The Enforcement Directorate (ED) recently conducted searches at the premises of Eros International Media Ltd., a once-prominent film production and distribution company, along with the residences of senior executives, including Sunil Lulla. The raids were linked to alleged violations of the Foreign Exchange Management Act (FEMA) involving the diversion of funds amounting to Rs. 2,000 crore.
In an official press release, the ED revealed, “Between 2012-13 and 2020-21, Eros disbursed approximately Rs. 2,000 crore as content advances to various entities. A significant portion of these advances was later written off by the company, citing non-recovery due to the COVID-19 pandemic as part of a balance sheet cleanup exercise.”
The ED accused Eros of inflating its financial statements through a scheme where content advances were diverted or round-tripped back to the company. These transactions were allegedly disguised as purchases of fictitious movie rights to conceal their true nature.
The ED initiated the investigation based on findings by the Securities and Exchange Board of India (SEBI), which flagged the company and its promoters for alleged financial misrepresentation and fund siphoning. On February 7, the ED stated, “The primary entity under scrutiny is Eros International Media Ltd., an Indian company involved in the production and distribution of motion pictures across multiple platforms, including theatrical, television, syndication, and digital formats worldwide.”
Of the Rs. 2,000 crore in question, the ED identified Rs. 300 crore that was purportedly transferred to overseas firms under the guise of film production payments. However, these entities reportedly did not produce any films.
During the searches, the ED seized crucial documents, including records of overseas entities, property details, foreign bank account information, and digital devices, which are now being examined as part of the ongoing investigation.
This investigation marks a significant step in addressing allegations of financial irregularities in the Indian entertainment industry.
