The embattled Brightcom Group reported its earnings for the third quarter ended December, 2023.
On August 24, the Hyderabad-headquartered digital marketing company reported a net loss of Rs 242 crore for the October-December quarter of FY24, a stark contrast to the Rs 544 crore profit recorded during the same quarter a year ago.
Also, revenue plummeted by 84 percent to Rs 4,532 crore in Q3FY24 as against Rs 39,576.4 crore in the year-ago period.
On May 16, Brightcom Group announced it was aiming to declare its quarterly results for the second and third quarters by June 11. However, the firm had only shared the earnings report for the September quarter by then.
The shares are available to trade on the first day of the week, on a trade-for-trade basis in the Z category. The stock hit its upper circuit of five percent at Rs 8.06 per share on the BSE.
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The firm listed a series of challenges that was plaguing the company. The firm noted that the December quarter of 2023 marked the beginning of a particularly challenging period for Brightcom Group, and the effects of these challenges persisted over the following quarters due to several key disruptions.
"The December 2023 quarter witnessed a significant decline in business, attributed to various factors. Notably, the resignations of the Chief Executive Officer and Chief Financial Officer, following the SEBI order, had a material impact on our operations. Additionally, the looming conflict in Israel, where an important subsidiary of Brightcom is located, further contributed to the downturn," said the firm in an exchange filing on August 24.
Brightcom Group shared its outlook after planning to implement several measures to reinvigorate business. "With these fundamental strengths and the strategic measures being implemented, Brightcom Group is not only poised to return to a stable state but also to achieve growth beyond previous levels," said the firm.
"The combination of our strong industry relationships, deep media reach, proven track record, global presence, and renewed leadership provides a solid foundation for our comeback. We are confident that these efforts will restore stability and propel us into the next phase of growth."
Auditor Raises Concerns
An independent auditor conducted a review of the firm's financial statements. The auditor said, "A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
"In view of the pending Legal and Other Regulatory Requirements and the observations made in the report we are not able to express a comprehensive, conclusive opinion," the auditors DSP Reddy & Co concluded.
BCG has been under SEBI scrutiny for over two years for listing violations, concealing information, and other non-compliance issues. SEBI found that the company understated expenditures and overstated profits by Rs 1,280 crore over five years starting from 2014-15, indicating large-scale fraud and camouflaging of accounting entries.
Trading Suspension and Regulatory Action
The National Stock Exchange (NSE) and BSE suspended trading of BCG shares effective Jun 14, 2024. The suspension follows the company's failure to comply with SEBI regulations requiring the submission of financial results for two consecutive quarters (September and December 2023).
The NSE circular stated, "The suspension will continue until the company complies with SEBI’s Master Circular dated July 11, 2023. After 15 days, trading will be allowed on the first trading day of each week for six months."
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