Market Regulator Securities and Exchange Board of India (SEBI) imposed penalties totalling Rs2.04 crore on 17 directors of three contend providers for non-compliance with its investigation into alleged financial irregularities at Eros International Media Ltd (EIML).
The penalised entities include Sunita Patel Kamlesh, Nitin Boricha Kishor, Vikaram Vasudev Rajani, Dhrishti Vikram Rajani, Dev Govind Binani, Abhishek Das, Anindya Bikas Datta, Debjit Medda, Rina Kumari Singh, Sutapa Mukherjee, Manisha Kumari Singh, Gourab Ray Chaudhuri, Vinod Kumar Agarwal, Sumit Bhoot, Sheetal Suresh Kale, Anil Kumar Sajjankumar Sharma, and Debosmita Ghosh Dastidar (all noticees). All of them are directors of Nextgen Films Pvt Ltd (now Viyanaa Media Works Pvt Ltd), Spicy Entertainment & Media Ltd (SEML) and Upkar Dealtrade Pvt Ltd.
In an order, Barnali Mukherjee, adjudicating officer (AO) of SEBI, observed that the noticees were given adequate opportunity by the investigating authority (IA) to comply with the summons. "It is the duty, responsibility and obligation of every person from whom information is sought to fully co-operate with the IA and promptly produce all documents, records, and information to the IA. If persons are allowed to flout the summons issued to them during the course of the investigation, SEBI, as the watchdog of the securities market, will not be able to discharge its statutory obligations in protecting the interests of the investors and safeguarding the integrity of the securities market."
SEBI's investigation into Eros International Media was prompted by findings related to significant write-offs and provisions in the company's financial statements, particularly regarding content advances and trade receivables raising suspicions about potential fund misappropriation and financial manipulation.
The inquiry focused explicitly on whether the funds advanced by EMIL for content development were genuinely utilised for their intended purpose or misused.
SEBI's preliminary examination of EIML's annual report for FY19-20 revealed that the company entered into agreements with several production houses, including Nextgen Films (now Viyanaa Media Works), SEML and Upkar Dealtrade, which received significant advances from EIML.
To ensure transparency, SEBI issued multiple summonses to the directors of these entities, requesting them to appear in person and provide critical documentation, such as shareholder records, agreements with Eros International Media, financial ledgers, and production details. Noticees Sunita Kamlesh, Nitin Kishor, Vikram Rajani, and others were required to clarify their roles and disclose how the funds were managed.
SEBI's investigation sought detailed records from Nextgen Films, focusing on ownership, financial transactions with Eros, and specific film projects tied to the funds. The regulator requested project schedules, personnel records, and explanations for incomplete projects. However, the responses were inconsistent despite repeated requests.
For example, Sunita Kamlesh did not appear in person after multiple requests, citing time constraints. Similarly, Nitin Kishor provided incomplete information, blaming the age of documents and recent management changes, yet failed to submit the required supporting documentation.
The investigation also extended to SEML, where SEBI sought extensive disclosures related to shareholder data, financial transactions, and contracts with Eros International Media to verify potential fund misuse. SEML directors were summoned repeatedly, including noticees Dev Binani, Abhishek Das and Anindya Datta.
Mr Binani submitted some records but cited professional commitments for his non-appearance, while Mr Das, who had resigned before the investigation, provided partial records but delayed responses due to health issues without medical evidence.
The lack of comprehensive compliance from these directors hampered SEBI's ability to assess the financial integrity of Eros International Media's advances fully.
The repeated non-appearance and insufficient information from the noticees indicated potential violations of SEBI's regulatory framework, particularly under Sections 11C(3) and 11C(5) of the SEBI Act, 1992, which require cooperation with investigations.
As a result, SEBI imposed a monetary penalty of Rs12 lakh on each of the 17 directors involved in this investigation.
Last year in October, rejecting a prayer to modify an interim order issued against five, the market regulator decided to continue restrictions imposed on Eros International Media, Eros Worldwide FZ LLC (now known as Eros Worldwide FZE), Eros Digital Pvt Ltd, Sunil Arjan Lulla, executive vice-chairman and managing director (MD) of Eros International and Pradeep Dwivedi, the company's chief executive officer (CEO). The case is related to the impairment of 'content advances' and 'film rights' provided for other advances and goodwill worth Rs1,553.52 crore by Eros International in its results for FY19-20. The company also wrote off trade receivables (TRs) of Rs519.98 crore in the same year. (
Read: Eros International: SEBI Confirms Restrictions against 5, including MD Sunil Lulla, CEO Pradeep Dwivedi)
