Markets regulator Securities and Exchange Board of India (SEBI) has uncovered serious financial irregularities at Mediaone Global Entertainment Ltd, including diversion and round-tripping of funds, manipulation of the books of accounts and dissemination of misleading financial information to investors. The regulator has imposed a total penalty of ₹99 lakh on Mediaone Global Entertainment and on its managing director (MD), Suryaraj Kumar, and J Murali Manohar, K Sai Prasad (director), M Srinivas Kumar, Timothy Alfred, Joseph Moses, and Saraswathy Gopalan.
In a detailed 131-page order, SEBI held that Mediaone Global Entertainment diverted ₹99.48 crore received from Eros International Media Ltd under the guise of film co-production and content acquisition arrangements. SEBI directed Mediaone Global Entertainment to take all necessary steps, including initiation of appropriate legal proceedings, to recover the diverted amount along with interest at 12% per annum.
SEBI has also directed Mediaone Global Entertainment to transfer ₹6.17 crore, comprising the unpaid dividend of ₹2.31 crore and interest of ₹3.86 crore, to the investor education and protection fund (IEPF) within one month of the order.
Further, SEBI restrained Mediaone Global Entertainment, Suryaraj Kumar, J Murali Manohar, K Sai Prasad and M Srinivas Kumar from accessing the securities market for periods ranging from two to three years, depending on their roles in the violations.
SEBI’s investigation showed that Mediaone Global Entertainment received a total of ₹236.06 crore from Eros International Media between FY12-13 and FY17-18 for the production of the animated film Kochadaiiyaan and three other proposed Tamil film projects. While around ₹136.58 crore was utilised for the production and release of Kochadaiiyaan, SEBI found that the remaining ₹99.48 crore was neither used for any film project nor deployed for legitimate business purposes.
Instead, the regulator found that these funds were routed back to Eros International Media, either directly or through intermediaries such as Metronet Multimedia. In several instances, the funds were transferred from Eros International Media to Mediaone Global Entertainment and returned to Eros International Media on the same day, a pattern SEBI described as clear evidence of round-tripping. Despite this, Mediaone Global Entertainment continued to reflect a substantial outstanding liability towards Eros in its books over several years.
SEBI further found that Mediaone Global Entertainment passed artificial journal entries and recorded fictitious revenue and purchase transactions to manage ledger balances and mask the diversion of funds. These accounting practices resulted in a distorted presentation of the company’s financial position and misled investors relying on its disclosures.
The regulator also examined Mediaone Global Entertainment's financial performance after trading in its shares resumed in May 2022 following a prolonged suspension by BSE. SEBI observed that the company allegedly overstated revenues in FY22-23 and FY23-24, abruptly turning profitable after reporting losses for eight consecutive years. This period coincided with a sharp surge in the company’s share price, which rose nearly sevenfold from ₹8.19 in May 2022 to a peak of ₹65.13 in August 2023, before falling to ₹32.50 by the end of 2024.
SEBI noted that investors were unaware of the alleged manipulation of accounts while trading in the company’s shares. During this period, the number of public shareholders more than doubled, raising concerns that misleading financial disclosures influenced investor decisions.
A forensic audit conducted by SKVM & Co, appointed by SEBI, confirmed extensive irregularities, including circular fund movements, sham transactions, unsupported journal entries and misrepresentation of financial statements. The regulator rejected Mediaone Global Entertainment's defence that the issues were merely accounting or commercial disputes, stating that arbitration proceedings or industry practices cannot legitimise fictitious transactions or override securities law obligations.
SEBI also found lapses on the part of the company’s directors and key managerial personnel, including failure to ensure the integrity of financial reporting, non-compliance with accounting standards, lack of transparency in disclosures and non-cooperation during the investigation. According to SEBI, the conduct of Mediaone and its officials violated provisions of the SEBI Act, the PFUTP Regulations and the SEBI (LODR) Regulations, amounting to fraud, unfair trade practices and manipulation of the securities market.
The noticees have been imposed monetary penalties based on the nature and extent of violations established against them. Mediaone Global Entertainment has been penalised ₹26 lakh, while Suryaraj Kumar has been fined ₹28 lakh. Mr Manohar has been imposed a penalty of ₹12 lakh and Mr Prasad has been fined ₹13 lakh. M Srinivas Kumar has been penalised ₹12 lakh. In addition, Mr Moses has been fined ₹3 lakh, and Ms Gopalan has been fined ₹5 lakh.
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