Two days after Moneycontrol’s detailed report on accounting irregularities at Brightcom Group, the adtech company has come out with a clarification to the stock exchanges. The company is taking remedial measures to improve its financial disclosures, as per the exchange filing.
For instance, Brightcom has now made the financials of its subsidiaries visible. In Moneycontrol’s article, accounting expert Nitin Mangal had pointed out that most of these numbers were inaccessible on the company’s website.
Read: Brightcom: Analysis of financial statements before SEBI order reveals several governance lapses
“We have uploaded the audited financials of our material subsidiaries on our website, and they are now accessible and fully visible,” the company said.
Moneycontrol also reported that 14 out of 16 Brightcom subsidiaries were not audited. To this, the company has responded, saying that the statutory auditor audits the standalone financials of the company and consolidates the subsidiary accounts.
“Given the complexity of our operations across different countries and jurisdictions, we comply with local laws in each subsidiary, necessitating the involvement of multiple auditors for the audit function,” it said.
Clarifying on the "Other Advances" section in the balance sheet, Brightcom has said it is actively refining its reporting to provide a detailed breakdown of this category.
Here's what happened...
It all started when SEBI pulled up the company for accounting irregularities and disclosure omissions. Brightcom’s asset impairment impact of Rs 868 crore was not reflected in its Profit and Loss account. The market regulator said the company overstated its profits in the previous financial years.
The company has reiterated that the total impairment impact has been recognised across its 10 subsidiaries. It further said that this impairment was not expected to impact Brightcom’s profit and loss account directly.
"Asset impairment charges are complex accounting treatments, and we assure you that all instances have been handled diligently with appropriate professional judgment," said the company in the June 5 exchange filing.
It goes on to explain how its online advertising business was impacted due to GDPR or General Data Protection Regulations in FY20.
"These regulations compelled companies worldwide to retire certain features in their products to comply with requirements. Consequently, our subsidiaries had to rework and retire numerous features of their existing platforms," it said.
SEBI had also pointed out that the company's shareholding pattern was not rightly reported. To this, Brightcom had earlier responded that promoters had pledged shares with banks, which were invoked and led to a change in promoter shareholding.
Also Read: Brightcom clarifies on promoter stake sale but lots of questions still unanswered
The digital marketing company is in the eye of the storm for having wiped off 90 percent of investors' wealth in the past year. In Q4, it reported a net profit of Rs 229.15 crore for the quarter ended March 2023, against Rs 223 crore in the comparable quarter last year.
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