Brightcom Group shares hit lower circuit for four consecutive sessions; heres why
The release stated that the ED conducted searches under the provisions of the Foreign Exchange Management Act (FEMA) at five locations in Hyderabad on August 23.
Brightcom Group shares have been on a downtrend for four consecutive trading sessions. The stock hit the lower circuit, sliding 5 per cent in morning deals at Rs 19.72 apiece on the BSE. Selling pressure came after the Enforcement Directorate (ED) released a press release about the raids conducted on August 23, 2023.
The release stated that the ED conducted searches under the provisions of the Foreign Exchange Management Act (FEMA) at five locations in Hyderabad on August 23.
"ED initiated the FEMA investigation on the basis of an investigation being conducted by the Securities and Exchange Board of India (Sebi) regarding the impairment of assets worth Rs. 868.30 crore by Brightcom Group through its subsidiaries abroad," the release read.
Further, an ED inquiry revealed several violations of the provisions of FEMA, 1999, by Brightcom Group Limited.
It was revealed that Brightcom itself financed the preferential issues and falsely claimed to have received full payment for preferential shares/warrants by providing ‘forged and fabricated bank statements’ to Sebi.
It was also revealed that more than Rs 300 crore advanced as loans to subsidiaries were partly siphoned off or remained unaccounted for.
During search operations of the ED, various incriminating documents and digital devices were recovered and seized, including unaccounted cash of Rs 3.30 crore and gold jewellery and bullion worth Rs 9.30 crore from the residence of auditor P. Murali Mohana Rao, and the residential premises of M Suresh Reddy were sealed.
On August 27, Chairman and Managing Director (CMD), Suresh Reddy, and Chief Financial Officer, Narayana Raju, resigned from their respective posts. The decision came after Sebi in its interim order, found lapses in Brightcom Group Limited's (BGL) preferential issue of shares.
Moreover, Sebi had also barred Suresh Kumar Reddy, the promoter-cum-chairman and MD of the company, along with CFO Naryan Raju, from continuing their positions until further notice.
Brightcom Group share price: Historic performance
In 2023 so far, Brightcom Group shares have declined over 32 per cent and have underperformed the headline index's rise of over 6 per cent.
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