ED conducts search at 5 locations in FEMA probe against Eros International

The Enforcement Directorate (ED) has conducted searches at five locations in the city as part of its FEMA (Foreign Exchange Management Act) probe in a case related to alleged diversion of funds by the Eros International Media Ltd, an Indian motion picture production/distribution firm.

MUMBAI: The Enforcement Directorate (ED) has conducted searches at five locations in the city as part of its FEMA (Foreign Exchange Management Act) probe in a case related to alleged diversion of funds by the Eros International Media Ltd, an Indian motion picture production/distribution firm, and other entities of the EROS group. The probe has under its scanner alleged transactions worth ₹300 crore with entities in foreign jurisdictions, either directly or via entities in India, purportedly involved in content production, according to ED sources.

ED conducts search at 5 locations in FEMA probe against Eros International

During the search operations at the official and residential premises of a few top officials and associates connected to the firm on Wednesday, various purported incriminating documents pertaining to overseas entities, immovable properties, overseas bank accounts and digital devices were seized by the ED.

The probe revealed that EROS allegedly paid around ₹2,000 crore as content advances to certain entities between 2012-13 and 2020-21. It also allegedly wrote off major amounts due from these entities under the pretext of non-recovery due to the pandemic as part of a balance sheet cleaning exercise, according to ED.

EROS had allegedly devised a scheme to inflate its financial statements by paying content advances, which were later diverted or round-tripped back to the company, with fictitious movie rights purchases used to hide the true nature of these transactions, according to ED.

ED’s probe is based on market regulator SEBI (Securities and Exchange Board of India)’s investigation against EROS group and its promoters for alleged misrepresentation of financials and diversion of funds amounting to around ₹2,000 crore. The SEBI’s confirmatory order in the matter of Eros International Media Ltd, dated October 13, 2023, had restrained Eros International and four other noticees associated with it, from buying, selling or dealing in securities, …until further orders, and restrained a noticee from holding the position of a director or a key managerial personnel in any listed company, including Eros, … until further orders, as per a copy of the order accessed by HT.

The main entity of EROS group is Eros International Media Ltd., an Indian motion picture production and distribution company. Eros co-produces, acquires and distributes Indian films in multiple formats worldwide, including theatrical, television syndication and digital platforms.