of INR 126.52
Crore nor written off its investment in its subsidiary, YMA.
66. BGL vide response to SEBI dated March 03, 2022 stated the following
rationale for not writing off the investment:
“This amount of approximately $20 million was invested into YMA in 2010 to
be used as the first payment in the acquisition of Lycos Inc. from the sellers
Daum Global Holding Corporation. The total value of acquisition was
supposed to be $36 million subject to certain clauses of performance.
However, a dispute arose in this regard and we went to arbitration in
Singapore and subsequent to that Daum filed the arbitration judgment in US
court to reclaim Lycos back or have us pay a higher amount to complete the
transaction. In this context as your good self is well aware that US laws
allows for a Chapter 11 protection which is primarily to give the buyer time to
come up with a payment plan and not close down the company. It is in effect
similar to a stay order to stop them from taking the asset back and rework a
payment settlement.
We are now in the process / negotiating a final settlement amount and
working on putting it down into a settlement agreement which will bring the
asset “Lycos INC” back to the fold of Brightcom group.
This is the reason we did not write off the investment”.
67. Shri M. Suresh Kumar Reddy, CEO and MD of BGL, during his statement
recording before IA on March 17, 2022, was asked about the expected date
to complete the transaction i.e. acquisition of "Lycos Inc.". He was also asked
on what basis was the Management certain of executing the above
transaction, and if not, why the Management had not created any provision
for the same. He was further asked whether there was any agreement for a
refund of $20m (initial investment in Ybrant Media Acquisition) if the deal did
_________________________________________________________________________________________
not come through. In response, Mr. Reddy stated that the Management was
expected to close the transaction in coming few quarters and the approximate
date was October/November 2022. Regarding the issue of provisioning, Mr.
Reddy stated that the Management was in the final stages of settling the final
payment for the said acquisition and they strongly believed that the said asset
would return to the Group’s (Company’s) control. Hence, they thought that
the investment was still valid and valuable. Regarding the issue of refund, Mr.
Reddy replied that No refund was to be made on the investment.
68. BGL did not furnish any documentation such as Board resolutions, internal
discussions, legal assessment from the Counsel, or other supporting
documents of the plans for execution of the settlement deal with the sellers
Daum Global Holding Corporation which were sought vide summons dated
July 21, 2022. The Draft settlement agreement, which was shared, was
neither dated nor signed.
69. BGL in its reply dated October 11, 2022 submitted that since Chapter 11
Bankruptcy case was filed which provided BGL with the breathing room
necessary to complete settlement discussions with Daum and complete a
capital raise through debt and/or equity financing with the assistance of
Ybrant Digital, there was no need to create a provision.
70. As per para 12 of Ind AS 36: Impairment of assets, “In assessing whether
there is any indication that an asset may be impaired, an entity shall consider,
as a minimum, the following indications for an investment in a subsidiary,
jointly controlled entity or associate, the investor recognises a dividend from
the investment and evidence is available that - the carrying amount of the
investment in the separate financial statements exceeds the carrying
amounts in the consolidated financial statements of the investee’s net assets,
including associated goodwill”.
71. In the instant case, the carrying amount of BGL’s investment in YMA, as
disclosed in the separate financial statements, and the Net assets of YMA,
as disclosed in the Annual Report for FY 2018-19 and 2-19-20 are as below:
_________________________________________________________________________________________
(INR Crore)
Particulars As at March 31, 2019 As at March 31, 2020
Investment in YMA in the
126.52* 126.52#
separate financial
statements BGL
Net assets of YMA
(95.51)** (104.10)##
Source
*Note No.6 at page 63 of #Note No.6 at page 128 of
Annual Report for the FY Annual Report for the FY
2018-19 2019-20
**Annexure-B at page 112 of ##Annexure-B at page 207 of
Annual Report for the FY Annual Report for the FY
2018-19 2019-20
72. As the carrying amount of the investment in the separate financial statements
exceeded the carrying amounts of the investee’s net assets in the
consolidated financial statements, BGL should have impaired its investment
in the subsidiary YMA in the FY 2018-19 in its standalone financial results,
which it should have continued to maintain in the financial statements for the
FY 2019-20 also, since the asset value continued to be negative in FY 2019-
20 also.
73. The non-compliance by BGL with requirements of Ind AS 36 in not

recognizing impairment loss w.r.t. its investment in the subsidiary despite
indication of impairment in the preparation and presentation of the financial
statements for the FYs 2018-19 & 2019-20 has resulted in violation of
SEBI (LODR) Regulations, 2015.
74. Further, as already mentioned above, as per Para 130 of “Ind AS 36 –

Impairment of Assets”, a company has to disclose the events and
circumstances that lead to the recognition of impairment losses. Accordingly,
BGL was required to disclose the events which led to impairment of
Rs.411.76 Crores in the financial statements for the FY 2018-19. However,
from the audited financial statements of BGL for FY 2018-19, but it was
observed that no such disclosure was made by BGL.
_________________________________________________________________________________________
75. It was further observed from the Audited Consolidated Financial Statements
of BGL for FY 2018-19 that the impairment of assets of Rs. 411.76 Crore was
disclosed under OCI in the Consolidated Profit and Loss statement.
76. As per the Notes forming part of Consolidated financial statements for the
year ended March 31, 2019 (Note No.2 at Page 88 of the Annual Report for
the FY 2018-19), the consolidated financial statements of BGL for FY 2018-
19 were prepared in accordance with Indian Accounting Standards (Ind AS)
as prescribed under section 133 of the Companies Act, 2013 and the rules
therein.
77. As already stated above, Para 60 of the Ind AS 36 which deals with the
recognition of impairment loss, provides that “An impairment loss shall be
recognised immediately in profit or loss, unless the asset is carried at
revalued amount in accordance with another Standard (for example, in
accordance with the revaluation model in Ind AS 16). Any impairment loss of
a revalued asset shall be treated as a revaluation decrease in accordance
with that other Standard.”
78. Further, para 61 of the said Ind AS 36 provides that “An impairment loss on
a non-revalued asset is recognised in profit or loss. However, an impairment
loss on a revalued asset is recognised in other comprehensive income to the
extent that the impairment loss does not exceed the amount in the revaluation
surplus for that same asset. Such an impairment loss on a revalued asset
reduces the revaluation surplus for that asset.”
79. On examining the Audited Financial statements from FY 2014-15 till FY 2018-
19, there were no disclosures pertaining to revaluation surplus in relation to
any asset during the aforesaid financial years, implying that the assets which
were impaired in FY 2018-19 were not revalued in the past during FYs 2014-
15 to 2018-19. Further, as per note at page 93 of the Annual Report for the
FY 2018-19, the Investment in subsidiaries were measured at cost less
impairment.
80. In view of the above, BGL should have recognized the impairment loss of
amounting to Rs. 411.76 Crore in profit or loss instead of Other
Comprehensive Income. Had the impairment losses of these assets been
_________________________________________________________________________________________
recognized in profit or loss, the profit for the year would have been Rs.32.21
Crore (ignoring impact of taxation due to additional expenditure) as against
reported profit of Rs.443.98 Crore.
In Rupees
Figures after correct accounting
Reported
Particulars treatment (Ignoring Taxation
Figures
impact)
Total Revenue 25,77,72,73,762 25,77,72,73,762
Total Expenditure 19,69,17,63,113 23,80,94,24,603
Profit before tax 6,08,55,10,649 1,96,78,49,159
Profit after Tax 4,43,97,61,048 32,20,99,558
81. The above non-compliance by BGL with Ind AS 36 in the preparation and
presentation of the financial statements for the FY 2018-19 was in violation
of Regulation 4(1)(a), (b), (c), (d) (e), (g), (h), (i), (j), 4(2)(e)(i), 33(1)(c) & 48
of SEBI (LODR) Regulations, 2015.
I. The non-disclosure of impact of GDPR on the Company:
82. The Company, vide its letter dated 27 Sept 2021 to SEBI, provided the
following rationale for recording the impairment of assets worth INR 868.30
Crore in FY 2019-20:
“The company has done impairment for the financial year 2019-20 due to the
regulatory changes, i.e., introduction of GDPR and also due to the slowdown
of business operations due to the COVID-19 pandemic and our future plans
for the coming fiscal year in this environment. From time to time the company
reviews the recoverability of advances. As per the IND AS, if there is any
uncertainty about the timing of recoverability of assets, the same is to be
impaired. As a prudent accounting practice, the management had taken
decision to impair the advances”.
83. The Company further stated that: “The primary reason for impairment,
especially on the OCA (Other current Assets) and current assets were due to
the introduction of new cyber law in 2018 across the EU and various parts of
the world called the GDPR”.
84. As already stated earlier, GDPR was enacted by European Parliament in

April 2016 and it became applicable w.e.f May 25, 2018. As per BGL’s Board
_________________________________________________________________________________________
minutes dated June 25, 2020, GDPR was the primary reason for impairment
of ‘Other current assets’ and ‘current assets’ in FY2019-20.
85. It was noted that if the reason for impairment of assets was the introduction
of GDPR, as stated by the company, considering the value of assets
impaired, the company should have made a disclosure to Stock Exchanges
under Regulation 30 r/w clause 7 of para B of Part A of Schedule III of SEBI
(LODR) Regulations, 2015.
86. SEBI had issued summonses dated February 23, 2022 and July 21, 2022 to
the Company asking it to furnish copies of all the disclosures made by BGL
in respect of introduction of GDPR. In response to the same, Mr. Suresh
Kumar Reddy vide email dated August 02, 2022 submitted a copy of Press
Release titled “Brightcom Group -Ready for GDPR” dated May 25, 2018
which was submitted to the stock exchanges on May 25, 2018. The relevant
extracts that talks about GDPR is reproduced below:
“The Brightcom Group, a global technology company that specializes in

Internet-related services and products, which include Ad-tech, New Media
and lot based businesses across the globe, primarily in the digital ecosystem,
today announced its measures and readiness to the GDPR.
The GDPR, which takes effect this Friday, May 25, 2018, is data privacy and
protection regulation defined and enforced by the European Union. The
GDPR imposes new rules regarding the processing of Personal Data of data
subjects’ located in the EU. Key points about GDPR compliance are:
Key points about GDPR compliance which Brightcom has already worked
upon are respecting data privacy, gathering consent & keeping proof of it,
securing the digital infrastructure and training and preparing the teams to
handle the customer’s data, as mandated by GDPR Regulations.
Brightcom is well aligned with the underlying philosophy of GDPR and we see
this as a great opportunity for firms, which are socially responsible towards
integrity of private data of consumers, to actually surge ahead in deploying
solutions that matter. We have established robust access controls and profile
management to ensure that processes are in place”, said Suresh Reddy,
Chairman & CEO of the Brightcom Group.”
_________________________________________________________________________________________
87. From the above press release, it was seen that Brightcom had stated that it
had already established controls to ensure the compliance with GDPR.
However, BGL did not make any specific disclosure in respect of financial
impact of GDPR on the business of the Company in the FY 2018-19.
88. As per Section 134(3) of the Company’s Act 2013, the report by Board of
Director’s which is part of Annual report of the company shall inter alia include
“material changes and commitments, if any, affecting the financial position of
the company which have occurred between the end of the financial year of
the company to which the financial statements relate and the date of the
report”. As noted earlier, GDPR was enacted by European Parliament in April
2016 and became applicable w.e.f. May 25, 2018. The Director’s report for
the Financial Years ended on March 31, 2016 and March 31, 2018 were
dated November 21, 2016 and October 16, 2018, respectively. It was noted
that even though the enactment of GDPR in April 2016 and applicability of
GDPR w.e.f. May 2018, had material impact on the financial statements of
the Company, there was no mention of these events in the Directors’ Report
of the company dated November 21, 2016 and October 16, 2018. Instead,
both the reports stated “There are no Material Changes and Commitments
affecting the financial position of the Company which occurred between the
end of the financial year to which the financial statements relate and the date
of this Report.”
89. Regulation 34(2) of the SEBI (LODR) Regulations, 2015 provides that the
annual report shall contain the Management Discussion and Analysis Report
- either as a part of the Directors’ Report or addition thereto. According to
Schedule V of SEBI (LODR) Regulations, 2015, the Management Discussion
and Analysis should inter alia include discussion on certain matters, viz.
Industry structure and developments, Opportunities and Threats, Outlook,
Risks and concerns. The Management Discussion and Analysis reports of
the Company for the financial years ending March 31, 2017 to March 31,
2020 (i.e. all the financial years starting from the year in which GDPR was
enacted in the European Parliament till the financial year in which the
impairment of assets purportedly due to introduction of GDPR) were
_________________________________________________________________________________________
examined and it was noticed that the Company had merely made the
following disclosure in the said years:
“Business can be affected by privacy legislations and other regulations. The

Company discloses all its collection statements and dissemination practices
in a published privacy statement in its website.”
90. The above statement was found to be generic in nature and could not be said
to be pertaining to GDPR and its impact on the Company due to following
reasons:
(a) The Company had made similar disclosures in the Management

Discussion and Analysis Reports of Financial years ending March 31,
2013 to March 31, 2016 i.e. even prior to introduction of GDPR.
(b) The compliance requirements under GDPR were not just restricted to
disclosure of published privacy statement on the Company’s website
but also included other requirements.
91. In view of the above, it was observed that BGL had allegedly violated
Regulation 30 r/w clause 7 of para B of Part A of Schedule III of SEBI (LODR)
Regulations, 2015 for not making disclosure in respect of impact of
introduction of GDPR on the functioning of the company. BGR had also
allegedly violated Regulation 34(2) of the SEBI (LODR) Regulations, 2015 for
not disclosing introduction of GDPR as Threats, Outlook, Risks or concerns
in Management Discussion and Analysis statement in the Annual Reports for
the financial years ending March 31, 2017 to March 31, 2020 (i.e. all the
financial years starting from the year in which GDPR was enacted in the
European Parliament till the financial year in which the impairment of assets
purportedly due to introduction of GDPR).
J. Observations on Transfer to Intangible Assets:

92. On examination of the Consolidated Financial statements of BGL, it was
noted that the note, “Property, Plant & Equipment and Intangible assets”
included three categories: Intangible assets, Capital Work-in-Progress and
Intangible Assets Under Development.
_________________________________________________________________________________________
93. The examination revealed a trend wherein each year, the additions to the
“Intangible Assets under Development” and “Capital Work-in Progress” were
entirely transferred to “Intangible Assets” in the subsequent year. Further, the
additions to “Intangible Assets under Development” and “Capital Work-in
Progress” during each year, showed the closing balances under the said
heads at the end of the said year. The same is shown in the table below:
Intangibles Under Development FY2014-15 FY2015-16 FY2016-17 FY2017-18 FY2018-19 FY2019-20

(Amount in INR, Crore)
Opening balance 19 165 102 71 176 137
Add: Additions 165 102 71 176 137 132
Less: Sale/deletion (19) (165) (102) (71) (176) (137)
Closing balance 165 102 71 176 137 132
Capital Work-In-Progress FY2014- FY2015-16 FY2016- FY2017- FY2018- FY2019-20

(Amount in INR, Crore) 15 17 18 19
Opening balance 22 105 70 (0) 125 148
Add: Additions 105 70 0 125 148 136
Less: Sale/deletion (22) (105) (70) 0 (125) (148)
Closing balance 105 70 (0) 125 148 136
Intangible assets FY2014- FY2015- FY2016-17 FY2017- FY2018- FY2019-20

(Amount in INR, Crore) 15 16 18 19
Opening balance 219 243 466 548 518 500
Add: Additions 42 281 172 71 301 285
Less: Sale/deletion (238)
Less: Depreciation (17) (58) (90) (102) (82) (112)
Closing balance 243 466 548 518 499 673
94. In this regard, BGL vide email dated October 17, 2022 had replied “The
average cycle time from the Concept design stage till commercial launch is
about 12 months. Hence, at the end of every year, we capitalize the opening
balances in Intangible Assets under Development and Capital Work in
Progress. Any new additions during the year will continue to appear as
closing balance.”
95. The above explanation was found to be untenable, since it was unlikely that
entire expenditure on concept stage was incurred on the very last day of the
financial year which required BGL to transfer entire opening balance in
CWIP/Intangible assets under development to Intangible assets at the end of
subsequent financial. Further, Mr. Narayana Raju, the CFO of BGL, in his
statement recorded before the IA on October 13, 2022 had admitted that it
was difficult to generalize the time to commercially launch a product and that
_________________________________________________________________________________________
each product / service offering would have its own level of complexity. He
further submitted that while some of the products might take anywhere
between 90 to 180 days to meet GDPR regulations, some product
development activities might take more than a year or two.
96. Further, BGL vide letter dated October 11, 2022 stated that “At BGL, we keep
investing on our products on a continuous basis. This will help us to stay up
to date with changing market / statutory compliance related requirements and
to provide robust and holistic solutions to our customers that meets regulatory
requirements as well.”
97. From the above, it was clear that the generation cycle of every intangible
asset not necessarily coincided with the start and the end of a financial year.
Thus, the asset recognition practice at BGL was not in accordance with
Accounting Standard 26 & Ind AS 38 which inter alia state that an intangible
asset shall be recognized if, and only if it is probable that the expected future
economic benefits that are attributable to the asset will flow to the entity.
98. The non-compliance by BGL with Accounting Standard 26 in preparation and

presentation of the financial statements for the FY 2014-15 was allegedly in
violation of Clauses 49 (I)(C)(1)(a) and 50 of the listing agreement. Further,
the non-compliance by BGL with Accounting Standard 26 (for FY 2015-16) &
Ind AS 38 (FY 2016-17 to FY 2019-20) in the preparation and presentation of
the financial statements was in violation of Regulation 4(1)(a), (b), (c), (d) (e),
(g), (h), (i), (j), 4(2)(e)(i), 33(1)(c) & 48 of SEBI (LODR) Regulations, 2015.
K. Non-Disclosure of initiation of Forensic Audit:

99. SEBI vide its letter dated September 16, 2021, had appointed the forensic
auditor in the matter of BGL. The scope was to conduct forensic audit of the
consolidated financial statements of the Company for the FYs 2014-15 to
2019-20 with a special focus on impairment of assets and expected to verify
any manipulation in the Books of Accounts of the Company & its subsidiaries,
misrepresentation and diversion/siphoning of Company funds, etc. The
initiation of Forensic Audit was a material development in terms of Regulation
30 (1) (2) (6) read with Clause 17 of A of Part A of Schedule III of the SEBI
(LODR) Regulations, 2015, which mandates that the fact of the initiation of
_________________________________________________________________________________________
the forensic audit ought to be disseminated to the stock exchanges within 24
hours. However, the Company failed to do so.
100. SEBI vide email dated October 12, 2021 inter alia asked the Company the
reasons for abovementioned non-disclosure of details pertaining to forensic
audit initiation, till date. In response, the Company vide letter dated October
13, 2021 inter-alia submitted that vide letter dated October 1, 2021 it had
already requested SEBI to withdraw the external audit. It further stated that
the said audit was regarding the impairment of assets done for the financial
year 2019-20 for which the company had submitted exhaustive list of
information and clarifications to SEBI, due to which it was awaiting a positive
response resulting in withdrawal of such audit.
101. It was observed that though the Company had made a request for withdrawal
of audit, SEBI vide letter dated February 17, 2022 had informed BGL that its
request for withdrawal of forensic audit was not acceded to. However, even
after the said communication, no disclosure was made on the stock exchange
in terms of Regulation 30 of SEBI (LODR) Regulations, 2015. Accordingly,
the reason for non-disclosure was again sought from BGL vide email dated
February 22, 2022. BGL vide its letter dated February 23, 2022 replied that
all the details and documents required by SEBI had been submitted and no
details were pending. It further stated that filing of the requisite disclosures
should not be insisted upon.
102. From the above, it was observed that the Company had no intention to make
the disclosure regarding initiation of forensic audit, despite repeated
reminders. Accordingly, vide email dated February 28, 2022, NSE and BSE
were directed to disseminate the SEBI letter dated September 16, 2021
captioned ‘Forensic Audit Assignment in the matter of BGL’, pursuant to
which, both the stock exchanges disseminated the aforementioned
information on February 28, 2022, post trading hours on the stock exchange’s
website.
103. BGL, in response to the above, on February 28, 2022 after the disclosures
by the exchanges, inter-alia submitted the following clarifications to the
exchanges:
_________________________________________________________________________________________
a) ‘On September 16, 2021, approximately five months ago, we received a
letter from the Securities & Exchange Board of India, dated September
16, 2021, wherein they appointed a forensic auditor.
b) The company represented to SEBI that the said audit was unnecessary
because several internet companies had to take such charges globally,
owing to the GDPR norms. However, SEBI on 25th February 2022
(Friday) intimated the company that this audit would be necessary.
Accordingly, we are notifying the Exchanges.
c) The Company is committed to extending its total cooperation in this
regard, to the Regulator and Auditor.
d) The Company shall inform the exchanges of any further developments in
the matter.’
104. The above observations show that there was a substantial delay of 165 days
in making the disclosure and that the Company had provided clarifications to
the exchanges on February 28, 2022 only after disclosures were made by the
exchanges pursuant to directions issued by SEBI. Accordingly, it was
observed that the Company had failed to comply with Regulation 30 (1), (2)
and (6) read with Clause 17 Schedule III Para A of Part A of SEBI (LODR)
Regulations, 2015.
L. Inconsistent Disclosure of Shareholding Pattern (SHP)

105. During investigation, it was observed that there were differences between the
shareholding patterns filed by the Company with the stock exchange and the
shareholding pattern available with RTA. The shareholding data of
Depositories was consistent with RTA data. A summary of inconsistencies is
given below:
Details of Promoter Shareholding

Reported to Stock Exchanges (A) As Per RTA Data (B) Difference (A-B)
Quarter Ending No. of Shares % of PUC No. of Shares % of PUC No. of Shares % of PUC
31-Mar-14 19,26,59,506 40.45 19,26,59,506 40.45 - -
30-Jun-14 18,96,67,506 39.83 18,96,67,506 39.83 - -
30-Sep-14 18,59,47,398 39.04 18,59,47,398 39.04 - -
31-Dec-14 18,63,58,271 39.13 18,17,35,164 38.17 46,23,107 0.96
31-Mar-15 18,66,68,224 39.20 18,25,72,635 38.35 40,95,589 0.85
30-Jun-15 18,67,37,270 39.21 18,18,71,164 38.19 48,66,106 1.02
30-Sep-15 18,67,37,270 39.21 17,09,97,201 35.91 1,57,40,069 3.30
31-Dec-15 18,59,73,307 39.05 16,47,40,701 34.60 2,12,32,606 4.45
31-Mar-16 18,62,02,065 39.10 16,37,39,459 34.39 2,24,62,606 4.71
30-Jun-16 18,62,44,525 39.11 15,63,86,289 32.84 2,98,58,236 6.27
30-Sep-16 18,62,44,525 39.11 13,98,86,289 29.37 4,63,58,236 9.74
31-Dec-16 18,62,44,525 39.11 13,82,06,289 29.02 4,80,38,236 10.09
31-Mar-17 18,62,54,525 39.11 13,16,04,409 27.63 5,46,50,116 11.48
30-Jun-17 18,62,67,525 39.11 12,98,32,991 27.25 5,64,34,534 11.86
_________________________________________________________________________________________
Details of Promoter Shareholding
Reported to Stock Exchanges (A) As Per RTA Data (B) Difference (A-B)
Quarter Ending No. of Shares % of PUC No. of Shares % of PUC No. of Shares % of PUC
30-Sep-17 18,62,67,525 39.11 11,78,93,337 24.75 6,83,74,188 14.36
31-Dec-17 18,62,67,525 39.11 10,52,84,480 22.09 8,09,83,045 17.02
31-Mar-18 18,62,67,525 39.11 9,52,78,209 19.99 9,09,89,316 19.12
30-Jun-18 18,63,77,685 39.13 9,17,00,851 19.24 9,46,76,834 19.89
30-Sep-18 18,63,87,685 39.14 9,15,10,851 19.20 9,48,76,834 19.94
31-Dec-18 18,64,27,685 39.14 8,81,50,397 18.50 9,82,77,288 20.64
31-Mar-19 18,64,27,685 39.14 8,72,39,703 18.31 9,91,87,982 20.83
30-Jun-19 18,64,27,685 39.14 8,55,79,139 17.96 10,08,48,546 21.18
30-Sep-19 18,64,27,685 39.14 8,32,71,522 17.48 10,31,56,163 21.66
31-Dec-19 18,64,27,685 39.14 7,21,00,911 15.13 11,43,26,774 24.01
31-Mar-20 18,64,27,685 39.14 6,65,32,378 13.96 11,98,95,307 25.18
30-Jun-20 18,64,27,685 36.72 6,05,14,136 11.90 12,59,13,549 24.82
30-Sep-20 18,66,27,685 36.76 5,63,03,372 11.07 13,03,24,313 25.69
31-Dec-20 18,66,27,685 36.76 5,23,70,400 10.30 13,42,57,285 26.46
31-Mar-21 18,66,27,685 36.76 3,67,97,633 7.24 14,98,30,052 29.52
30-Jun-21 18,66,27,685 36.76 3,57,88,133 7.04 15,08,39,552 29.72
30-Sep-21 23,32,84,604 22.40 4,36,85,916 4.19 18,95,98,688 18.21
31-Dec-21 23,32,84,604 22.40 4,29,24,541 4.12 19,03,60,063 18.28
31-Mar-22 22,36,81,791 18.47 4,24,31,791 3.51 18,12,50,000 14.96
30-Jun-22 37,27,82,652 18.47 7,06,99,321 3.51 30,20,83,331 14.96
106. Vide email dated March 16, 2022, a response was sought from BGL on the
significant differences in the promoter/public shareholding disclosed on the
stock exchange website vis-à-vis the holding statement as per RTA and
depositories for the period March 2020 to Sep 2020. In response, BGL vide
letter dated March 21, 2022 had submitted the following-
‘the difference is due to shares of the promoters being pledged. One of

the condition of pledging shares was that the shares would be transferred
to the account of pledgor, however, the beneficial ownership and the
voting rights of the shares were with the promoters of the Company.
Since the promoters were the beneficial owners of the pledged shares,
therefore, the same was being shown in the shareholding pattern in the
name of the respective promoters.’
107. Subsequent to the above, information was also sought from depositories vide
email dated March 23, 2022 regarding encumbrances marked against the
shares held by promoters of BGL. In response, the depositories submitted
that except for 4 demat accounts, none of the demat accounts had any
encumbrance. Further, on the said 4 demat accounts, the encumbrance was
in the form of suspension (Debit)/account freeze, pursuant to SEBI directions
issued in 2019 for violating PIT Regulations.
_________________________________________________________________________________________
108. From the above, it was observed that the promoters had referred to the off
market transfers done from their Demat accounts as pledge of shares.
However, as per SEBI master circular for Depositories dated October 25,
2019, ‘…an off-market transfer of shares leads to change in ownership
and cannot be treated as pledge’. Accordingly, the submissions of the
Company were found to be untenable. In fact, there appeared to be a
deliberate attempt to disclose incorrect shareholding pattern. It was also
noted that neither BGL nor promoters had made any disclosures under SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and
SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations,
2015”) in respect of shares pledged/invoked/transferred.
109. With regard to the above, NSE had also sought clarifications from the
Company. However, the Company provided incomplete and unsatisfactory to
the NSE. Further, it also failed to provide further clarifications sought by NSE.
Subsequently, NSE disseminated the following information to the market vide
on December 16, 2022 in the Corporate Announcements section of its
website:
“The Exchange has been seeking various clarifications from Brightcom Group
Ltd. ('Company') against a complaint from investor and response received
from Company was unsatisfactory and incomplete. On the basis of aforesaid,
the Company is required to provide satisfactory and complete response. The
response from the Company is awaited.”
110. As per section 10(1)(3) of the Depositories Act, 1996, a beneficial owner is
entitled to all the rights and benefits and be subjected to all the liabilities in
respect of his securities held by a depository. Considering the same, the claim
of the Company that despite promoters transferring the shares to lenders, the
promoters remained beneficial owners and held the voting rights of the
shares was found to be untenable. This also casts doubt on the voting results
of the various general meetings (including postal ballot) published under
clause 35A of the erstwhile Listing Agreement and Regulation 44(3) of the
SEBI(LODR) Regulations, 2015 and the scrutinizers report under Section 109
_________________________________________________________________________________________
of the Companies Act, 2013 and Rule 21(2) of the Companies (Management
and Administration) Rules, 2014.
111. The RTA of a company acts as an agent of that company and is entrusted
with the responsibility of maintaining records on behalf of that company,
which include list of holders of securities of such company. RTAs compile all
the information related to shares held in physical as well as in dematerialized
form. The shareholding pattern filed by BGL under clause 35 of the erstwhile
Listing Agreement (up to November 30, 2015) and Regulation 31 of SEBI
(LODR) Regulations, 2015 (w.e.f. December 01, 2015) should have been
sourced from the data maintained by RTA. However, even though the
shareholding data of RTA was consistent with that of Depositories, it
appeared that Company had deliberately misrepresented its shareholders’
data. The company intentionally concealed the material information i.e., the
actual shareholding pattern and the quantity of shares encumbered, from the
public shareholders to mislead & deceive the public/shareholders of the
Company at large. The same was in violation of Clause 35 of the erstwhile
Listing Agreement (up to November 30, 2015) and Regulation 4(1) (c), (h),
31(1)(b) of SEBI (LODR) Regulations, 2015 read with SEBI circular no.
CIR/CFD/CMD/13/2015 dated November 30, 2015 (w.e.f December 01,
2015).
M. Observations on the internal Audit:

112. BGL published a press release dated 10 April 2018 on exchanges’ platform
announcing the appointment of Ernst & Young as its internal auditor. Vide
Summons dated May 20, 2022, SEBI asked BGL to confirm whether it had
carried out its Internal Audit for the period April 1, 2014 to March 31, 2020.
BGL vide letter dated June 23, 2022 replied that “We did not appoint external
firm to do the internal audit; rather, as permitted under Rule 13 of the
Companies (Account) Rules, 2014, an internal audit team was constituted
from amongst our employees in the accounts department and they conducted
the internal audit.” BGL further informed that “In view of the circumstances
that have now evolved, we have decided to appoint an Internal Auditor for the
Company and the proposal for the same will be placed before the Board of
Directors in their next meeting in July 2022.”
_________________________________________________________________________________________
113. BGL also furnished its quarterly internal audit reports from which it was noted
that the reports were not signed by the internal auditor. Also, the name of the
auditor was not mentioned. Thus, it could not be ascertained if it was external
consultant who had issued the internal audit report. Further, Mr. Narayana
Raju, the CFO of BGL, during his statement recording on 13 Oct 2022, stated
that he was not aware of engagement of Ernst & Young as the Company’s
internal auditor.
114. In view of the above, it was found that BGL had made a wrong and misleading
corporate announcement, thereby violating Regulation 4(1)(c) & (h) of SEBI
N. Observations on the Quarterly Financial Results of FY 2019-20:

115. As per Regulation 33(3)(h) of SEBI (LODR) Regulations, 2015 which was
inserted and became applicable w.e.f. 1.4.2019, “The listed entity shall
ensure that, for the purposes of quarterly consolidated financial results, at
least eighty percent of each of the consolidated revenue, assets and profits,
respectively, shall have been subject to audit or in case of unaudited results,
subjected to Ltd. review.”
116. However, it was observed that the quarterly consolidated results for the FY
2019-20 reviewed by the statutory auditors and the details of results were not
subjected to audit/Ltd. review, as required under the abovementioned
provision. A summary of such results is provided below:
All Figures in Rs. Crores

I. Quarterly Results Reported by BGL
Particulars Reference Jun-19 Sep-19 Dec-19 Mar-20
Type of Audit Ltd. Review Audit
Consolidated Revenue A 574.98 629.57 859.52 628.25
Consolidated Profit After Tax B 83.16 105.47 143.84 107.65
Consolidated Assets C 3,465.54 3,712.96 3,755.96 3,270.00
II. Details obtained from Auditor's report
No of Subsidiaries not
16 14
reviewed/audited D 14 14
Revenue of Subsidiaries
459.92 513.02 747.34 Not Specified
not reviewed/audited E
PAT of Subsidiaries not
107.82 106.22 126.33 Not Specified
reviewed/audited F
Assets of Subsidiaries not
Not Specified 3,524.70 Not Specified 3,058.99
reviewed/audited G
III. Observations based on II & III above
% Revenue not r Not
79.99% 81.49% 86.95%
eviewed/audited H=E/A Ascertainable
% PAT not reviewed/ Not
129.65% 100.71% 87.83%
audited I=F/G Ascertainable
_________________________________________________________________________________________
% Total Assets not reviewed Not
Not Ascertainable 94.93% 93.55%
/audited J=G/C Ascertainable
117. It was therefore found that BGL had violated Regulation 33(3)(h) of SEBI
O. Non-independence of Raghunath Allamsetty as an Independent Director:

118. The Board of Directors had appointed Mr. Raghunath Allamsetty as
Additional Director (Independent) of BGL (known as LGS Global at that time)
with effect from June 26, 2012 under Section 260 of the Companies Act, 1956
and he held the office till December 26, 2012 (AGM for FY 2011-12). He was
re-appointed as Director by way of Ordinary Resolution in AGM dated
December 26, 2012. He ceased to be director of the Company on completion
of his tenure on September 29, 2015 (Annual report 2015-16).
119. Subsequently, the Board of Directors of the Company at its meeting held on
December 27, 2016 appointed Mr. Raghunath Allamsetty as Additional
Director (Non-Executive-Independent) w.e.f December 27, 2016 till the
conclusion of the forthcoming Annual General Meeting of the Company.
Thereafter, he was appointed as independent Director at AGM held on
September 27, 2017 till December 26, 2021.
120. The Company made a disclosure under Regulation 30 of SEBI (LODR)

Regulations, 2015 on December 27, 2021, stating “… this is to inform that
Mr.Allam Raghuanth (DIN: 00060018) an Independent Director of the
Company has completed the second term of office on December 26, 2021
thereby completing two terms as an Independent Director and consequently
he also ceased to be a Director of the Company with effect from close of
business hours of December 26, 2021.”
121. Based on the above material, the tenure of Mr. Raghunath Allamsetty, as
Director of the Company, is tabulated below:
Sl.No From To Category Appointed by

1 26-June-2012 26-Dec-2012 Independent Board of Directors as Additional Director
under Section 260 of the Companies Act 1956
2 26-Dec-2012 29- Sep-2015 Independent Shareholders by way of Ordinary Resolution
in AGM dated December 26, 2012.
_________________________________________________________________________________________
3 27-Dec-2016 27- Sep-2017 Independent Board of Directors as Additional Director
under Section 165(1) of the Companies Act
2013
4 27- Sep-2017 26- Dec-2021 Independent Shareholders at by way of Special Resolution
in AGM dated September 27, 2017
122. Section 150(2) of the Companies Act, 2013 provides that “the appointment of
independent director shall be approved by the company in general
meeting as provided in sub-section (2) of section 152”. Section 152(2) of the
Act mandates that “save as otherwise expressly provided in the Act, every
director shall be appointed by the company in general meeting.” Further,
Schedule IV of the Companies Act, 2013 provides that “appointment process
of independent Directors shall be independent of the company
management” and “The appointment of independent director(s) of the
company shall be approved at the meeting of the shareholders.”
123. From the disclosure made in explanatory statement of in the notice to 18 th

AGM of the Company, it was observed that Mr. Raghunath Allamsetty was
appointed by Board as an additional director (independent) and his
appointment was approved by the shareholders at the next AGM for a period
of five years w.e.f the date on which he was appointed as such in the Board
meeting. Hence, the entire period starting from the effective date of
appointment of independent director by the Board (I.e. December 27, 2016)
and the subsequent date of approval by the shareholders (i.e. September 27,
2017) had to be considered as part of single term of Mr. Raghunath
Allamsetty, which came to end on December 26, 2021. Further since the
disclosure made by the Company on December 27, 2021 stated that Mr.
Raghunath had completed two terms as independent director, it could be
inferred that his appointment in the board meeting on December 27, 2016
was a re-appointment for the second term and the term starting from June
26, 2012 to September 29, 2015 was his first term. The same was also
evident from the fact that the resolution passed at AGM dated September 27,
2017 was a special resolution which was applicable in case of re-appointment
of the Independent Director as against Ordinary resolution in case of
appointment for the first time.
_________________________________________________________________________________________
124. In this context, it is imperative to note that an Independent Director cannot be
reappointed by the Board of Directors of a company for a second term once
his first term is over, unless a special resolution was passed by the Company
and a disclosure of such appointment was made in the Board’s report, as
required by Section 149(10) of the Companies Act, 2013 which provides that
“Subject to the provisions of section 152, an independent director shall hold
office for a term up to five consecutive years on the Board of a company, but
shall be eligible for reappointment on passing of a special resolution by the
company and disclosure of such appointment in the Board's report.”
125. Since in the instant case, the shareholders’ approval by special resolution for
re-appointment for second term was not taken as on the last date of the first
term ending on September 29, 2015, the re-appointment of Mr. Raghunath
by the board as an additional director for the second term was not in
accordance with the law. Accordingly, the Allamsetty Raghunath could not be
considered as independent director for the period between December 27,
2016 to September 26, 2017.
126. Further, as per Regulation 16(1)(b) of the SEBI (LODR) Regulations, 2015,
one of the conditions for appointment as independent director is that such
person’s relatives should not be an employee of the listed entity or its holding,
subsidiary or associate company. A similar provision existed in Clause 49IIB
of the erstwhile Listing Agreement w.e.f. October 1, 2014 till SEBI (LODR)
Regulations, 2015 came into force from December 1, 2015.
127. During the recording of statement of Mr.Allamsetty Raghunath on April 27,

2022, he had stated that Ms. Aishwarya Allamsetty was his daughter. From
her Linkedin profile, it was noted that she was employed in Ybrant Digital Ltd
as intern from April 2013 to May 2013 and Lycos as Business Analyst from
Sep 2014 to May 2016 and was currently working as Lead-Corporate
Communication of Brightcom Group Ltd. since Sep 2018. In this context it
may be noted that Brightcom Group Ltd. was formerly named as Ybrant
Digital Ltd. from June 14, 2012 to October 07, 2014, which was changed to
Lycos Internet Ltd. w.e.f October 07, 2014 and to Brightcom Group Ltd. w.e.f
September 05, 2018.
_________________________________________________________________________________________
128. Further, Ms. Aishwarya vide email dated April 27, 2022 shared with SEBI her
employment certificate dated May 24, 2019 issued by M/s. LIL Projects
Private Ltd., as per which she was employed as Lead-Corporate
Communications with that company from September 11, 2018 to May 24,
2019. It was found that M/s. LIL Projects Private Ltd. was a subsidiary of
Brightcom Group Ltd..
129. In view of the above irregularities in appointment of Allamsetty Raghunath

and his daughter’s employment with the Company and its subsidiary, he did
not qualify to be an Independent Director of the BGL from October 01, 2014.
Thus, BGL had violated Regulation 17(1) of SEBI(LODR) Regulations 2015.
Further, BGL had also violated 18(1)(b) of SEBI (LODR) Regulations, 2015
as the constitution of Audit committee of BGL, during the period for which
Allamsetty Raghunath did not qualify to be an independent director, was also
not in accordance with requirement specified in the said regulation.
P. Corporate governance requirements with respect to subsidiary of listed

entity.
130. Clause 49(III)(i) of the erstwhile listing agreement and Regulation 24(i) of
SEBI (LODR) Regulations, 2015 specify corporate governance requirements
with respect to unlisted material subsidiaries of a listed entity.
131. The Company vide letter dated August 02, 2022 had furnished the list of its
material subsidiaries for each of the Financial Years during the investigation
period, which is given below:
Material Subsidiaries
Sl. No. FY15 FY16 FY17 FY18 FY19 FY20
Online Media Online Media Online Media Online Media Online Media Online Media
1 Solutions Solutions Solutions Solutions Solutions Solutions
Frontier Data Frontier Data Frontier Data Frontier Data Frontier Data Frontier Data
2 Management Management Management Management Management Management
International International International International International International

3 Expressions Expressions Expressions Expressions Expressions Expressions
Inc. Inc. Inc. Inc. Inc. Inc.
132. From the page no.3 of annual report of BGL for the FY 2019-20 where the list
of subsidiaries was given, it was seen that Online Media Solutions Ltd. was
an Israeli Company and two companies, viz. Frontier Data Management and
_________________________________________________________________________________________
International Expressions Inc., were based out USA. It was thus seen that
during the entire period, the Company had only overseas subsidiaries as
material subsidiaries. With effect from April 01, 2019, the requirement of
having an independent director on the board of directors of the listed entity
on the board of directors of an unlisted material overseas subsidiary was
introduced in Regulation 24(i) of the SEBI (LODR) Regulations, 2015. In this
regard, the Company had provided the following list of directors of its material
overseas subsidiaries.
Subsidiary Directors & Key Management

Frontier Data Management Inc., USA Brad Cohen, Vijay Kancharla
International Expressions Inc., USA Ori Elraviv, Vijay Kancharla
Online Media Solutions Ltd., Israel Jacob Nizri,Etai Eitany
133. However, it was found that none of the abovementioned directors of the
overseas subsidiaries was an Independent Director on the Board of BGL.
Accordingly, BGL had violated the Regulation 24(1) of SEBI (LODR)
Regulations, 2015.
Q. Non-disclosure of Standalone financial statements of subsidiaries on the

Website of the company:
134. As per the requirements of Regulation 46(2) of SEBI (LODR) Regulations,

2015, the Company was required to publish the Standalone financial
statements of subsidiaries on its Website. However, on perusal of the website
of the Company viz., https://www.brightcomgroup.com/, it was observed that
the Company had not published the separate financials of its subsidiaries for
any of the years. Despite various summonses issued by SEBI requiring the
Company to furnish the link of its website where separate audited accounts
in respect of each of its subsidiary (including foreign subsidiaries) were
published, the Company failed to provide the same.
135. Mr. Suresh Kumar Reddy, in his statement dated March 17, 2022 to SEBI,
when asked to give reasons for the above non-compliance, stated that “There
was a legal matter in the Lycos acquisition case, where in the detailed
breakup of the financials was causing difficulty in negotiation with the other
party. That was the reasons we did not put forth detailed subsidiary
_________________________________________________________________________________________
financials”. Mr. Suresh Kumar Reddy further confirmed that the Company had
not sought exemption from SEBI from the applicability of Regulation 46 of
SEBI (LODR) Regulations, 2015 in respect of the above.
136. In view of the above, BGL had violated of 4(1)(d),(g),(h),(i),(j) & 46(2) SEBI
(LODR) Regulations 2015 and the same is continuing till date.
R. Non-Maintenance of Structured Digital Database:

137. During the statement recording on May 31, 2022, M. Suresh Kumar Reddy,
CMD of the Company, was asked to furnish the copy of the Structured Digital
Database (“SDD”) maintained by the Company in accordance with
Regulation 3(5) of the PIT Regulations. In response, Mr. M. Suresh Kumar
Reddy, vide email dated June 07, 2022, merely furnished an excel sheet
containing a list of insiders. On further asking by SEBI, Mr. Suresh Kumar
Reddy stated the following:
“We would like to submit that in order to create and maintain the Structured
Digital Database, a separate software is needed and the Registrar and
Transfer Agent of the Company who maintains the details of shareholding
including the BENPOS files is required to input data into the software. Due to
certain unavoidable circumstances, the software for this purpose could not
be procured and the server could not be installed at our Registered Office.
We were also not able to identify third party providers to create and maintain
the Structured Digital Database at Hyderabad.
We have now arranged to procure the necessary software and to input data
and to set up and maintain servers at our registered office.
It may be noted that Brightcom Group is a Multinational Company with
business and operations in 25 countries and a market leader in ad tech space
with clients who include Fortune 50 companies such as Sony, Viacom,
Samsung, British Airways; since various jurisdictions have different
compliance requirements and need separate software, the delay in setting up
the Structured Digital Database is only on account of the complexity in our
overall compliance requirements. “
_________________________________________________________________________________________
138. From the above response of the Company, it was clear that the board of
directors of the Company had not ensured the implementation of
maintenance of SDD containing the names of such persons or entities with
whom UPSI was shared, which was a legal requirement w.e.f April 1, 2019.
The reasons provided by the company for non-maintaining such SDD were
not tenable as the obligation to maintain such a database was on the Board
of Directors of the Company. The Company’s contention that RTA was
required to input data was without any merit. Further, the Company’s
explanation that it was not able to identify third-party providers to create and
maintain the Structured Digital Database at Hyderabad was also untenable
for the reason that as per Regulation 3(5) of the PIT Regulations, 2015, such
database cannot be outsourced and has to be maintained internally. Further,
it was immaterial whether the Company was functioning within India or an
MNC operating across the globe, as the compliance requirements are same
for all the listed entities in India in respect of maintenance of SDD.
139. In view of the above, the board of directors of the Company had failed to
comply with Regulation 3(5) of SEBI (PIT) Regulations 2015.
S. Summary of Findings:
140. A summary of the abovementioned findings of investigation is as follows:
Noncompliance with Accounting Standards:
(a) BGL wrongly capitalized expenditure incurred during the research phase and
research-cum-development phase (the phase in which BGL could not
distinguish the research phase from the development phase) of the creation
of intangible assets which resulted in non-compliance with Accounting
Standard 26 (FY 2014-15 & 2015-16) and Ind AS 38 (FY 2016-17 to FY 2019-
20). This led to an understatement of expenditure and overstatement of Profit
before Tax and Profit After Tax during the respective financial years.
(b) BGL did not recognize the impairment loss w.r.t. its investment in its
subsidiary, despite indication of impairment during the FYs 2018-19 & 2019-
20, which resulted in non-compliance with requirements of Ind AS 36. This led
_________________________________________________________________________________________
to an understatement of expenditure and overstatement of Profit before Tax
and Profit After Tax during the FYs 2018-19 & 2019-20.
(c) BGL recognized impairment of assets of Rs. 411.76 Crore and Rs. 868.30
Crores under Other Comprehensive Income instead of recognizing the same
in profit or loss in the financial statements for the FYs 2018-19 and 2019-20
respectively, which resulted in non-compliance with Ind AS 36 leading to an
understatement of expenditure and overstatement of Profit before Tax and
Profit After Tax. Further, BGL in its financial statements for the FYs 2018-19
and 2019-20 did not disclose the events and circumstances that had led to
the recognition of said impairment losses, which resulted in non-compliance
with Ind AS 36.
(d) The practice of BGL transferring “Intangible Assets Under Development” and
“Capital Work-in-Progress” to Intangible Assets once in a year instead of as
and when the asset recognition criteria was met, resulted in non-compliance
with Accounting Standard 26 (FY 2014-15 & 2015-16) and Ind AS 38 (FY
2016-17 to FY 2019-20).
(e) The above non-compliances with Accounting Standard 26 during the FY

2014-15 and FY 2015-16 and non-compliances with Ind AS 36 and Ind AS 38
during the FY 2016-17 to FY 2019-20 resulted in violation of Clauses 49
(I)(C)(1)(a) and 50 of the erstwhile Listing Agreement for the FY 2014-15) and
SEBI (LODR) Regulations 2015 for the FYs 2015-16 to FY 2019-20.
Violations of other LODR Regulations:
(f) BGL did not disclose the fact of the initiation of forensic audit to stock
exchanges and hence, violated Regulation 30 (1), (2) and (6) read with Clause
17 Schedule III Para A of Part A SEBI (LODR) Regulations 2015.
(g) BGL submitted incorrect and misleading quarterly shareholding pattern to the
stock exchanges for 31 out of 34 quarters during March 31, 2014 to June 30,
2022 and hence, violated Clause 35 of the erstwhile Listing Agreement (up to
November 30, 2015) and Regulation 4(1) (c), (h), 31(1)(b) of SEBI LODR
_________________________________________________________________________________________
Regulations, 2015 read with SEBI circular no. CIR/CFD/CMD/13/2015 dated
November 30, 2015 (w.e.f. December 01, 2015).
(h) BGL issued a false and misleading press release on April 10, 2018 w.r.t
appointment of internal auditor and hence violated Regulation 4(1)(c) & (h) of
SEBI (LODR) Regulations 2015.
(i) BGL did not ensure that, for the purposes of quarterly consolidated financial
results, at least eighty percent of each of the consolidated revenue, assets
and profits, respectively, were subjected to audit or in case of unaudited
results, subjected to Ltd. review for the quarters ending June 30, 2019,
September 30, 2019, December 31, 2019 and March 31, 2020 and hence,
violated Regulation 33(3)(h) of SEBI (LODR) Regulations 2015.
(j) BGL did not ensure that the constitution of its Audit Committee w.e.f. October
01, 2014 was in accordance with the regulatory requirements and hence
violated Regulation 18(1)(b) of SEBI (LODR) Regulations 2015.
(k) BGL did not appoint at least one independent director from its board as a
director on the board of directors of its three unlisted material subsidiaries and
hence, violated Regulation 24(1) of SEBI (LODR) Regulations 2015.
(l) BGL did not publish the standalone financial statements of its subsidiaries on
its website and hence violated of 4(1)(d),(g),(h),(i),(j) & 46(2) SEBI (LODR)
Regulations, 2015.
(m) BGL did not make disclosures in respect of the impact of introduction of GDPR
on the functioning of the Company and hence, violated Regulation 30 r/w
Clause 7 of Para B of Part A of Schedule III of SEBI (LODR) Regulations
2015.
(n) BGL did not make disclosure in respect of introduction of GDPR as Threats,
Outlook, Risks or Concerns in Management Discussion and Analysis and
hence violated Regulation 34(2)(3) & Schedule V SEBI (LODR) Regulations
2015.
(o) The aforesaid violations of various Clauses / provisions of the erstwhile Listing
Agreement and SEBI (LODR) Regulations 2015 also led to violations of
Section 21 of Securities Contracts (Regulation) Act, 1956.
_________________________________________________________________________________________
T. Impact on the price of the scrip
141. The price-volume chart of the scrip of BGL at BSE during the investigation
period is given below:
Brightcom Group Limited

100.00 2,00,00,000
80.00 1,60,00,000
60.00 1,20,00,000
40.00 80,00,000
20.00 40,00,000
0.00 -
16-Oct-14
19-Oct-16
15-Oct-18
19-Mar-15
14-May-14
18-May-16
20-Mar-17
15-May-18
15-Mar-19
01-Apr-14
29-Apr-15
19-Jun-14
05-Jun-15
14-Dec-15
07-Apr-16
23-Jun-16
27-Apr-17
05-Jun-17
11-Dec-17
06-Apr-18
20-Jun-18
25-Apr-19
04-Jun-19
16-Dec-19
26-Nov-14
04-Nov-15
25-Nov-16
03-Nov-17
22-Nov-18
07-Nov-19
02-Jan-15
20-Jan-16
02-Jan-17
17-Jan-18
01-Jan-19
22-Jan-20
25-Jul-14
13-Jul-15
12-Jul-17
26-Jul-18
11-Jul-19
24-Sep-15
26-Feb-16
08-Sep-16
08-Feb-17
26-Sep-17
26-Feb-18
04-Sep-18
06-Feb-19
04-Sep-14
10-Feb-15
27-Sep-19
27-Feb-20
18-Aug-17
20-Aug-19
18-Aug-15
01-Aug-16
No.of Shares Traded Close Price
142. From the above chart, it is apparent that from September 30, 2014, the share
price of BGL had generally declined over a period of time. Had the Company
not resorted to accounting irregularities, as detailed above, the Company’s
actual profits would have been significantly lesser from the reported profits.
Further, the assets and reserves would also be significantly different from
what were disclosed in the balance sheet. The same would have led to a
much steeper decline in the share prices. The accounting irregularities, due
to which the Company could paint a rosy picture of its financials, can be said
to have impacted the decision-making process for all stakeholders including
public shareholders of BGL who were oblivious to such accounting
irregularities. It is also worth noting that during the investigation period, the
promoters’ shareholding in BGL decreased from 40.45% on March 31, 2014
to 13.96% on March 31, 2020 and further to 3.51% as on June 30, 2022. The
promoters thus offloaded shares at prices which were artificially propped up
by showing higher profits through accounting irregularities.
143. The abovementioned acts operated as a device/scheme to defraud the

investors in the securities market resulting in violation of Regulation 3(c), 3(d),
_________________________________________________________________________________________
4(1) and 4(2)(f), (k) & (r) of SEBI (Prohibition of Fraudulent and Unfair Trade
Practices Relating to Securities Market) Regulations, 2003 [SEBI (PFUTP)
Regulations, 2003] read with12A (b) & (c) of SEBI Act, 1992.
U. Role of Mr. M. Suresh Kumar Reddy, Chairman and Managing Director &
Promoter and Mr. Vijay Kancharla, Whole Time Director & Promoter
144. Mr. M. Suresh Kumar Reddy is associated with BGL as Chairman and
Managing Director since June 26, 2012. Further, he is one of the promoters
of the Company. He had also signed the financial statements and CEO/CFO
Certification for all the financial years during the investigation period. He was
also a Key Managerial Personnel (“KMP”) of the Company, as per the
Companies Act, 2013. Mr. M. Suresh Kumar Reddy has also attended all the
board meetings of BGL during the investigation period. Further, all the board
meetings of 7 out of 10 subsidiaries of the Company, which recorded
impairment in FY 2019-20, were attended by Mr. M. Suresh Kumar Reddy.
(Minutes of the remaining three subsidiaries were not provided)
145. Mr. Vijay Kancharla is associated with BGL as a Whole Time Director since
June 26, 2012. He is also one of the promoters of the Company. He had also
signed the financial statements during the investigation period. He was also
a KMP of the Company as per the Companies Act, 2013. Mr. Vijay Kancharla
was also a member of Audit Committee during the investigation period. He
had attended many of the board meetings and audit committee meetings of
BGL during the investigation period. Further, he was also one of the directors
on board of all the subsidiaries that recorded impairment during the
investigation period and attended all the board meetings of 7 out of 10
subsidiaries during the investigation period that recorded impairment in FY
2019-20. (Minutes of the remaining three subsidiaries were not provided)
146. The role of the Board of directors of any company is very crucial as any
company acts through its Board of Directors. As envisaged under Regulation
4(2) (f) of SEBI (LODR) Regulations, 2015, the board of directors is inter alia
required to ensure integrity of the listed entity’s accounting and financial
reporting systems and oversee the process of disclosure and
communications. Being the Chairman and Managing Director of BGL &
_________________________________________________________________________________________
Executive Director, Mr. M. Suresh Kumar Reddy and Mr. Vijay Kancharla
were in charge of, and were responsible to, the Company for the conduct of
its business. It was their responsibility to ensure that the Company’s financial
statements presented a true and fair picture of the Company’s state of
financial affairs as they were involved in day-to-day affairs of BGL and its
subsidiaries and they had approved and authenticated all the financial results
of the listed entity filed during the investigation period. Accordingly, they are
liable under Section 27(1) of SEBI Act, 1992, for the contraventions done by
the Company.
147. Further, these directors had failed to ensure the implementation and of
maintenance of SDD containing the names of such persons or entities with
whom UPSI was shared, as required w.e.f April 01, 2019, thereby violating
Regulation 3(5) of SEBI (PIT) Regulations 2015.
148. In view of the above, these directors are responsible for the all the violations
committed by BGL during the investigation period, in terms of Section 27 of
SEBI Act, 1992 and Section 24 of SCRA, 1956. Further, they also failed to
perform the duties and obligations required to perform as Executive Directors
under clauses 49 (I)(C)(1)(a), 49(I)(D)(1)(b), (2)(b)(h) and 50 of the erstwhile
listing agreement (For the FY 2014-15) and Regulations 4(2)(f)(i)(2),
4(2)(f)(ii)(2)(7)(8), 4(2)(f)(iii)(1)(2)(3)(6)(7)(12) of SEBI (LODR) Regulations,
2015 (For the FYs 2015-16 to FY 2019-20).
149. Further, M. Suresh Kumar Reddy, being signatory to CEO/CFO Certification,

violated Clause 49(IX) of the erstwhile Listing Agreement (For the FY 2014-
15) & Regulation 17(8) of SEBI (LODR) Regulations, 2015 (For the FYs 2015-
16 to FY 2019-20).
150. Mr. Vijay Kancharla, as a member of the audit committee during the
investigation period, had failed to ensure that the published financial
statements were in accordance with the applicable accounting standards and
presented a true and fair view of the Company's affairs, and hence failed to
discharge his duties, as required under Regulation 18(3) read with Part C of
Schedule II of the SEBI (LODR) Regulations, 2015.
_________________________________________________________________________________________
V. Role of Mr. Y Ramesh Reddy, Independent Director, Member of Audit
Committee, Group CFO and Executive Director:
151. Mr. Y Ramesh Reddy was associated with BGL in multiple roles, as given
below:
Role From To
Independent Director & Audit Committee Member 26/06/2012 09/05/2016
Executive Director 09/05/2016 20/04/2017
Group CFO 09/05/2016 08/05/2021
152. He was also a signatory to the Financial Statements for the FY 2015-16. He
had attended 19 out of 20 board meetings and all the eight audit committee
meetings held during his tenure, covered by the investigation period. He was
also a KMP of the Company, as per the disclosure made in Annual Report of
BGL for the FY 2016-17. As disclosed in the Annual Report of BGL for the
FY 2015-16, his responsibilities included corporate finance, mergers and
acquisitions, corporate planning, risk management and investor relations.
Accordingly, as an executive director and KMP, he was responsible for the
all the violations committed by BGL during his tenure, in terms of Section 27
of SEBI Act, 1992 and Section 24 of SCRA, 1956. Further, he also failed to
perform the duties and obligations required to perform as Executive Directors
under Regulations 4(2)(f)(i)(2), 4(2)(f)(ii)(2)(7)(8), 4(2)(f)(iii)(1)(2)(3)(6)(7)(12)
of SEBI (LODR) Regulations, 2015.
153. Mr. Y. Ramesh Reddy, as a member of the audit committee during the
investigation period, had failed to ensure that the published financial
statements were in accordance with the applicable accounting standards and
presented a true and fair view of the Company's affairs, and hence failed to
discharge his duties, as required under Clause 49 III D of the erstwhile Listing
Agreement and Regulation 18(3) read with Part C of Schedule II of the SEBI
154. Mr. Y. Ramesh Reddy was also the Group CFO of the Company from May
09, 2016 to May 08, 2021. A CFO, as a person heading and discharging the
finance function of the listed entity, is expected to exercise due care and
diligence in ensuring that the transactions are genuine and that they are in
the best interests of a company, including the minority shareholders of that
_________________________________________________________________________________________
company. Therefore, Mr. Y Ramesh Reddy was expected to exercise the
powers in bona fide manner and in the interest of all stakeholders of the
Company. However, he failed to discharge the responsibilities required under
Regulations 4(2)(f)(i)(2) of SEBI (LODR) Regulations, 2015. Accordingly, he
was liable for the contraventions done by the Company, in terms of Section
27 (2) of the SEBI Act 1992 and Section 24 of SCRA, 1956.
W. Role of Mr. Y. Srinivasa Rao, CFO of BGL:
155. Mr. Y Srinivasa Rao was associated with BGL as CFO, throughout the
investigation period. He was also signatory to the Financial Statements and
CEO/CFO certification for all the financial years during the investigation
period. He was also a KMP of the Company, as per the Companies Act, 2013.
As CFO, he was expected to exercise the powers in bona fide manner and in
the interest of all stakeholders of the Company. However, he failed to
discharge the responsibilities required under Regulations 4(2)(f)(i)(2) of SEBI
(LODR) Regulations, 2015. Accordingly, he was liable for all the
contraventions done by the Company, in terms of Section 27 of the SEBI Act
1992 and Section 24 of SCRA, 1956.
156. Further, being a signatory to CEO/CFO Certification, Mr. Y. Srinivasa Rao

violated clause 49 (IX) of the erstwhile Listing Agreement (For the FY 2014-
15) & Regulation 17(8) of SEBI (LODR) Regulations, 2015 (For the FYs 2015-
16 to FY 2019-20).
X. Role of Statutory Auditors:

157. The following were the statutory auditors of the Company during the
investigation period:
FY Statutory Audit Signing Partner Type of Audit Report

Firm ICAI Standalone Consolidated
Membership
No.
2014-15 P Murali & Co P.Murali Unqualified Unqualified
Mohana Rao
(023412)
2015-16 P Murali & Co M.V Joshi Unqualified Unqualified
(024784)
_________________________________________________________________________________________
P Murali & Co P.Murali Unqualified Unqualified
2016-17 Mohana Rao
(023412)
PCN & Chandra Babu M Unqualified Unqualified
2017-18
Associates (227849)
PCN & Chandra Babu M Unqualified Unqualified
2018-19
Associates (227849)
2019-20 PCN & K Gopala Unqualified Unqualified
Associates Krishna
(203605)
158. As already observed above, the financial statements of BGL during the
Investigation period were not prepared and presented in accordance with
various prescribed accounting standards. However, it was observed that the
auditors for various years did not issuing a qualified / adverse / disclaimer of
opinion on the financial statements of BGL in accordance with Standard on
Auditing (SA) 700(Revised), “Forming an Opinion and Reporting on Financial
Statements”.
159. Further, as per the Auditor’s Report for the FYs 2018-19 & 2019-20, the
Company was having branch operations at USA. In terms of Section 143
(3)(b), (c) & (d) of the Companies Act, 2013, the Auditor’s Report had to
provide certain statements / disclosures in respect of books of account and
audit of such branch. However, on perusal of the Statutory Auditor’s reports
for the FY 2018-19 & 2019-20, it was observed no such disclosures were
made about the audit of the branches.
160. Further, it was observed that Auditor’s Reports for FY 2018-19 and 2019-20
were silent on whether the subsidiaries and branches not audited by the
auditor were audited by other auditors or unaudited, though the auditors were
required to do so under SA700. Further, whether such branches and
subsidiaries were material to the financial statements of the entity/
consolidated financial statements of the Group was not brought out in the
Auditor’s Reports.
161. As per the provisions related to the rotation of statutory auditors under Rule
6(3) of the Companies (Audit and Auditors) Rules, 2014 read with Section
139 of Companies Act, 2013, the incoming auditor or audit firm shall not be
eligible for appointment if such auditor or audit firm is associated with the
outgoing auditor or is an audit firm under the same network of audit firms.
_________________________________________________________________________________________
However, it was observed that PCN & Associates, the auditor for FY 2017-
18 to 2019-20 was associated with P Murali & Co, the previous auditor. The
details of such association are as under:
(a) As per the statement of Chandra Babu M, Partner of PCN & Associates,
recorded before IA, he was associated with P Murali & Co as a
consultant during 2011-2015.
(b) As per the website of PCN & Associates, two of its partners, viz. CA
Naveen Madivada and CA Lakshmi Prasanthi, did their CA articleship
in M/s.P.Murali & Co.
162. As per Section 141(3)(e) of the Companies Act, 2013 which deals with the
eligibility, qualifications and disqualifications of auditors, a person or a firm
who, whether directly or indirectly, has business relationship (any transaction
entered into for a commercial purpose) with the company, or its subsidiary,
or its holding or associate company or subsidiary of such holding company
or associate company, shall not be eligible for appointment as an auditor of
a company.
163. In the instant case, it was observed from the annual reports of the Company
that M/s. Aarthi Consultants Private Limited, the Registrar and Share Transfer
Agent (RTA) of the Company since 2000-2001, was associated with
Potukuchi Murali Mohan Rao, the partner of P Murali & Co. in the following
ways:
(a) Potukuchi Naga Nandini, wife of P Murali Mohan Rao is one of the
subscribers to Memorandum of Association of M/s.Aarthi Consultants
Private Limited and also one of its promoters.
(b) Ram Lakshmi Potukuchi and Vasantha Petasubba, the directors of

M/s.Aarthi Consultants Private Limited during the years 1992 to 2018,
had registered [email protected] as their email ID with MCA,
which was same as the email ID of Pluto Mines And Minerals LLP where
Potukuchi Murali Mohan Rao is a designated partner.
(c) The registered address of M/s.Aarthi Consultants Private Limited, viz.

1-2-285, Domalguda Hyderabad – 500 029, was same as address of
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Pluto Mines And Minerals LLP, Palace Heights Avenues LLP and A M
N Hotels LLP where Potukuchi Murali Mohan Rao is a designated
partner.
(d) Vasantha Petasubba was one of the Directors of P Murali Consultants

Private Limited which is a consultancy firm in which Potukuchi Murali
Mohan Rao is also a director.
(e) The shareholders of M/s. Aarthi Consultants Private Limited were found
to be related to P Murali Mohana Rao.
164. Further, it was also observed that BGL had allotted 45,00,000 shares of Face
Value of Rs. 2 each at Rs.7.7 per share in preferential issue to M/s. Palace
Heights Avenues LLP, on July 23, 2021. From the LLP Agreement dated
June 2020, it was seen that 100% of the Capital of the LLP was contributed
by P Murali Mohana Rao and his wife P Naganandini. The same was in
violation of Section 141(3)(d)) of the Companies Act, 2013, which prohibits a
relative of an auditor from holding securities in the company of face value
exceeding rupees one lakh.
165. In view of the above observations, P Murali & Co prima facie appeared to be
ineligible to be appointed as Statutory Auditors of BGL for period under
investigation. However, M/s.P Murali & Co. was not only appointed as auditor
of BGL till FY2016-17, it was reappointed as the Statutory Auditors of the
Company for a term of five consecutive years commencing from the
conclusion of the 23rd Annual General Meeting held on September 30, 2022
up to the conclusion of the 28th Annual General Meeting.
Extract of the legal provisions allegedly violated:
166. The relevant provisions of SEBI Act, 1992, and SEBI (PFUTP) Regulations,
2003, SEBI (LODR) Regulations, 2015, SEBI (PIT) Regulations, 2015, Listing
Agreement and SCRA, 1956 are reproduced hereunder for ready reference:
SEBI Act, 1992

Sec 12A. No person shall directly or indirectly—
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(b) employ any device, scheme or artifice to defraud in connection with issue or
dealing in securities which are listed or proposed to be listed on a recognised
stock exchange;
(c) engage in any act, practice, course of business which operates or would
operate as fraud or deceit upon any person, in connection with the issue, dealing
in securities which are listed or proposed to be listed on a recognised stock
exchange, in contravention of the provisions of this Act or the rules or the
regulations made thereunder;
Sec 15A. If any person, who is required under this Act or any rules or
regulations made thereunder, —
(b) to file any return or furnish any information, books or other documents within
the time specified therefor in the regulations, fails to file return or furnish the
same within the time specified therefor in the regulations or who furnishes or
files false, incorrect or incomplete information, return, report, books or other
documents, he shall be liable to a penalty which shall not be less than one lakh
rupees but which may extend to one lakh rupees for each day during which
such failure continues subject to a maximum of one crore rupees.
(c) to maintain books of account or records, fails to maintain the same, he shall
be liable to a penalty which shall not be less than one lakh rupees but which
may extend to one lakh rupees for each day during which such failure
continues subject to a maximum of one crore rupees.
Sec 15HA. Penalty for fraudulent and unfair trade practices.
If any person indulges in fraudulent and unfair trade practices relating to
securities, he shall be liable to a penalty which shall not be less than five lakh
rupees but which may extend to twenty-five crore rupees or three times the
amount of profits made out of such practices, whichever is higher.
Sec 15HB. Penalty for contravention where no separate penalty has been
provided.
Whoever fails to comply with any provision of this Act, the rules or the regulations
made or directions issued by the Board thereunder for which no separate penalty
has been provided, shall be liable to a penalty which shall not be less than one
lakh rupees but which may extend to one crore rupees.
Contravention by companies:
Sec. 27(1): Where a contravention of any of the provisions of this Act or any rule,
regulation, direction or order made thereunder has been committed by a company,
every person who at the time the contravention was committed was in charge of,
and was responsible to, the company for the conduct of the business of the
company, as well as the company, shall be deemed to be guilty of the
contravention and shall be liable to be proceeded against and punished
_________________________________________________________________________________________
accordingly: Provided that nothing contained in this sub-section shall render any
such person liable to any punishment provided in this Act, if he proves that the
contravention was committed without his knowledge or that he had exercised all
due diligence to prevent the commission of such contravention
Sec 27(2): Notwithstanding anything contained in sub-section (1), where an
contravention under this Act has been committed by a company and it is proved
that the contravention has been committed with the consent or connivance of, or
is attributable to any neglect on the part of, any director, manager, secretary or
other officer of the company, such director, manager, secretary or other officer
shall also be deemed to be guilty of the contravention and shall be liable to be
proceeded against and punished accordingly.
Explanation: For the purposes of this section, — (a) “company” means any body-
corporate and includes a firm or other association of individuals; and (b) “director”,
in relation to a firm, means a partner in the firm.
Securities Contracts (Regulation) Act, 1956:
21. Where securities are listed on the application of any person in any recognised
stock exchange, such person shall comply with the conditions of the listing
agreement with that stock exchange
23H. Whoever fails to comply with any provision of this Act, the rules or articles or
bye- laws or the regulations of the recognised stock exchange or directions issued
by the Securities and Exchange Board of India for which no separate penalty has
been provided, shall be liable to a penalty which shall not be less than one lakh
rupees but which may extend to one crore rupees.
SEBI (PFUTP) Regulations, 2003
3. Prohibition of certain dealings in securities
No person shall directly or indirectly –
(c) employ any device, scheme or artifice to defraud in connection with dealing in
or issue of securities which are listed or proposed to be listed on a recognized
stock exchange;
(d) engage in any act, practice, course of business which operates or would
operate as fraud or deceit upon any person in connection with any dealing in or
issue of securities which are listed or proposed to be listed on a recognized stock
exchange in contravention of the provisions of the Act or the rules and the
regulations made there under.
4. Prohibition of manipulative, fraudulent and unfair trade practices
(1) Without prejudice to the provisions of Regulation 3, no person shall indulge in
a manipulative, fraudulent or an unfair trade practice in securities markets.
Explanation – For the removal of doubts, it is clarified that any act of
diversion, misutilisation or siphoning off of assets or earnings of a company whose
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securities are listed or any concealment of such act or any device, scheme or
artifice to manipulate the books of accounts or financial statement of such a
company that would directly or indirectly manipulate the price of securities of that
company shall be and shall always be deemed to have been considered as
manipulative, fraudulent and an unfair trade practice in the securities market.
(2) Dealing in securities shall be deemed to be a manipulative, fraudulent or an
unfair trade practice if it involves any of the following: —
(f) knowingly publishing or causing to publish or reporting or causing to report by
a person dealing in securities any information relating to securities, including
financial results, financial statements, mergers and acquisitions, regulatory
approvals, which is not true or which he does not believe to be true prior to or in
the course of dealing in securities;
(k) disseminating information or advice through any media, whether physical or
digital, which the disseminator knows to be false or misleading and which is
designed or likely to influence the decision of investors dealing in securities;
(r) knowingly planting false or misleading news which may induce sale or
purchase of securities
Clauses of erstwhile Listing Agreement:
35. “The company agrees to file with the exchange the following details,
separately for each class of equity shares/security in the formats specified in this
clause, in compliance with the following timelines, namely:-
a. One day prior to listing of its securities on the stock exchanges.
b. On a quarterly basis, within 21 days from the end of each quarter.
c. Within 10 days of any capital restructuring of the company resulting in a change
exceeding +/-2%
of the total paid-up share capital”
(I)(a) Statement showing Shareholding Pattern
49. CORPORATE GOVERNANCE

I. The company agrees to comply with the provisions of Clause 49 which shall be
implemented in a manner so as to achieve the objectives of the principles as
mentioned below. In case of any ambiguity, the said provisions shall be interpreted
and applied in alignment with the principles.
C. Disclosure and transparency
1. The company should ensure timely and accurate disclosure on all material
matters including the financial situation, performance, ownership, and governance
of the company.
a. Information should be prepared and disclosed in accordance with the
prescribed standards of accounting, financial and non-financial disclosure.
_________________________________________________________________________________________
D. Responsibilities of the Board
1. Disclosure of Information
b. The Board and top management should conduct themselves so as to meet
the expectations of operational transparency to stakeholders while at the same
time maintaining confidentiality of information in order to foster a culture for
good decision-making.
2. Key functions of the Board

The board should fulfill certain key functions, including:
b. Monitoring the effectiveness of the company’s governance practices and
making changes as needed.
h. Overseeing the process of disclosure and communications.
III. Audit Committee

D. Role of Audit Committee
The role of the Audit Committee shall include the following:
1. Oversight of the company’s financial reporting process and the disclosure of its
financial information to ensure that the financial statement is correct, sufficient and
credible;
4. Reviewing, with the management, the annual financial statements and auditor's
report thereon before submission to the board for approval, with particular
reference to:
a. Matters required to be included in the Director’s Responsibility Statement to be
included in the Board’s report in terms of clause (c) of sub-section 3 of section 134
of the Companies Act, 2013
b. Changes, if any, in accounting policies and practices and reasons for the same.
c. Major accounting entries involving estimates based on the exercise of judgment
by management
e. Compliance with listing and other legal requirements relating to financial
statements.
11.Evaluation of internal financial controls and risk management systems;
12.Reviewing, with the management, performance of statutory and internal
auditors, adequacy of the internal control systems;
13.Reviewing the adequacy of internal audit function, if any, including the structure
of the internal audit department, staffing and seniority of the official heading the
department, reporting structure coverage and frequency of internal audit;
_________________________________________________________________________________________
IX. CEO/CFO certification:
The CEO or the Managing Director or manager or in their absence, a Whole Time
Director appointed in
terms of Companies Act, 2013 and the CFO shall certify to the Board that:
A. They have reviewed financial statements and the cash flow statement for the
year and that to the best of their knowledge and belief :
1. these statements do not contain any materially untrue statement or omit any
material fact or contain statements that might be misleading;
2. these statements together present a true and fair view of the company’s
affairs and are in compliance with existing accounting standards, applicable
laws and regulations.
B. There are, to the best of their knowledge and belief, no transactions entered
into by the company during the year which are fraudulent, illegal or violative of the
company’s code of conduct.
C. They accept responsibility for establishing and maintaining internal controls for
financial reporting and that they have evaluated the effectiveness of internal
control systems of the company pertaining to financial reporting and they have
disclosed to the auditors and the Audit Committee, deficiencies in the design or
operation of such internal controls, if any, of which they are aware and the steps
they have taken or propose to take to rectify these deficiencies.
D. They have indicated to the auditors and the Audit committee:
1. significant changes in internal control over financial reporting during the
year;
2. significant changes in accounting policies during the year and that the same
have been disclosed in the notes to the financial statements; and
3. instances of significant fraud of which they have become aware and the
involvement therein, if any, of the management or an employee having a
significant role in the company’s internal control system over financial
reporting.
50. The company will mandatorily comply with all the Accounting Standards
issued by Institute of Chartered Accountants of India (ICAI) from time to time.”
SEBI (LODR) Regulations, 2015

Principles governing disclosures and obligations
_________________________________________________________________________________________
4. (1) The listed entity which has listed securities shall make disclosures and abide
by its obligations under these regulations, in accordance with the following
principles:
(a) Information shall be prepared and disclosed in accordance with applicable
standards of accounting and financial disclosure.
(b) The listed entity shall implement the prescribed accounting standards in letter
and spirit in the preparation of financial statements taking into consideration the
interest of all stakeholders and shall also ensure that the annual audit is conducted
by an independent, competent and qualified auditor.
(c) The listed entity shall refrain from misrepresentation and ensure that the
information provided to recognised stock exchange(s) and investors is not
misleading.
(d) The listed entity shall provide adequate and timely information to recognised
stock exchange(s) and investors.
(e) The listed entity shall ensure that disseminations made under provisions of
these regulations and circulars made thereunder, are adequate, accurate, explicit,
timely and presented in a simple language.
(g)The listed entity shall abide by all the provisions of the applicable laws including
the securities laws and also such other guidelines as may be issued from time to
time by the Board and the recognised stock exchange(s) in this regard and as
may be applicable.
(h) The listed entity shall make the specified disclosures and follow its obligations
in letter and spirit taking into consideration the interest of all stakeholders.
(i) Filings, reports, statements, documents and information which are event based
or are filed periodically shall contain relevant information.
(j) Periodic filings, reports, statements, documents and information reports shall
contain information that shall enable investors to track the performance of a listed
entity over regular intervals of time and shall provide sufficient information to
enable investors to assess the current status of a listed entity.
(2) The listed entity which has listed its specified securities shall comply with the
corporate governance provisions as specified in chapter IV which shall be
implemented in a manner so as to achieve the objectives of the principles as
mentioned below.
(e) Disclosure and transparency: The listed entity shall ensure timely and
accurate disclosure on all material matters including the financial situation,
performance, ownership, and governance of the listed entity, in the following
manner:
(i) Information shall be prepared and disclosed in accordance with the prescribed
standards of accounting, financial and non-financial disclosure.
_________________________________________________________________________________________
4. (2) (f) Responsibilities of the Board of Directors:
(i) Disclosure of information:
(2) The board of directors and senior management shall conduct themselves so
as to meet the expectations of operational transparency to stakeholders while at
the same time maintaining confidentiality of information in order to foster a culture
of good decision-making.
(ii) Key functions of the Board of Directors –
(2) Monitoring the effectiveness of the listed entity’s governance practices and
making changes as needed.
(7) Ensuring the integrity of the listed entity’s accounting and financial reporting
systems, including the independent audit, and that appropriate systems of control
are in place, in particular, systems for risk management, financial and operational
control, and compliance with the law and relevant standards.
(8) Overseeing the process of disclosure and communications.
(iii) Other responsibilities:
(1) The board of directors shall provide strategic guidance to the listed entity,
ensure effective monitoring of the management and shall be accountable to the
listed entity and the shareholders.
(2) The board of directors shall set a corporate culture and the values by which
executives throughout a group shall behave.
(3) Members of the board of directors shall act on a fully informed basis, in good
faith, with due diligence and care, and in the best interest of the listed entity and
the shareholders.
(6) The board of directors shall maintain high ethical standards and shall take into
account the interests of stakeholders
(7) The board of directors shall exercise objective independent judgement on
corporate affairs.
(12) Members of the board of directors shall be able to commit themselves
effectively to their responsibilities.
Board of Directors – Regulation 17
(1) The composition of board of directors of the listed entity shall be as follows:
(a) board of directors shall have an optimum combination of executive and non-
executive directors with at least one woman director and not less than fifty per
cent. of the board of directors shall comprise of non-executive directors;
_________________________________________________________________________________________
(b) where the chairperson of the board of directors is a non-executive director, at
least one-third of the board of directors shall comprise of independent directors
and where the listed entity does not have a regular non-executive chairperson, at
least half of the board of directors shall comprise of independent directors:
(8) The chief executive officer and the chief financial officer shall provide the
compliance certificate to the board of directors as specified in Part B of Schedule
II.
Audit Committee – Regulation 18
(1) Every listed entity shall constitute a qualified and independent audit committee
in accordance with the terms of reference, subject to the following:
(b) Two-thirds of the members of audit committee shall be independent directors
(3) The role of the audit committee and the information to be reviewed by the
audit committee shall be as specified in Part C of Schedule II.
Part C of Schedule II: ROLE OF THE AUDIT COMMITTEE AND REVIEW OF

INFORMATION BY AUDIT COMMITTEE
A. The role of the audit committee shall include the following:
(1) oversight of the listed entity’s financial reporting process and the disclosure of
its financial information to ensure that the financial statement is correct,
sufficient and credible;
…
(4) reviewing, with the management, the annual financial statements and auditor's
report thereon before submission to the board for approval, with particular
reference to:
(a) matters required to be included in the director’s responsibility statement to
be included in the board’s report in terms of clause (c) of sub-section (3) of
Section 134 of the Companies Act, 2013;
(b) changes, if any, in accounting policies and practices and reasons for the
same;
(c) major accounting entries involving estimates based on the exercise of
judgment by management;
(d) significant adjustments made in the financial statements arising out of audit
findings;
(e) compliance with listing and other legal requirements relating to financial
statements;
_________________________________________________________________________________________
(f) disclosure of any related party transactions; (g)modified opinion(s) in the
draft audit report
(5) reviewing, with the management, the quarterly financial statements before
submission to the board for approval
(7) reviewing and monitoring the auditor’s independence and performance, and
effectiveness of audit process.
(11) evaluation of internal financial controls and risk management systems;
(12) reviewing, with the management, performance of statutory and internal
auditors, adequacy of the internal control systems;
(13) reviewing the adequacy of internal audit function, if any, including the
structure of the internal audit department, staffing and seniority of the official
heading the department, reporting structure coverage and frequency of internal
audit.
Corporate governance requirements with respect to subsidiary of listed

entity. - Regulation 24:
(1) At least one independent director on the board of directors of the listed entity
shall be a director on the board of directors of an unlisted material subsidiary,
whether incorporated in India or not.
Explanation - For the purposes of this provision, notwithstanding anything to the
contrary contained in regulation 16, the term “material subsidiary” shall mean a
subsidiary, whose income or net worth exceeds twenty percent of the consolidated
income or net worth respectively, of the listed entity and its subsidiaries in the
immediately preceding accounting year.
Disclosure of events or information. - Regulation 30:
(1) Every listed entity shall make disclosures of any events or information which,
in the opinion of the board of directors of the listed company, is material.
(2) Events specified in Para A of Part A of Schedule III are deemed to be material
events and listed entity shall make disclosure of such events.
(3) The listed entity shall make disclosure of events specified in Para B of Part A
of Schedule III, based on application of the guidelines for materiality, as specified
in sub-regulation (4).
(4) (i) The listed entity shall consider the following criteria for determination of
materiality of events/ information:
(a)the omission of an event or information, which is likely to result in
discontinuity or alteration of event or information already available publicly; or
_________________________________________________________________________________________
(b)the omission of an event or information is likely to result in significant market
reaction if the said omission came to light at a later date;
(c)In case where the criteria specified in sub-clauses (a) and (b) are not
applicable, an event/information may be treated as being material if in the
opinion of the board of directors of listed entity, the event / information is
considered material.
(ii) The listed entity shall frame a policy for determination of materiality, based on
criteria specified in this sub-regulation, duly approved by its board of directors,
which shall be disclosed on its website.
(6) The listed entity shall first disclose to stock exchange(s) of all events, as
specified in Part A of Schedule III, or information as soon as reasonably possible
and not later than twenty four hours from the occurrence of event or information:
Provided that in case the disclosure is made after twenty four hours of occurrence
of the event or information, the listed entity shall, along with such disclosures
provide explanation for delay.
SCHEDULE III
PART A: DISCLOSURES OF EVENTS OR INFORMATION: SPECIFIED
SECURITIES
[See Regulation 30]
The following shall be events/information, upon occurrence of which listed entity
shall make disclosure to stock exchange(s):
A. Events which shall be disclosed without any application of the

guidelines for materiality as specified in sub-regulation (4) of regulation
(30):
17. Initiation of Forensic audit: In case of initiation of forensic audit, (by whatever
name called), the following disclosures shall be made to the stock exchanges by
listed entities:
a) The fact of initiation of forensic audit along-with name of entity initiating the
audit and reasons for the same, if available;
B. Events which shall be disclosed upon application of the guidelines for

materiality referred sub-regulation (4) of regulation (30):
7. Effect(s) arising out of change in the regulatory framework applicable to the

listed entity
Holding of specified securities and shareholding pattern. – Regulation 31
31. (1) The listed entity shall submit to the stock exchange(s) a statement showing
holding of securities and shareholding pattern separately for each class of
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securities, in the format specified by the Board from time to time within the
following timelines -
(a) one day prior to listing of its securities on the stock exchange(s);
(b) on a quarterly basis, within twenty-one days from the end of each quarter; and,
(c) within ten days of any capital restructuring of the listed entity resulting in a
change exceeding two per cent of the total paid-up share capital:
Financial Results. – Regulation 33:
33. (1) While preparing financial results, the listed entity shall comply with the
following:
(c) The standalone financial results and consolidated financial results shall be
prepared as per Generally Accepted Accounting Principles in India
(3) The listed entity shall submit the financial results in the following manner:
(h) The listed entity shall ensure that, for the purposes of quarterly consolidated
financial results, at least eighty percent of each of the consolidated revenue,
assets and profits, respectively, shall have been subject to audit or in case of
unaudited results, subjected to limited review.
Annual Report – Regulation 34(2):
The annual report shall contain the following:
(e) management discussion and analysis report - either as a part of directors

report or addition thereto;
Website - Regulation 46:
(2) The listed entity shall disseminate the following information under a separate
section on its website:
(s) separate audited financial statements of each subsidiary of the listed entity in
respect of a relevant financial year, uploaded at least 21 days prior to the date of
the annual general meeting which has been called to inter alia consider accounts
of that financial year:
Provided that a listed entity, which has a subsidiary incorporated outside India—
(a) where such subsidiary is statutorily required to prepare consolidated financial
statement under any law of the country of its incorporation, the requirement of this
proviso shall be met if consolidated financial statement of such subsidiary is
placed on the website of the listed entity;
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(b) where such subsidiary is not required to get its financial statement audited
under any law of the country of its incorporation and which does not get such
financial statement audited, the holding Indian listed entity may place such
unaudited financial statement on its website and where such financial statement
is in a language other than English, a translated copy of the financial statement in
English shall also be placed on the website;
Accounting Standards. – Regulation 48:

The listed entity shall comply with all the applicable and notified
Accounting Standards from time to time.
SEBI (PIT) Regulations, 2015

Communication or procurement of unpublished price sensitive information.
– Regulation 3
w.e.f. July 17, 2020:
(5) The board of directors or head(s) of the organisation of every person required
to handle unpublished price sensitive information shall ensure that a structured
digital database is maintained containing the nature of unpublished price sensitive
information and the names of such persons who have shared the information and
also the names of such persons with whom information is shared under this
regulation along with the Permanent Account Number or any other identifier
authorized by law where Permanent Account Number is not available. Such
database shall not be outsourced and shall be maintained internally with adequate
internal controls and checks such as time stamping and audit trails to ensure non-
tampering of the database.
April 01, 2019 to July 16, 2020:
(5) The board of directors shall ensure that a structured digital database is
maintained containing the names of such persons or entities as the case may be
with whom information is shared under this regulation along with the Permanent
Account Number or any other identifier authorized by law where Permanent
Account Number is not available. Such databases shall be maintained with
adequate internal controls and checks such as time stamping and audit trails to
ensure non-tampering of the database.
Need for SEBI’s Intervention:
167. The non-compliances with accounting standards by a listed company can

have a significant impact on the interests of investors in the securities market.
They not only result in misrepresentation of a company's financial position,
_________________________________________________________________________________________
but also result in incorrect disclosure of material information. In the instant
case, these non-compliances have resulted in understatement of expenditure
and hence, overstatement of profits during each of the financial years during
the investigation period. The scale of fraud is indeed large. The Noticees
attempted to camouflage accounting entries in excess of Rs.1280 Crore
during FYs 2018-19 and 2019-20 to give a distorted picture of the Company’s
financial position. By all yardsticks, the accounting shenanigans and dubious
accounting practices, which the Noticees resorted to, were to mislead
investors.
168. The published financial statements of a listed company, a publicly available

document, are expected to present a true picture about the financial health of
that company which are relied upon by the investors to make an informed
decision regarding investment in that company. As observed in some earlier
cases of similar nature, while all companies are mandated to ensure that their
books of accounts and financial statements present a true and fair picture
under the provisions of the Companies Act, 2013, the listed companies are
additionally required to adhere to the same under Regulation 4 (1) of the SEBI
(LODR) Regulations, 2015. Any mis-statement or mis-representation in the
financial statements adversely impairs an investor’s ability to make an
informed decision about investment.
169. Further, the Hon’ble Supreme Court of India in the matter of N. Narayanan
Vs. Adjudicating Officer, Securities and exchange Board of India (Civil Appeal
Nos 4112-12 of 2012- Date of Decision- April 26, 2013) , while emphasizing
on the adverse impact of incorrect information, has observed: “The object of
the SEBI Act is to protect the interest of investors in securities and to promote
the development and to regulate the securities market, so as to promote
orderly, healthy growth of securities market and to promote investors
protection. Securities market is based on free and open access to
information, the integrity of the market is predicated on the quality and the
manner on which it is made available to market. ‘Market abuse’ impairs
economic growth and erodes investor’s confidence. Market abuse refers to
the use of manipulative and deceptive devices, giving out incorrect or
misleading information, so as to encourage investors to jump into
_________________________________________________________________________________________
conclusions, on wrong premises, which is known to be wrong to the abusers.
The statutory provisions mentioned earlier deal with the situations where a
person, who deals in securities, takes advantage of the impact of an action,
may be manipulative, on the anticipated impact on the market resulting in the
“creation of artificiality’. The same can be achieved by inflating the company’s
revenue, profits, security deposits and receivables, resulting in price rice of
scrip of the company. Investors are then lured to make their “investment
decisions” on those manipulated inflated results, using the above devices
which will amount to market abuse.”
170. Further, Hon’ble SAT in the matter of V. Natarajan vs. SEBI, in Appeal No.104
of 2011 (order dated June 29, 2011), while holding the publication of false
and misleading financial statements as amounting to unfair trade practice,
has held that "… we are satisfied that the provisions of Regulations 3 and 4
of the Securities and Exchange Board of India (Prohibition of Fraudulent and
Unfair Trade Practices relating to Securities Market) Regulations, 2003, were
violated. These regulations, among others, prohibit any person from
employing any device, scheme or artifice to defraud in connection with
dealing in or Issue of securities which are listed or proposed to be listed on
an exchange. They also prohibit persons from engaging in any act, practice,
course of business which operates or would operate as fraud or deceit upon
any person in connection with any dealing in or issue of securities that are
listed on stock exchanges. These regulations also prohibit persons from
indulging in a fraudulent or unfair trade practice in securities which includes
publishing any information which is not true or which he does not believe to
be true. Any advertisement that is misleading or contains information in a
distorted manner which may influence the decision of the investors is also an
unfair trade practice in securities which is prohibited. The regulations also
make it clear that planting false or misleading news which may induce the
public for selling or purchasing securities would also come within the ambit of
unfair trade practice in securities"
171. It is further observed that prima facie certain non-compliances / violations

continue to take place, as on date. The widespread non-compliances with /
violations of various Clauses of Listing Agreements and Regulations framed
_________________________________________________________________________________________
by SEBI, many of which are continuing in nature, erode the confidence of
investors in a disclosure-based regime. These are detrimental to the interests
of investors and impinge on the integrity of the securities market.
172. Further, as mentioned in above paragraphs, certain adverse observations

have also been found against M/s. P Murali & Co., who audited the financial
statements of BGL between FYs 2014-15 to 2016-17 and did not qualify the
audit report in respect of the non-compliances. However, the said firm has
been once again appointed as the Statutory Auditor of the Company in FY
2021-22 for a term of 5 (Five) consecutive years, commencing from the
conclusion of the 23rd Annual General Meeting held on September 30, 2022
up to the conclusion of the 28th Annual General Meeting.
173. Apart from the above, it is also noted that the Promoter Group of the
Company has directly benefitted as a result of manipulation of financial
statements by the Company. In this regard, it is noted that during FY 2021-
22, BGL had made preferential allotment of equity shares to 79 allottees and
raised Rs.836.38 Crores. Such allottees included 4 entities which
subsequently became part of Promoter Group. By virtue of the same, the
shareholding of the promoters and promoter group of the Company now
stands at 18.47%, as on December 31, 2022. The abovementioned
preferential allotment was done at Rs.7.70 per share (face value of each
share was Rs.2). Subsequently, there were two bonus issues in the ratio of
1:4 and 2:3 during FY 2021-22, as a result of which the effective allotment for
the preferential allottees came to Rs.3.70 (approx.) per share. However, prior
to the abovementioned preferential allotment, the promoter group had sold
shares when the average price of the scrip was much higher than the effective
allotment price. Considering the same, it is apparent that the abovementioned
increase in shareholding by the promoters was achieved at price far below
the prices at which the promoters had offloaded a large percentage of their
shareholding through a purported pledge.
174. Having observed prima facie that Noticees have resorted to various
accounting irregularities and other violations, as already detailed above, it is
clear that the promoter group entities, by offloading their shares in BGL
throughout the investigation period and increasing their shareholding after
_________________________________________________________________________________________
the investigation period at a much lower price, have directly benefitted
themselves from the said violations. However, the quantification of the
unlawful gains made by the promoter group entities cannot be made on
account of non – submission of information sought from the Company
including date of purported pledge, copies of loans and pledge agreements
and DIS slips in respect of the shares offloaded by them.
175. It is also apparent from the facts of the case that the Company concealed the
correct shareholding pattern during the investigation period, when the
promoters were off-loading shares, thereby keeping public shareholders in
the dark about reduction in their shareholding. Thus, the picture that emerges
is that of a corporate entity that does not hesitate to bend rules and give a
rosy and distorted picture of its true self to investors to benefit its promoters.
The fact that the promoters gave themselves preferential allotment of shares
which led to them increasing their shareholding from 3.51 % to over 18.47 %
after start of the SEBI investigation speaks volumes of their intent to mislead
and their brazen approach towards self-enrichment. This acted as a scheme
against ordinary investors who were induced/ influenced into making their
investment decisions based on inflated profits reported by the Company and
the incorrect shareholding pattern of promoters filed by the Company with the
stock exchanges. On top of that, the Company, from the very start, resorted
to delaying tactics, so that the investigation process got stalled.
176. In view of the abovementioned observations and findings, I find that it is a fit
case for issuing appropriate directions in the form of a Show Cause Notice
cum Interim Order. Further, considering that the scrip of BGL is currently
trading at around Rs.16.23 (closing price at BSE on April 12, 2023), there is
a real risk that the Promoters may off-load their shares and exit the Company.
It is thus imperative that the Promoters be restrained/ prohibited from off–
loading/ disposing their shareholding in the Company having regard to their
conduct in these proceedings as detailed in the preceding paragraphs.
_________________________________________________________________________________________
Directions:
177. Keeping in view the foregoing factual deliberations involving financial

misstatements of BGL and the observations thereon recorded in the
preceding paragraphs and after being cognizant of the fraudulent manner in
which the Noticees have conducted their affairs to manipulate financial
statements in flagrant violations of all canons of corporate governance, in
order to protect the interests of shareholders of the said company and that of
other investors and the integrity of the securities market, I, in exercise of the
powers conferred upon me under Sections 11, 11(4) and 11B(1) read with
Section 19 of the SEBI Act, 1992 hereby issue by way of this interim order
cum show cause notice, the following directions, which shall be in force until
further orders: -
(a) Noticees 2 to 5 are hereby directed not to sell/ dispose of/ dilute their
shareholding in the Company, held directly or indirectly through their
family members or through companies/ LLP in which they or their family
members are Directors/ Partners until further orders.
(b) Noticee 1 (i.e. BGL) shall place the copy of this order before its Audit
Committee and also undertake the examination of its consolidated
financial statements for the period 2014-15 to 2021-22 to ensure that
the same are in compliance with all the applicable accounting standards
and submit the statement of impact of all the non-compliances noted
including those observed in the order for each of the financial years
within three months from the date of the order. The accounting impact
of rectification of above-noted non-compliances shall be carried out as
per the applicable accounting standards in the consolidated financial
statements of the financial year 2022-23. BGL shall ensure that the said
statement of impact of non-compliances is in the format specified in
SEBI Circular no. CIR/CFD/CMD/56/2016 dated May 27, 2016 (BGL
may use the term “non-compliances” instead the term “audit
qualification” for this purpose). BGL shall further ensure that the said
statement of impact of non-compliances is certified by a peer-reviewed
_________________________________________________________________________________________
Chartered Accountant, other than the Statutory Auditor, who had
audited at least one company forming part of NIFTY 100 or S&P BSE
100 indices during the past three years.
(c) Noticee 1 (i.e. BGL) shall publish on the stock exchanges platform,
within seven days from the date of this order, the statement showing
correct shareholding pattern, as required under regulation 31 of SEBI
(LODR) Regulations 2015 for all the quarters in which incorrect
shareholding pattern has been observed above.
(d) Noticee 1 (i.e. BGL) shall appoint at least one independent director on
its board of directors as a director on the board of directors of each of
its material subsidiaries, as required under Regulation 24(1) of SEBI
(LODR) Regulations, 2015, within fifteen days of the date of this order.
(e) Noticee 1 (i.e. BGL) shall disseminate the standalone financial

statements of each of its subsidiaries on its website, for the period
between FY 2014-15 and FY 2021-22, as required under Regulation 46
of SEBI (LODR) Regulations, 2015, within fifteen days from the date of
this order.
(f) Noticee 1 (i.e. BGL) shall ensure that, for the purposes of quarterly
consolidated financial results, at least eighty percent of each of the
consolidated revenue, assets and profits, respectively, is subjected to
audit or in case of unaudited results, subjected to limited review starting
from Quarter ending March 31, 2023, in accordance with the
requirements specified in Regulation 33(1)(h) of SEBI (LODR)
Regulations, 2015.
(g) The Audit Committee of BGL shall comply with the following directions,
within three months from the date of this order, and file its report on the
same with stock exchanges where the shares of BGL are listed:
i. Review and monitor the statutory auditor’s independence,

performance, and effectiveness of the audit process and take
suitable corrective action, including but not limited to the removal of
the auditor, if necessary, in accordance with the due process
_________________________________________________________________________________________
prescribed under the Companies Act, 2013, in view of the adverse
observations on statutory auditors.
ii. Review the adequacy of internal audit function of BGL and take
suitable corrective action.
iii. Enhance the oversight of the BGL’s financial reporting process and
the disclosure of its financial information to ensure that the financial
statement is correct, sufficient, and credible.
(h) NSE shall monitor the compliances with the above directions and file a
detailed report to SEBI periodically.
(i) With regard to the shares of BGL disposed of / transferred / offloaded

by the promoter group entities in any manner during the period from the
start of investigation period till date, the Noticees shall submit details
regarding the date of purported pledges, off-market transfers, copies of
loans and pledge agreements, if any, DIS slips, prices at which shares
were disposed of and all other relevant documents / details to SEBI
within 15 days from the date of this Order.
178. The foregoing prima facie observations, contained in this Order, are made on
the basis of the material available on record. The said prima facie findings
shall also be considered as a show cause notice and the afore-said Noticees
are directed to show cause as to why suitable directions / prohibitions under
Section 11(4) and 11B of the SEBI Act, 1992, including the directions
restraining them from accessing the securities market; prohibiting them from
buying, selling or otherwise dealing in securities in any manner whatsoever,
directly or indirectly, for a specified period and further restraining them from
being associating with any listed company and any registered
intermediary, should not be issued against them, for the abovementioned
violations allegedly committed by them.
179. Further, the Noticees 1 to 5 are also called upon to show cause as to why
inquiry should not be held against them in terms of Rule 4(1) of Securities
and Exchange Board of India (Procedure for Holding Inquiry and Imposing
Penalties) Rules, 1995 and Rule 4(1) of Securities Contracts (Regulation)
_________________________________________________________________________________________
(Procedure for Holding Inquiry and Imposing Penalties) Rules, 2005 and
penalty be not imposed on them under Section 11(4A), 11B(2) read with
Section 15A(b), 15A(c), 15HA and 15HB of the SEBI Act, 1992 and Section
12A(2) read with Section 23H of Securities Contracts (Regulation) Act, 1956
for the above alleged violations of provisions of SEBI Act, 1992, SEBI (LODR)
Regulations, 2015, SEBI (PFUTP) Regulations, 2003, SEBI (PIT)
Regulations, 2015, Listing Agreement read with provisions of SCRA, 1956.
180. In this context, the concerned Noticees may, within 21 days from the date of
receipt of this Order, file their reply/objections, if any, to this Order and may
also indicate whether they desire to avail an opportunity of personal hearing
on a date and time to be fixed in that regard.
181. The above directions shall take effect immediately and shall be in force until
further orders.
182. A copy of this order shall be served upon Noticees, Stock Exchanges,
Registrar and Transfer Agents and Depositories for necessary action and
compliance with the above directions.
DATE: APRIL 13, 2023 ASHWANI BHATIA

PLACE: MUMBAI WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA
_________________________________________________________________________________________

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WTM/ASB/CFID/CFID_4/25730/2023-24

SECURITIES AND EXCHANGE BOARD OF INDIA

INTERIM ORDER CUM SHOW CAUSE NOTICE

SL. No. NOTICEE(S) PAN

In the matter of Brightcom Group Ltd.

2. Brightcom is in the business of Ad-Tech, New Media and digital advertising

3. The Company claims to be a leading global provider of comprehensive online

Consolidated figures for the financial year ended (Rs. Lakhs)

Findings of the Investigation:

8. A number of deficiencies in the Books of Accounts and other information

11. Further, considering the requirements specified under Para B87 of

B. Impairment of assets in FY 2019-20 amounting to Rs.868.30 Crore

13. BGL had recorded an impairment of Rs.863.80 Crore in the consolidated

# Particulars Amount (INR Crore)

15. Following is the subsidiary-wise break up of assets impaired with amount in

# Subsidiary Format of Data provided Whether

C. Accounting Policy in respect of Intangible Assets:

Accounting Policy for Classification of Product Development

Product Life Cycle – Accounting Treatment

Concept Design Prototype Testing Soft Launch

Bugs found – Back to

(d) Though BGL’s product development involved research and

D. Inconsistencies in the data provided with respect to initial

Data Set 4 – As per the product-wise and year-wise breakup of impaired

28. An example of inconsistencies in four data sets, as regards the accounting

29. As a result of wrong classification of expenditure during the research phase

Annual Consolidated figures for the financial years (INR Lakhs.)

Prior to 2014- Investigation Period

31. The non-compliance by BGL with Accounting Standard AS 26 in preparation

E. Accounting treatment of impaired assets:

36. On examining the Audited Financial Statements of FYs 2014-15 to 2019-20,

Figures after correct

Total Revenue 26,92,31,83,759 26,92,31,83,759

F. Disclosure as per Ind AS 36 - Impairment of Assets:

G. Review of Impairment Assessment for the assets carried out by BGL

49. With respect to non-impairment of assets due to introduction of GDPR, BGL

59. The abovementioned non-compliance by BGL with requirements of Ind AS

H. Observations in respect of Impairment of Investment/ loans to

60. On examining the Audit Report of Consolidated Financial Statements of BGL

62. On review of the Standalone Financial Statements of BGL for FY 2018-19, it

63. On examination of the Financial Statements of YMA for FY 2018-19, it was

- Total Assets – Rs. 61.46 Crore (Loans)

73. The non-compliance by BGL with requirements of Ind AS 36 in not

74. Further, as already mentioned above, as per Para 130 of “Ind AS 36 –

I. The non-disclosure of impact of GDPR on the Company:

84. As already stated earlier, GDPR was enacted by European Parliament in

“The Brightcom Group, a global technology company that specializes in

“Business can be affected by privacy legislations and other regulations. The

(a) The Company had made similar disclosures in the Management

J. Observations on Transfer to Intangible Assets:

Intangibles Under Development FY2014-15 FY2015-16 FY2016-17 FY2017-18 FY2018-19 FY2019-20

Capital Work-In-Progress FY2014- FY2015-16 FY2016- FY2017- FY2018- FY2019-20

Intangible assets FY2014- FY2015- FY2016-17 FY2017- FY2018- FY2019-20

98. The non-compliance by BGL with Accounting Standard 26 in preparation and

K. Non-Disclosure of initiation of Forensic Audit:

L. Inconsistent Disclosure of Shareholding Pattern (SHP)

Details of Promoter Shareholding

‘the difference is due to shares of the promoters being pledged. One of

M. Observations on the internal Audit: