SEBI bars Eros Intl from securities market over breach of trade regulations
The Securities and Exchange Board of India (SEBI) announced on June 22 that it has barred Eros International Media, its promoters and chief executive officer (CEO) Pradeep Kumar Dwivedi from the securities market until further notice over alleged breach of trade practice regulations.
The capital markets regulator has also barred Vice Chairman and Managing Director Sunil Arjan Lulla from holding any directorial position in any listed company, including Eros International or its subsidiaries. SEBI has restrained Dwivedi from holding any directorial position in any listed firm other than Eros International.
SEBI has appointed a forensic auditor to investigate whether funds have been siphoned off from the company, and the investigations have still not been completed. “The investigation is currently in progress and a forensic auditor has also been appointed to conduct an examination into the books of accounts of the company,” said SEBI in its interim order.
The order follows an examination of the company’s financial statements, which indicated an alleged misrepresentation of numbers and/or siphoning of funds.
The interim order added, “pending completion of the detailed investigation initiated by SEBI, there is a need to pass an ad-interim ex-parte order to protect the interests of public shareholders as well as the interest of the general investors and to prevent any further deterioration of funds/assets of Eros”.
In fiscal 2019-20, Eros International Media made a provision towards impairment on ‘content advances’, ‘film rights’, and certain goodwill amounting to ₹1,553.52 crore. In the same year, the company also wrote off trade receivables amounting to ₹519.98 crore.
The National Stock Exchange (NSE) examined the statements and forwarded a preliminary investigation report (PER) to SEBI. The officials noted that the revenue from operations, trade receivables and loans given by the company were largely related-party transactions. These had increased substantially in the fiscal year that was under consideration or FY20.
The transactions indicated that the company was engaging in financial mis-reporting or siphoning/diversion of funds.
“It prima facie appears that company overstated its books of accounts by recording revenue receivable from potentially bogus entities and subsequently round tripping its own funds to these entities to enable them to make payments against the revenue that has already been recognized,” SEBI stated.
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Updated: 22 Jun 2023, 07:22 PM IST
