Interim Ex Parte Order in the matter of Eros International Media Limited

WTM/AB/CFID/CFID-SEC2/27715/2023-24 SECURITIES AND EXCHANGE BOARD OF INDIA INTERIM EX PARTE ORDER Under Sections 11(1), 11(4) and 11B (1) of the Securities and Exchange Board of India Act, 1992 In respect of:

Sr. no. Name of the Noticee(s) PAN 1. Eros International Media Ltd. AAACR2148H 2. Eros Worldwide FZ LLC AABCE8755A 3. Eros Digital Private Ltd. AAACE6627Q 4. Sunil Arjan Lulla AAAPL4639E 5. Pradeep Kumar Dwivedi AAFPD6402N (The aforesaid entities are hereinafter individually referred to by their respective names/Noticee no. and collectively as “Noticees” unless the context specifies otherwise).

In the matter of Eros International Media Ltd. Background: 1. In the financial results disclosed by Eros International Media Ltd. (“Eros/EIML/the Company”) for FY 2019-20, impairment provided by the Company on “Content Advances” and “Film Rights”1, which along with impairment provided for other advances and goodwill, amounted to Rs.1553.52 Cr. In the same year, Eros also wrote off trade receivables2 amounting to Rs.519.98 Cr. Pursuant to said disclosure, National Stock Exchange of India Ltd. (“NSE”) examined the financial statements of the Company and forwarded a preliminary examination report (“PER”) to SEBI. It was noted in the PER that revenue from operations, trade receivables and 1 “Content Advances” and “Film Rights” are Intangible Non-Current Assets 2 Trade receivables are Current Assets

Interim Ex Parte Order in the matter of Eros International Media Limited loans given by Eros mainly comprised of related party transactions, and the same had increased substantially in FY 2019-20. The PER observed that prima-facie these transactions indicated that the Company was engaging in financial mis-reporting/siphoning/diversion of funds. 2. Pursuant to receiving the PER, the Securities and Exchange Board of India (“SEBI”) initiated a detailed investigation into the affairs of the Company. The investigation broadly focused on identifying potential mis-statements in the books of accounts of the Company, diversion of funds and significant related party transactions, so as to ascertain if any provision of Securities and Exchange Board of India Act, 1992 (“SEBI Act, 1992”), Securities Contracts (Regulation) Act, 1956 (“SCRA”), SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”), SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (“SEBI (PFUTP) Regulations”) etc., were violated by Eros. 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. General Information about the Company: 3. Eros was incorporated on August 19, 1994, with an object to carry on the business of exhibiting, distributing and otherwise exploiting cinematograph and television films and motion pictures of all kinds, including commercial advertisement films. Eros came out with an initial public offering in 2010, where it raised close to Rs. 350 Cr, and was listed on BSE Ltd. (“BSE”) and NSE. The Company has produced/co-produced blockbuster movies such as Bajrangi Bhaijaan, Bajirao Mastani and Tanu weds Manu.

4. As per the Annual Report for FY2019-20, the group structure of the Company was as follows:

Table 1 S. Name of Entity Relationship with Eros % of shareholding No. (in Eros/of Eros) 1 Eros Media World PLC, British Virgin Islands Ultimate Holding Company 100% 2 Eros Worldwide FZ LLC, Dubai Holding Company 39.61% 3 Eros International Films Private Ltd., India Subsidiary 100.00% 4 Copsale Ltd. (Isle of Man), British Virgin Islands Subsidiary 100.00% 5 Big Screen Entertainment Private Ltd., India Subsidiary 64.00% 6 EyeQube Studios Private Ltd., India Subsidiary 100.00% 7 EM Publishing Private Ltd., India Subsidiary 100.00% 8 Eros Animation Private Ltd., India Subsidiary 100.00% 9 Digicine PTE Ltd., Singapore Subsidiary 100.00% 10 Colour Yellow Productions Private Ltd., India Subsidiary 50.00% 11 ErosNow Private Ltd., India Subsidiary 100.00% 12 Eros International Distribution LLP, India* Subsidiary 99.80% 13 Reliance Eros Productions LLP, India** Subsidiary 50.00% * No operations since incorporation ** Struck off

5. The shareholding pattern of Eros for FY2017-18 to FY2020-21, as noted from the website of BSE, is as follows:

Table no. 2 Sl. No. Name of the Promoter & As on As on As on As on As on Promoter Group March March 31, March March 31, March 31, 2019 2020 31, 2021 2022 31, 2023 1 Eros Worldwide FZ LLC 39.66% 39.61% 39.51% 25.43% 6.81% 2 Eros Digital Private Ltd. 22.72% 22.69% 22.64% 22.63% 9.44% 3 Meena Lulla 0.01% 0.01% 0.01% 0.01% 0.01% 4 Arjan Lulla 5 Krishika Sunil Lulla 6 Sunil Lulla Total 62.39% 62.31% 62.15% 48.07% 16.25%

6. Eros Worldwide FZ LLC (“EWW/Noticee 2”) and Eros Digital Private Ltd. (“EDPL/Noticee 3”) are the major promoters of Eros during the relevant period, collectively holding 62.39% of its shares as on March 31, 2019, which reduced to 16.25% as on March 31, 2023. Noticee 4 (Sunil Arjan Lulla) is the Executive Vice Chairman & Managing Director of the Company, and Noticee 5 (Pradeep Dwivedi) is the Chief Executive Officer (“CEO”) of Eros. 7. The total assets of the Company on a consolidated basis was Rs. 4205.72 Crore in FY 2018-19, which fell sharply to Rs. 2496.67 Crore in FY 2019-20. For the same period, the Company, which had reported a consolidated profit of Rs. 266. 48 Cr in FY-19, reported a loss of Rs. 1401.21 Cr in FY-20. The key financials of Eros, on a consolidated and standalone basis, from FY-17 to FY-21 are provided in Table 3 and 4 below:

Table no. 3 (INR in Crore) Particulars (Annual Consolidated) Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Total Revenue 1445.28 1010.01 1139.69 933.86 388.73 Profit before Tax 322.23 287.35 317.63 (1615.46) (173.01) Net Profit/(Loss) 243.29 231.22 266.48 (1401.21) (180.86) Total Assets/Liabilities 3675.82 3786.84 4205.72 2496.67 2413.90 Cash Flow From Operations 235.15 235.27 401.97 50.83 291.68 (Source: Annual Reports of Eros)

Table no. 4 (INR in Crore) Particulars (Annual Standalone) Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Total Revenue 1164.66 728.57 869.80 724.47 312.64 Profit before Tax 211.00 140.43 136.77 (1377.84) (158.47) Net Profit/(Loss) 130.39 77.01 87.36 (1160.73) (169.83) Total Assets/Liabilities 2604.63 2833.81 3056.36 1534.30 1335.71 Cash Flow From Operations 230.67 258.80 428.04 126.73 209.46 (Source: Annual Reports of Eros) Preliminary examination of the financial statements of the Company: 8. The annual report of Eros for FY 2019-20 disclosed the following in respect of “content advances” and “trade receivables”: “Company enters into agreements with production houses to develop future film content. Advances are given as per terms of agreements. Such content advances are monitored by the management of the Company for recoverability and appropriate write-offs are taken when film production does not seem viable and refund of advance is not probable basis management evaluation”.

“The Group had entered into an agreement with some of the customers which entitled them to exploit the film rights for the period as specified therein. The amount receivable from such customers under the said agreement has been past due over a prolonged period. Due to disruption in the film business caused by the outbreak of COVID-19, the management does not have any reasonable expectation of recovering the amount due and therefore has terminated the agreement with such customers. Consequently, the receivables of Rs. 51,998 lakhs have been written-off by the management and has disclosed the same under the exceptional item.” 9. In FY 2019-20, the following impairment/provision for impairment and write-off was made by Eros in its books of accounts:- Table no. 5 S. No. Particulars Amount (In Cr.) 1 Impairment of content advance provision 1290.15 2 Impairment of film rights 208.15 3 Impairment of other advances 7.62 4 Impairment of content advance write off 30.25 5 Impairment of Goodwill 17.35 6 Write off of Trade Receivables 519.98 10. To understand the nature of the transactions that were impaired/written-off, SEBI examined the books of accounts of the Company. It was noted that the impairment of content advance amounting to Rs. 1320.40 Cr (Sl. No. 1 + 4 in Table No. 5) related to 87 entities. Entity-wise details were examined, and it was noted that Rs. 1172.41 Cr representing 88.8% of the total impairment related to 18 entities (“Content Advances Entities/CAE”). Similarly, details of Trade Receivables were examined. It was noted that the write-offs pertained to another 17 entities ("Trade receivable Entities/TRE”). The details of impairment/write-offs in respect of the CAEs and TREs are given in the Tables below: Table no. 6 (Content Advances Entities) Balance as on Amount Closing March 31, Impaired balance as 2020 (Before (In Cr.) on March 31, Impairment) 2020 (After S. No. Name of entity Impairment) Impairment Provision of Content Advances (In Cr.) 1 Next Gen Films Pvt Ltd 300.03 251.70 48.33 2 Globus Ent FZE 197.98 197.98 0.00

Table no. 6 (Content Advances Entities) Balance as on Amount Closing March 31, Impaired balance as 2020 (Before (In Cr.) on March 31, Impairment) 2020 (After S. No. Name of entity Impairment) 3 RV Films 241.73 163.47 78.26 4 Spicy Entertainment and Media Ltd* 108.54 92.20 16.34 5 Virgo Entertainment Pvt Ltd 205.40 88.23 117.17 0.00 6 Mediaone Global Entertainment Ltd* 63.61 63.61 7 Metronet Multimedia Pvt Ltd 58.59 58.59 0.00 8 Express Image Pvt Ltd 52.00 52.00 0.00 9 Upkar Dealtrade Pvt Ltd 36.50 33.79 2.71 10 Base Industries Group 29.63 29.63 0.00 11 Dil Multimedia Pvt Ltd 27.51 27.51 0.00 12 M M Moviez 20.30 20.30 0.00 13 Adarsh Telemedia Pvt Ltd 52.85 17.04 35.81 14 Colour yellow productions Pvt Ltd 47.82 15.42 32.40 15 Siddharth Anand Productions 14.71 14.71 0.00 16 Red Eye Kraft Pvt Ltd 8.95 8.95 0.00 17 Encash Entertainment Ltd* 21.80 7.03 14.77 Total of 17 entities 1487.95 1142.16 345.79 Interest on various production Accounts 101.11 80.30 20.81 Other 69 entities 109.13 52.28 56.85 Total 1698.19 1274.74 423.45 Adjustments by the company for consolidated Financial Statements** - 15.41 - Total Impairment by Eros 1290.15 Impairment Write off of Content Advances (In Cr.) 18 Ritestone Solutions Pvt Ltd (item 4 of Table 5) 30.25 30.25 0.00 Grand Total 1728.44 1320.40 423.45 * BSE Listed Company ** No break-up/details provided by the Company

Table no. 7 (Trade Receivable Entities) (Rs. in Crore) SN Name of Entity Bad Debts Written Off (In FY 2019-20) 1 Supernova Advertising Ltd* 45.47 2 Jiwanjyoti Sales Pvt Ltd 45.15 3 Sri Karani Exports Pvt Ltd 44.52 4 Jagnamo Multiservices Pvt Ltd 37.08 5 Adhiraj Distributors Ltd* 36.21 6 Wabash Vintrade Pvt Ltd 34.72 7 Shree Shyam Motion Pictures Pvt Ltd 33.89 8 Vibhakar Trading Pvt Ltd 30.86 9 Springboard Media Ventures Pvt Ltd 29.28 10 BCPL International Ltd# 28.67 11 Think Ink Studio Ltd@ 28.21 Oyeee Media Ltd@ 3.60 12 Gora Enterprises Pvt Ltd 28.00 13 Shyen Trading LLP 28.00 14 Nysa Sales Pvt Ltd 27.86 15 BB Commercial Ltd# 19.10 16 Adarsh Global Trade & Services Pvt Ltd 15.08 17 View Finder Publicity Pvt Ltd 4.28 Total 519.98 *BSE SME ITP listed entity. #Calcutta Stock Exchange Listed entity. @ Think Ink Studio Ltd was earlier known as Oyeee Media Ltd. The name was subsequently changed to Thinkink Picturez Ltd. It is a BSE Listed Company. 11. Subsequently, SEBI, vide letter dated February 11, 2022, advised Eros to provide inter-alia copies of agreements entered with aforesaid “Content Advances entities” and “Trade receivable entities”, details of efforts made by Eros to recover the due amount from defaulting entities and details of legal action taken against aforesaid entities for recovering the money due to the Company.

Eros, vide e–mail dated February 18, 2022, sought an extension of time, sighting limited availability of resources due to the Covid-19 pandemic, attrition of employees and voluminous data sought by SEBI. Acceding to the request, SEBI, vide e–mail dated February 21, 2022, advised Eros to provide the information by February 28, 2022. Subsequently, vide three e–mails dated February 24, 2022, February 25, 2022, and February 28, 2022, Eros provided certain agreements and minutes of audit committee meetings. As the information provided by Eros was incomplete, SEBI vide e–mail dated March 02, 2022, granted Eros time till March 09, 2022, to provide the complete information sought. 12. Pursuant to the same, vide three separate e–mails, dated March 07, 2022 (two e–mails) and March 11, 2022, Eros provided certain additional information, which again was found to be incomplete. As the Company had not submitted the complete information sought by SEBI even after additional time was provided, a meeting was held with the Compliance Officer of Eros on May 09, 2022. The Compliance Officer of Eros, during the course of the said meeting, stated that there was a delay in providing the information as he “…was not keeping well and there was no employee at senior level in finance team.

[He] will provide remaining data on or before May 19, 2022”. Subsequently, vide letter dated May 19, 2022, Eros provided certain additional information. It was, however, again noted that the information provided by Eros was incomplete as the Company only provided sample agreements covering approximately 50% of the written-off amount. 13. On examination of agreements and other information provided by the Company, it was identified that agreements with the TREs were entered in FY2016-17 and FY2017-18 and provided a period of three years for making the payments. The Company, it was however noted, had written off the entire outstanding amount in FY2019-20 itself, i.e. before the expiry of three years and also without taking any remedial measures for recovery. Further, in response to SEBI’s query regarding legal action taken by the Company to recover the advances, Eros provided copies of demand letters dated August 10, 2021, sent to 10 TREs. On examining the same, it was identified that the demand letters were sent almost one year after the write-off of the trade receivables (Rs.519.98 Cr.).

No other legal action was taken by the Company against these entities. In respect of the agreements entered with the CAE, it was noted the agreements related to the production of titled/untitled feature films by the CAE, which were to be financed by Eros. It was, however, noted that even though substantial amounts of money had been transferred to the CAEs by Eros, as per the terms of the respective agreements, most of the movies had not yet been made/released.

14. Given the delay in providing complete information by the Company and prima-facie suspicion of misutilisation, SEBI proceeded to call for the information directly from the “Trade receivable” and “Content advance entities”.

Trade Receivable Entities 15. As noted earlier, the Company had entered into contracts/agreements with 17 Trade Receivable Entities. These agreements pertained to the exploitation of “theatrical rights” and “Satellite/Video on Demand Rights”. Depending on the rights assigned, these agreements could be classified as “distribution agreements” and “license agreements”. The rights assigned to “Distributor” and “Licensee” were defined under the respective agreements as follows:  “Distributor” was provided three years’ theatrical rights in all formats, including Digital Theatrical rights as per the provisions of the Copyright Act, 1957 in Hindi and in particular regional language, on an outright basis. Also, as per the agreements, these entities were licensed to re-release already released movies in regional language after dubbing the said films and getting censorship certificates from the “Central Board of Film Certification” (“CBFC”) under the Cinematograph Act, 1952, in the licensed territory defined in each agreement.  “Licensee” was provided five years’ “satellite rights” and “Video on Demand Rights” for the Territory of India and Video Parlour Rights of the said films dubbed in regional language for the licensed territory defined in the agreement. 16. Summons dated July 19, 2022, was issued to the 17 TREs and their Directors, at the address available in MCA records, to examine whether these entities commercially exploited the rights acquired from Eros under these agreements. The following information was sought from the aforesaid entities;  Details of districts and Talukas in which movies were released, along with the list of theatres,  Date/s of such release along with details of net monthly collection (along with copies of bank statements clearly highlighting receipt of payment),  Details of marketing, advertising, publicity and creative expenditure incurred for the release of movies, along with documentary evidence,

 Copies of agreement/s entered with theatre owners and booking platforms like BookMyShow, Paytm etc., for the release of movies,  Reason for non-payment of outstanding dues to Eros which lead to termination of agreement/s by Eros, including copies of all the correspondences with Eros w.r.t. non-payment of outstanding dues. 17. Summons issued to 10 TREs returned undelivered with remarks such as “no such addressee” or “no such consignee”. Further, even the TREs and the Directors to whom Summons were delivered either failed to reply to SEBI’s summons or responded seeking an extension of time and did not furnish the information sought by SEBI. 18. Subsequently, as many of the Summons issued to the addresses available on the MCA Database were not delivered, reminder Summons/letters/e–mails were sent to the TREs and their present Directors on alternate addresses and e–mail ids taken from the KYC database of SEBI. Pursuant to the same, SEBI started receiving replies from some of the Directors and TREs. However, even in this instance, it was noted that the entities only provided basic information such as GST returns, income tax returns, invoices etc. (“Basic Information”) and failed to furnish any material which would indicate that the entities had taken steps to commercially exploit the rights obtained from Eros. The details of the Summons issued and the summary of responses are detailed in the Table below:

Table 8 Sr. Name of Entity Date of Delivery Status Provided Summary of No. Summons/Reminders complete Response Information 1 Supernova i) July 19, 2022, Undelivered to No Basic Advertising Ltd. ii)July 22, 2022, Company, Delivered information iii)September 06, 2022 to only a few Directors submitted & iv)December 22, 2022 2 Jiwanjyoti Sales i) July 19, 2022 & Undelivered to No Basic Pvt Ltd. ii)December 23, 2022 Company, Delivered information to Directors submitted 3 Sri Karani i) July 19, 2022, Undelivered to No Basic Exports Pvt Ltd. ii)December 06, 2022 Company, Delivered information & to only a few Directors submitted iii)December 23, 2022 4 Jagnamo i) July 19, 2022, Delivered to No Basic Multiservices Pvt ii)December 06, 2022 Company, information Ltd. & Undelivered to submitted iii)December 28, 2022 Directors

Table 8 Sr. Name of Entity Date of Delivery Status Provided Summary of No. Summons/Reminders complete Response Information 5 Adhiraj i) July 19, 2022, Undelivered to No Basic Distributors Ltd. & Company, Delivered information ii)December 05, 2022 to only one Director submitted 6 Wabash Vintrade i) July 19, 2022, Undelivered No No reply Pvt Ltd. & received ii)December 27, 2022 7 Shree Shyam i) July 19, 2022, Delivered to No Only partial Motion Pictures & Company, Delivered Basic Pvt Ltd. ii)August 03, 2022 to Directors Information submitted 8 Vibhakar Trading i) July 19, 2022, Delivered to No Basic Pvt Ltd. ii)December 06, 2022 Company, Delivered information to Directors submitted 9 Springboard i) July 19, 2022, Delivered to No Basic Media Ventures ii)December 06, 2022 Company, Delivered information Pvt Ltd. to only one Director submitted 10 BCPL i) July 19, 2022, Undelivered to No Basic International Ltd. ii)September 07, 2022 Company, Delivered information & to only a few Directors submitted iii)December 27, 2022 11 Thinkink Picturez i) July 19, 2022, Delivered to No Basic Ltd. ii)August 03, 2022 & Company, Delivered information iii)December 14, 2022 to Directors submitted 12 Gora Enterprises i) July 19, 2022, Undelivered to No No reply Pvt Ltd. ii)December 06, 2022 Company, Delivered received & to only a few Directors iii)December 27, 2022 13 Shyen Trading i) July 19, 2022, Undelivered to No No reply LLP ii)December 12, 2022 Company, Delivered received & to only a few Directors iii)December 14, 2022 14 Nysa Sales Pvt i) July 19, 2022, Undelivered to No No reply Ltd. & Company, Delivered received ii)December 05, 2022 to only a few Directors 15 B B Commercial i) July 19, 2022, Undelivered to No Basic Ltd. ii)August 03, 2022 & Company, Delivered information iii)December 06, 2022 to only a few Directors submitted 16 Adarsh Global i) July 19, 2022 & Delivered to No Submitted a Trades and ii)December 23, 2022 Company, copy of Services Pvt Ltd. Undelivered to Panchanama Directors issued by DGGI3, wherein it was stated that documents of the company were seized by GST for investigation. 3 Directorate General of GST Intelligence

Table 8 Sr. Name of Entity Date of Delivery Status Provided Summary of No. Summons/Reminders complete Response Information 17 View Finder i) July 19, 2022 & Delivered to No Only partial Publicity Pvt Ltd. ii)December 06, 2022 Company, Delivered Basic to Directors Information submitted 19. It can be noted from the above Table that out of the 17 TAEs, only 13 responded to Summons issued by SEBI. Further, even the 13 entities which responded only provided basic information and did not provide any information/documents which could substantiate that they had taken steps to exploit the commercial rights acquired from Eros. 20. Three individuals, who were Directors of these entities, appeared before SEBI on receipt of the Summons and also made e–mail submissions. The relevant portion of submissions made by these Directors are reproduced below: I. Uplaksh S Adlakha, Director, Supernova Advertising Ltd.: a. He was introduced to Supernova by Mr. Nitin Boricha b. He was made the Director of the firm in early 2021 assuming that Mr. Nitin Boricha and Mr. Dipan J Patel, hold the same positions in the firm as well.

He must have signed on 100 - 150 documents till date in regard to the appointment of the Director position and bank accounts integration in complete trust. c. He has no relation with the transactions that took place in the firm with other companies such as Eros. d. The transactions took place without his knowledge and the firm was absolutely not under his control since he was made a dummy Director. e. He has not received any kind of remuneration from the firm till date. II. Mr. Yogendra Garje, Director, Supernova Advertising Ltd., Springboard Media Ventures Pvt. Ltd. and Jeewan Commodities Pvt. Ltd. in his statement made submissions similar to those made by Mr. Uplaksh S. Adlakha. III. Bhushan V. Sakpal, Director, Sri Karani Exports Private Ltd. a. He was fraudulently and wrongfully appointed as Director b. He does not possess any documents which are associated with the Company c. He is a victim of fraud and he has filed a police complaint against Mr. Dharmraj Kanojia and Mr. Bhanu Kumar Goyal, who obtained his self-attested PAN Card and Aadhar Card by promising to help him find a good job.

21. The submissions of these three Directors indicated that they were dummy Directors and that the companies were being controlled by others (this included Mr. Nitin Boricha Kishore, whose connection with Eros is discussed in detail in subsequent paragraphs of this order). 22. It was noted during the investigation that the agreements entered by the TREs with Eros granted them the rights to re-release movies in multiple regional languages. Each movie that was released in India (even if it was re-released after dubbing) compulsorily needed to obtain a certificate from the Censor Board. It was, therefore, noted that after dubbing in regional languages, 160 movies would have required 977 separate approvals as one movie would be dubbed in multiple regional languages. However, on examination of the CBFC website, it was noted that Censor Board certification was not obtained for re-releasing any of these movies. Further, no information was furnished by any of the entities or their Directors which would indicate that the movies were actually released. This casted doubts on whether the entities had actually commercially exploited the rights obtained from Eros.

23. Considering the statements made by the Directors of the TREs, the absence of data to indicate that the TREs had taken steps to re-release the movies, coupled with the fact that many TREs were not traceable/not responding to the Summons issued by SEBI, raised questions regarding the business operations of the TREs and called into question the revenue recognized in the books of Eros on the basis of agreements entered with these entities. 24. It prima facie appeared that most of the TREs were paper companies with no business operations. Given the same, the financial statements filed by these companies with MCA were examined. It was noted from the financial statements that the TREs had reported significant revenues only in the financial years they had business transactions with Eros. Further, some of these entities had not filed financial statements for the last 6-7 years, and certain others had filed statements showing Nil revenue since incorporation.

The details of revenue of these entities in the period prior to/post business with Eros are given in the Table below: Table no. 9 (Rs. in Crore) S N Name of Entity Revenue prior to Revenue during Revenue post transactions with Eros business with Eros transactions with Eros 1 Supernova Rs.34.21 Rs.219.64 No Financials Filed Advertising Ltd. (in nine years, i.e. FY2007- (In four years, i.e. FY for FY 2020-21 & 08 to FY 2015-16) 2016-17 to FY 2019-20) 2021-22 2 Jiwanjyoti Sales Pvt Rs.2.05 Rs.99.92 Nil for FY 2020-21; Ltd. (in eight years, i.e. (In four years, i.e. FY Rs.5.76 for FY 2021- FY2008-09 to FY 2015-16) 2016-17 to FY 2019-20) 22 3 Sri Karani Exports Rs.9.99 Rs.52.77 Rs.7.89 for FY 2020- Pvt Ltd. (in 14 years i.e. FY2004-05 (In two years i.e. FY 2018- 21; to FY 2017-18) 19 & FY 2019-20) Nil for FY 2021-22 4 Jagnamo Rs.0.01 Rs.38.15 Rs.26.46 for FY 2020- Multiservices Pvt (in five years i.e. FY2011- (In four years i.e. FY 21; Ltd. 12 to FY 2015-16) 2016-17 to FY 2019-20) Nil for FY 2021-22 5 Adhiraj Distributors Rs.18.00 Rs.6.00 Rs.2.55 for FY 2020- Ltd. (in eight years i.e. FY2010- (In two years i.e. FY 2018- 21; 11 to FY 2017-18) 19 & FY 2019-20) Rs.1.02 for FY 2021- 22 6 Wabash Vintrade Nil for FY 2014-15, FY Financials Not Filed for No Financials Filed Pvt Ltd. 2015-16 and FY 2016-17.

FY 2018-19 for FY 2019-20, 2020- Financials Not Filed for FY 21 & 2021-22 2017-18 7 Shree Shyam Rs.4.58 Rs.11.00 Nil for FY 2019-20, Motion Pictures Pvt (in 11 years i.e. FY2007-08 (In FY 2018-19) 2020-21 & 2021-22 Ltd. to FY 2017-18) 8 Vibhakar Trading Rs.7.75 Rs.34.31 Rs.0.26 for FY 2020- Pvt Ltd. (in eight years i.e. FY2010- (In two years i.e. FY 2018- 21; 11 to FY 2017-18) 19 & FY 2019-20) Rs.0.18 for FY 2021- 22 9 Springboard Media Rs.0.05 Rs.39.03 Rs.13.60 for FY 2020- Ventures Pvt Ltd. (in seven years i.e. (In two years i.e. FY 21; FY2011-12 to FY 2017-18) 2018-19 & FY 2019-20) Rs.17.34 for FY 2021- 22 10 BCPL International Rs.94.72 Rs.9.40 No Financials Filed Ltd. (in four years i.e. FY2014- (In two years i.e. FY for FY 2020-21 & 15 to FY 2017-18) 2018-19 & FY 2019-20) 2021-22 11 Thinkink Picturez Rs.0.91 Rs.171.34 Rs.1.60 for FY 2020- Ltd. (in five years i.e. FY2010- (In five years i.e. FY 21; 11 to FY 2014-15) 2015-16 to FY 2019-20) Rs.9.36 for FY 2021- 22 12 Gora Enterprises FY 2015-16 – Rs.0.00008 No financials filed post-FY No financials filed Pvt Ltd. No financials filed after FY 2015-16 post-FY 2015-16; 2015-16 Struck off

Table no. 9 (Rs. in Crore) S N Name of Entity Revenue prior to Revenue during Revenue post transactions with Eros business with Eros transactions with Eros 13 Shyen Trading LLP NIL revenue since NIL revenue since NIL revenue since incorporation incorporation incorporation 14 Nysa Sales Pvt Ltd. No financials have been No financials have been No financials have filed since incorporation filed since incorporation been filed since incorporation 15 B B Commercial Rs.0.01 (in two years i.e. Rs.57.61 (in four years Rs.10.69 for FY 2020- Ltd. FY2014-15 to FY 2015-16) i.e. FY2016-17 to FY 21 2019-20) 16 Adarsh Global No financials Filed post-FY No financials Filed post- No financials Filed Trades and 2016-17 FY 2016-17 post-FY 2016-17 Services Pvt Ltd. 17 View Finder Rs.87.04 Rs.135.63 Rs.21.24 for FY 2020- Publicity Pvt Ltd. (in 12 years i.e. FY2005-06 (in three years i.e. 21; to FY 2016-17) FY2017-18, 2018-19 & Rs.12.26 for FY 2021- FY 2019-20) 22

25. Further, on examination of the Goods and Services Tax (“GST”) registration certificate of these entities, it was observed that the nature of business as per GST records is significantly different from the “Object Clause” in the Memorandum of Association (“MoA”) filed by these entities with MCA. Further, the nature of the business of many of these entities as per the GST data was not related to the media/entertainment industry. It was also noted that the GST License of certain TREs was cancelled by the GST department retrospectively from the date of registration. The GST registration of one TRE (Jiwanjyoti Sales Pvt. Ltd) was cancelled as the registration was obtained by means of fraud and willful misstatements of facts and submitting false and fabricated documents. The current status of the GST Registrations of the TREs is given in the Table below:

Table no. 10 S. Name of Date of Nature of Business Nature of Business as Current Status No. Entity Incorporation as per MOA per GST of business 1 Supernova 11.04.2008 Publicity, company IT infrastructure and GST License Advertising advertising etc. network management cancelled by Ltd. services, advertising GST agency, promotion or department marketing of brand of from the date of goods or services or registration i.e. events service, 01.07.2017 broadcasting service, works contract service

Table no. 10 S. Name of Date of Nature of Business Nature of Business as Current Status No. Entity Incorporation as per MOA per GST of business 2 Jiwanjyoti 28.01.2009 Wholesale and trader General construction GST License Sales Pvt Ltd. of homecare products services, site formation cancelled by and consumer goods and clearance services, GST excavating and department earthmoving services etc. from the date of registration i.e. 04.12.2017 3 Sri Karani 04.07.1994 Wholesale and trader Goods transport service, GST License Exports Pvt of homecare products packaging services of cancelled by the Ltd. and consumer goods goods, maintenance and GST repair services of goods department etc. from the date of registration i.e. 14.05.2018 4 Jagnamo 05.05.2011 language translation Sponsorship service, GST License Multiservices and interpretation, broadcasting service, cancelled by Pvt Ltd. maintenance business auxiliary GST services, bureau services, promotion or department services etc. marketing of goods or from the date of services etc. registration i.e. 07.01.2018 5 Adhiraj 01.02.2011 Wholesale and trader Coal, ferrous products, Active Distributors of homecare products iron and steel, ferrous Ltd. and consumer goods products, iron and steel, woven fabrics, textile fabrics etc. 6 Wabash 07.03.2012 Wholesale and trader Services provided for a GST License Vintrade Pvt of homecare products fee/commission or cancelled by Ltd. and consumer goods contract basis on GST wholesale trade department from the date of registration i.e. 10.05.2018 7 Shree Shyam 06.03.2008 Buy, sell, import, Copyright service transfer Active Motion export, deal in temporarily or permit use Pictures Pvt cinematographic or enjoyment Ltd. films, television films, video films etc. 8 Vibhakar 28.01.2011 Wholesale and trader Woven fabric, coal, coke, GST License Trading Pvt of homecare products ferrous products cancelled on the Ltd. and consumer goods application of a taxpayer from 06.04.2023 9 Springboard 26.09.2011 Advertising, publicity Performing art events Active Media and propaganda promotion and Ventures Pvt agents to promote the production, broadcasting Ltd. sale of any products services, other support and service through services, sponsorship various media such as services & brand cinema, hoardings promotion services, etc. etc.

Table no. 10 S. Name of Date of Nature of Business Nature of Business as Current Status No. Entity Incorporation as per MOA per GST of business 10 BCPL 26.08.1985 Wholesale and trader Wholesale and trader of Active International of homecare products homecare products and Ltd. and consumer goods consumer goods 11 Thinkink 16.04.2008 Business Auxiliary Active Picturez Ltd. Services, Promotion or marketing of Brand of Goods or Services or events service, Event Management Services, Works Contract Services, Broadcasting Service 12 Gora 27.01.2016 Building completion, Food preparations, hair GST License Enterprises construction, repairs products, telephone sets, cancelled by Pvt Ltd. etc. tobacco etc. GST department from 01.08.2019 13 Shyen 26.07.2015 Production, Broadcasting services, Active Trading LLP distribution & Performing arts event marketing of films, promotion and serials, Ad films, organization services, documentaries, music Sponsorship Services & videos, music Brand Promotion cassettes and other Services, Motion picture, works in audio and/or videotape, television and video format, radio program production multimedia services, services information/content providers in the media industry and other related activities. 14 Nysa Sales 04.01.2018 Manufacture all kinds Bitumen and asphalt, GST License Pvt Ltd. of furniture made from articles of cement, bar cancelled by wood, brass, steel, and rods of iron etc. GST fiberglass, plastics or department any other alloys and from handicrafts 12.06.2020 15 B B 17.11.1980 Trading, importing Sponsorship service, GST License Commercial and exporting of all broadcasting services, suspended Ltd. items of industrial, business auxiliary w.e.f. domestic and services, promotion or 04.05.2021 agricultural use and marketing of brand of also other goods goods or services or connected therewith events services etc. 16 Adarsh 06.07.2012 Act as brokers, Steel related products, GST License Global Trades agents, stockiest, woven fabric, insulated cancelled on the and Services distributors, suppliers, cables, wires etc. application of a Pvt Ltd. commission agents of taxpayer w.e.f. all kinds of metals and 05.01.2022 metal products of any description

Table no. 10 S. Name of Date of Nature of Business Nature of Business as Current Status No. Entity Incorporation as per MOA per GST of business 17 View Finder 08.02.2006 Act as advertising, Advertising services, GST Publicity Pvt publicity, marketing sponsorship services & (Maharashtra) Ltd. and propaganda brand promotion services License agents through media cancelled by such as newspapers, GST journals, cinemas etc. department from 16.08.2022 26. It was observed during the investigation that apart from the aforesaid 17 TREs, the Company had also entered into similar seemingly fictitious agreements with two other entities - Silver Frame Movies and Venu Visuals. Investigation revealed that the Company had been entering into such agreements with these two companies even prior to FY 2012-13. Silver Frame Movies and Venu Visuals are sole proprietorships of Mr. Tharemana Krishnamurthy and Mr. Nagarajan, respectively. As per the GST registration details, both these entities are involved in the “Business of making/developing cinematographic films, etc.”. It was noted that the GST Registration of Silver Frame was cancelled w.e.f. January 2022. 27. Examination of the ledgers of the TREs, Silver Frame Movies and Venu Visuals, maintained in the books of Eros, revealed that Eros had recognised revenue of Rs.1623.81 Cr, during the period FY 2012 -13 to FY 2018-19 from these 19 entities, out of which Rs. 1099.59 Cr was shown as received in the books of the Company. As most of these entities appeared to be paper entities, SEBI analyzed their bank statements to determine the source of funds used for making the payment to Eros. From fund flow analysis, it was prima facie noted that almost 60% of the funds transferred by these entities to Eros were directly/indirectly funded by Eros itself (The investigation is still ongoing and at this stage 60% of the funds could be traced back to Eros). It was also noted that in some instances, the amounts were paid back by these entities to Eros on the very day the funds were transferred by Eros to their accounts. In other instances, it was transferred back after a gap of a few weeks/months. The details of such transfers are given in the Table below:

Table 11 S. Name of Entity Financial Financial Total Total Collection No. year when year when revenue Collection Funded by revenue revenue booked Eros was first was last booked booked (A) (B) (C) (D) (E) (F) (G) 1 Silver Frame Movies 2012-13 2019-20 387.61 388.47 293.83 2 Venu Visuals 2014-15 2019-20 338.96 338.21 285.15 3 Supernova Advertising Ltd 2016-17 2018-19 122.76 75.04 27.36 4 Jiwanjyoti Sales Pvt Ltd 2016-17 2018-19 98.32 53.17 16.45 5 Sri Karani Exports Pvt Ltd 2018-19 2018-19 45.36 0.84 0.20 6 Jagnamo Multiservices Pvt Ltd 2016-17 2018-19 75.02 37.94 1.69 7 Adhiraj Distributors Ltd 2018-19 2018-19 36.96 0.75 0.75 8 Wabash Vintrade Pvt Ltd 2018-19 2018-19 34.72 Nil NA 9 Shree Shyam Motion Pictures 2018-19 2018-19 1.95 35.84 1.95 Pvt Ltd 10 Vibhakar Trading Pvt Ltd 2018-19 2018-19 31.36 0.50 0.50 11 Springboard Media Ventures 2018-19 2018-19 30.24 0.96 0.96 Pvt Ltd 12 BCPL International Ltd 2018-19 2018-19 29.12 0.45 - 13 Thinkink Picturez Ltd 2015-16 2018-19 132.56 98.65 17.46 14 Gora Enterprises Pvt Ltd 2018-19 2018-19 28.00 Nil NA 15 Shyen Trading LLP 2018-19 2018-19 28.00 Nil NA 16 Nysa Sales Pvt Ltd 2018-19 2018-19 28.00 0.14 - 17 B B Commercial Ltd 2017-18 2018-19 80.50 61.40 17.75 18 Adarsh Global Trades and 2017-18 2017-18 - 43.68 28.60 Services Pvt Ltd 19 View Finder Publicity Pvt Ltd 2017-18 2017-18 16.80 12.52 - Total 1623.81 1099.59 664.05 28. A pictorial representation of one such instance of fund flow from Venu Visuals to Eros is depicted as under:

29. It can be noted from the transactions depicted above that the funds that were transferred by Venu Visuals to Eros can be traced back to the books of Eros. A significant portion of these funds, it can be noted, were initially transferred by Eros to CAEs, ostensibly for producing movies, and CAEs transferred the money to Venu Visuals, which in turn transferred the money back to the accounts of Eros. In view of the aforesaid, 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. It was also noted, that over the years, the revenue from these 19 entities came to represent a significant portion of the total earnings of Eros.

30. As an illustration, in FY-19, more than 65% of the total revenue of Eros came from these 19 entities, the details of which are given in the Table below: Table 12 Particulars FY FY 2015- FY 2016- FY 2017- FY 2018- FY Total 2012-13 16 17 18 19 2019-to FY 20 2014-15 Revenue accounted by 2854.13 1,178.68 1,146.18 707.66 835.64 669.00 7391.29 EIML [A]

Revenue earned from 19 200.66 183.63 219.5 399.82 557.76 62.44 1623.81 customers of EIML (as per the ledgers in the books of accounts of EIML) (B) % of Revenue earned 7.03% 15.58% 19.15% 56.50% 66.75% 9.33% 21.97% from 19 customers of EIML (B/A*100) 31. These figures call into question the integrity of the financial statements of the company and give an indication that Eros was using the cover of these entities to inflate its financial statements. Subsequently, in FY 2019-20, it appears that the Company, under the guise of Covid-19, attempted to clean up its balance sheet by writing-off the outstanding balance shown as receivable from these 19 entities in its books.

Content Advance Entities 32. It was noted that as on March 31, 2020, out of total “Content Advances” (Intangible Assets) of Rs.1650.33 Crore (before impairment provision) reflected in the books of Eros, Rs.1518.20 Crore (Rs.1487.95 Crore + Rs.30.25 Crore) representing 92% of the content advances was made to 18 entities. Out of the Rs.1518.20 Crore, Eros impaired/wrote-off Rs.1172.41 Crore or 77.22% of total outstanding content advances made to these 18 entities. This further represented 88.8% of the total content impairment/write-off made by Eros. 33. As the amount of impairment was significant, SEBI issued Summons dated July 22, 2022, seeking information pertaining to the utilisation of funds received from Eros to 12 CAE and its Directors (which together accounted for Rs. 850.76 Cr of the amount impaired), namely Viyanaa Media Works Private Ltd. (Formerly known as Nextgen Films Pvt Ltd.) (“Nextgen”), RV Films (“RV”), Spicy Entertainment and Media Ltd. (“Spicy”), Virgo Entertainment Pvt Ltd (“Virgo”), Mediaone Global Entertainment Ltd (“Mediaone”), Metronet Multimedia Pvt Ltd (“Metronet”) Upkar Dealtrade Private Ltd. (“Upkar”), Dil Multimedia Pvt Ltd (“Dil Multimedia”), Adarsh Telemedia Pvt Ltd (“Adarsh”), Colour Yellow Productions Pvt Ltd (“Colour Yellow”), Red Eye Kraft Pvt. Ltd. (“RedEye”) and Ritestone Solutions Pvt Ltd (“Ritestone”), at the address available as per the MCA website. 34. Summons issued to five CAEs (Nextgen, RV, Spicy, Upkar and RedEye) returned undelivered with remarks “door locked” or “no such consignee”. These 5 CAEs accounted for 42% (Rs.550.11 Cr) of the content advance impaired/written off by Eros. Further, even the remaining seven companies and the Directors to whom Summons were delivered either failed to reply to SEBI’s summons or responded without providing any information and only sought an extension of time. 35. As the 12 CAEs mentioned above failed to provide any information regarding the utilization of the funds provided by Eros, SEBI proceeded to issue Summons to the Directors of three of the Content Advance Entities (Nextgen Films Pvt. Ltd., Spicy Entertainment & Media Ltd. and Upkar Dealtrade Pvt. Ltd) during the period when money was advanced by Eros, at the alternate addresses obtained from the KYC database of SEBI. Details of the Summons issued are given in the Table below:

Table 13 Name of Content No. of Directors Compliance with Compliance with Summons Advance Entity Summons issued Summons for production for personal appearance to of documents Next Gen Films 4 All 4 have submitted All 4 Directors failed to appear Private Ltd. (Now response before SEBI known as Viyanaa Media Works Pvt Ltd) Spicy Entertainment Executive Directors 8 Directors to whom All 8 Directors to whom & Media Ltd. (Listed – – 3 Summons delivered Summons delivered failed to BSE SME) submitted replies. appear before SEBI Independent Directors – 7 3 – Executive Directors Total - 10 5 Independent Directors Upkar Dealtrade 11 Summons delivered to only 6 Only one Director out of the 6 Private Ltd. Directors. All 6 Directors who had received the Summons submitted reply appeared before SEBI. 36. On examination of documents/information submitted by these entities, it was noted that none of the entities have provided information relating to the utilization of funds received from Eros for the production of movies by these entities. SEBI, therefore, provided additional opportunities to these Directors to appear before SEBI and record their statements.

Despite granting additional opportunities, most of the Directors who had been summoned, citing reasons such as “suffering from health issues and have been advised to avoid travelling”, “working in Kolkata, can’t travel to Mumbai”, etc., expressed their inability to appear before SEBI. Subsequently, SEBI provided an opportunity to these Directors to record their statements in their respective cities. Here again they failed to present themselves before SEBI. 37. It can therefore be noted that out of the 25 present and past Directors of CAEs summoned by SEBI, only 1 Director (Mr. Debrup Dutta, Director of Upkar Dealtrade Pvt. Ltd.) appeared before SEBI. Mr. Datta, in his statement, submitted that he was not aware of the fact that he was appointed as Director of a company. He further stated that due to his poor financial condition, he gave his KYC documents (PAN, Aadhar and Photo) to a person for which he has paid a sum of Rs. 500 per month. 38. SEBI, with the assistance of the local police, also attempted to hand deliver the Summons to Mr. Nitin Boricha Kishore at his address in “Mumbai”.

When the SEBI team arrived at his residence, he was not present. On contacting him over the phone, he assured the SEBI team that he would return home in the next 15- 20 minutes. He, however, failed to appear and based on subsequent discussions with him over the phone, the Summons was delivered to his mother. He communicated that he would be visiting SEBI Office to record his statement. However, despite hand delivering the summons and the assurance given by him, he subsequently failed to appear before SEBI. It may be recalled that Mr. Kishore was named by Mr. Uplaksh S Adlakha and Mr. Yogendra Garje, Directors of Supernova Advertising Ltd., a TRE, in their statements before SEBI, as being in “control” of the said entity. 39. The submission of Mr. Debrup Dutta and the failure of CAEs and their Directors to appear before SEBI raises serious questions on the business activities of the content advance entities. Further, as all the Directors, other than Mr. Datta, to whom Summons was issued, failed to appear and considering that many of them had cited similar reasons for their non-appearance, prima facie, it appears that there is a concerted effort on the part of the CAEs and its Directors to stall the investigations initiated by SEBI.

40. As no information was received from these entities, SEBI proceeded to examine the ledgers of content advances entities in the books of Eros. It was noted that there were payments made to these entities as far back as FY2012-13. The ledger analysis of Content Advances Entities revealed the following:

Table No. 14 (Rs. in Crore) S. Name of Payment Payment Assets Amount Untraceable Provision for No. Content made made as recorded received amount impairment/ Advance since per (till back (till write off Entity ledger FY2019- FY2019- (till 20)# 20) FY2019- 20) (A) (B) (C) (D) (E) (F) (G) (D-E-F) (H) 1 Next Gen Films Before 1107.28 440.63 341.51 325.14 251.70 Pvt Ltd FY2012- 13* 2 Globus Ent FZE Before The ledger provided by the Company is not complete. 197.98 FY2015- As entity is foreign entity, no bank statements are 16** available 3 RV Films FY2013- 559.26 231.07 87.39 240.80 163.47 14 4 Spicy FY2016- 114.04 0.00 5.50 108.54 92.20 Entertainment 17 and Media Ltd* 5 Virgo Before 580.20 386.55 88.39 105.26 88.23 Entertainment FY2012- Pvt Ltd 13* 6 Mediaone Before 236.06 136.00 33.50 66.56 63.61 Global FY2012- Entertainment 13* Ltd* 7 Metronet Before 131.04 68.03 23.17 39.84 58.59 Multimedia Pvt FY2012- Ltd 13* 8 Express Image FY2016- 52.00 0.00 0.00 52.00 52.00 Pvt Ltd 17 9 Upkar FY2016- 36.50 0.00 0.00 36.50 33.79 Dealtrade Pvt 17 Ltd 10 Base Industries FY2015- 101.63 67.00 5.00 29.63 29.63 Group 16 11 Dil Multimedia FY2015- 28.50 0.00 0.99 27.51 27.51 Pvt Ltd 16 12 M M Moviez Before 33.34 11.32 4.65 17.37 20.30 FY2012- 13* 13 Adarsh FY 2017- 52.85 0.00 0.00 52.85 17.04 Telemedia Pvt 18 Ltd 14 Colour yellow FY 2013- 268.82 173.88 27.81 67.13 15.42 productions Pvt 14 Ltd 15 Siddharth FY 2015- 17.36 0.00 0.00 17.36 14.71 Anand 16 Productions 16 Red Eye Kraft FY 2016- 8.95 0.00 0.00 8.95 8.95 Pvt Ltd 17

Table No. 14 (Rs. in Crore) S. Name of Payment Payment Assets Amount Untraceable Provision for No. Content made made as recorded received amount impairment/ Advance since per (till back (till write off Entity ledger FY2019- FY2019- (till 20)# 20) FY2019- 20) (A) (B) (C) (D) (E) (F) (G) (D-E-F) (H) 17 Encash FY 2017- 21.80 0.00 0.00 21.80 7.03 Entertainment 18 Ltd 18 Ritestone FY 2014- 55.25 25.00 0.00 30.25 30.25 Solutions Pvt 15 Ltd Total 3404.88 1539.48 617.91 1247.49 1172.41 * Ledgers were made available by the Company for FY2012-13 onwards. * There were transactions with these entities before FY2012-13, however opening balances are not verified as ledgers are made available only from FY2012-13. ** Ledger was made available by the Company from FY2015-16 onwards. # Under investigation as instances of overstated asset booking were identified.

41. It can be noted from the Table that for 8 of these entities (viz. Spicy, Express, Upkar, Dil, Adarsh, Siddharth Anand, Red Eye Kraft, Encash), to which Eros had cumulatively advanced Rs.332.00 Crore, no film rights were recorded in the balance sheet of Eros. Further, in the subsequent financial years (FY2020-21 and FY2021-22), a substantial portion of the advances made to these 8 entities were impaired.

42. In the case of four of the said 8 entities, 100% of content advances were written off by EROS in subsequent years, the details of which are as follows:

Table 15 S.N. Name of Content Advance Untraceable Write off Financial year of Entity amount write-off 1 Adarsh Telemedia Pvt Ltd 52.85 52.85 FY2020-21 2 Dil Multimedia Pvt Ltd 27.51 27.51 FY2021-22 3 Encash Entertainment Ltd 21.80 21.80 FY2020-21 4 Upkar Dealtrade Pvt Ltd 36.50 36.50 FY2020-21 Total 138.66 138.66

43. This further raised doubts about the genuineness of the amounts paid by Eros to Content Advances Entities. Further, as already mentioned, the entities Encash and Upkar are not in the media/entertainment business. 44. SEBI Investigation also revealed that 11 out of the 18 CAEs are prima facie directly/indirectly connected to Eros through common Directors. These 11 entities accounted for almost 65% (i.e. Rs. 868.23 Cr out of the total impairment of Rs. 1320.40 Cr) of total impairment provision/write-offs. Further, these 11 connected entities include 4 entities to whom the aforesaid SEBI Summons were returned “Undelivered”. The details of the connection are explained as under:

Table 16 S. No. Entity name and Details of connection with Eros/its promoters Amount relationship Impaired (in Cr.) 1 Next Gen Films Pvt Ltd Next Gen Films Pvt Ltd (Now known as Viyanaa Media 251.70 Works Pvt Ltd) is connected to Eros International Media Ltd. through Sunil Lulla. NextGen is owned by Vikram V Rajani, who is the brother-in-law of Sunil Lulla. Vikram V Rajani was a Director in this company from November 28, 2008, to September 19, 2019, and Drishti V Rajani (Vikram V Rajani’s daughter) was the Director from February 11, 2016, to September 19, 2019. Nextgen was incorporated on September 02, 2008, and Sunil Lulla and his other company Eros Pictures Pvt Ltd (now known as Eros International Films Pvt Ltd), were subscribers to MoA. 2 Globus Ent FZE Globus Ent FZE is UAE based entity and was incorporated 197.98 by Ashok Tarachand Grover in the year 2007. Virgo Entertainment Pvt Ltd is a Mumbai-based entity which was incorporated in 2011 and is owned and controlled by Ashok Tarachand Grover. 3 Virgo Entertainment 88.23 Pvt Ltd Dilip Chudasama was a Director of Eros International Ltd., UK (which is a fellow subsidiary of EWW) from June 18, 2015, to April 29, 2022. As per submission of the Company, he is an employee of Eros International Ltd., UK, for the last 23 years and Director of multiple group companies/erstwhile subsidiaries of Eros viz. Ayngaran International (UK) Ltd., Eros Music Publishing Ltd., UK, Eros Network Ltd., UK etc. Ashok Tarachand Grover and Dilip Chudasama share common Directorship in UK-based companies, namely Kumbhayana Productions Ltd, UK, Future Film Production Ltd., UK, and Velocity Films Ltd., UK. The correspondence address of Ashok Tarachand Grover, as per filings of Velocity Films Ltd. (from Jan2020), is Unit 23, Sovereign Park, Coronation Road, London, England,

Table 16 S. No. Entity name and Details of connection with Eros/its promoters Amount relationship Impaired (in Cr.) NW10 7QP, which is also the correspondence address of Eros Network Ltd. (till May 2022) and Eros Music Publishing Ltd. (September 2019). Velocity Films Ltd., UK (previously known as Silverscreen Films Ltd., UK) is the entity to whom the Company’s funds were diverted through Virgo Entertainment Pvt. Ltd. Virgo Entertainment Pvt Ltd and Globus Ent FZE are connected to Eros International Media Ltd. through Ashok Tarachand Grover. 4 Spicy Entertainment & Spicy Entertainment & Media Ltd. is a connected entity of 92.20 Media Ltd. another trade receivable entity, namely Thinkink Picturez Ltd. These two entities are interconnected through one individual, namely Vimal Lahoti. Investigations have so far revealed that the funds diverted from Eros are also through/to some companies owned and controlled by Mr. Vimal Lahoti/ his family members. Further, Investigation has also revealed that Spicy Entertainment & Media Ltd. has diverted Rs. 12.70 Cr. to Nextgen (a connected entity of Eros).

In another transaction, Spicy received Rs.10 lacs from Eros on May 22, 2020, for one “Untitled film Directed by Srijit Mukherji”. Immediately on the day of receipt of funds from Eros, Spicy diverted Rs.10 Lacs to the personal account of the Director of Nextgen, Mr. Nitin Boricha Kishore. 5 Mediaone Global Dil Multimedia Pvt Ltd, Mediaone Global Entertainment 63.61 Entertainment Ltd Ltd, Metronet Multimedia Pvt Ltd and Ritestone Solutions 6 Metronet Multimedia Pvt. Ltd. are connected to Eros through common Directors. 58.59 Pvt Ltd The details of which are as follows: 7 Ritestone Solutions  Dil Multimedia Pvt Ltd, Mediaone Global Entertainment 30.25 Pvt Ltd Ltd and Metronet Multimedia Pvt Ltd have a common 8 Dil Multimedia Pvt Ltd Director Jayabalan Muralimanohar. 27.51  Ritestone Solutions Private Ltd., Mediaone Global Entertainment Ltd. & Metronet Multimedia Private Ltd. have a common Director Timothy Alfred Joseph Moses  Metronet Multimedia Private Ltd. & Sree Balaji Hi-Tec Promoter Private Ltd. have a common Director - Jayabalan Jayakumar  Sree Balaji Hi-Tec Promoter Private Ltd. & Ayngaran International Media Private Ltd. have a common Director - Srinivasan Venkatesh  Ayngaran International Media Private Ltd. was a subsidiary of Eros and was promoted by Mr. Sunil Arjan Lulla.

9 Upkar Dealtrade Pvt Investigation has revealed that of the total funds of Rs. 36.50 33.79 Ltd Crores paid by Eros to Upkar as content advance, Upkar has diverted 10.99 Cr. to Nextgen (a connected entity of Eros) and round tripped Rs. 5 Crores to Eros.

Table 16 S. No. Entity name and Details of connection with Eros/its promoters Amount relationship Impaired (in Cr.) Further, Upkar is connected to other trade receivable entities - Sri Karani Exports Pvt. Ltd, Supernova Advertising Ltd. and content advance entity, i.e. Nextgen, through common Directors. The details of the connection are as under:  Suresh Kumar Pareek & Sutapa Mukherjee are common Directors in Upkar Dealtrade Pvt Ltd & Sri Karani Exports Pvt. Ltd.  Further, Sri Karani Exports Pvt. Ltd is connected to Supernova Advertising Ltd. through common Director - Bhanukumar Arvind Goyal.  Supernova Advertising Ltd. & Nextgen are connected through common Director - Sunita Patel Kamlesh. 10 Colour Yellow Subsidiary company of Eros 15.42 Productions Pvt Ltd 11 Red Eye Kraft Pvt Ltd RedEye is connected to Eros through Nextgen. These two 8.95 entities have common Director, Mr. Nitin Boricha Kishore. Total 868.23

45. On examination of MCA records/GST details, it was noted that some of the content advances entities were never in the business of movie/content making. Details of which are as under: Table 17 Sr. Name of Content Date of Nature of Business No. Advance Entity Incorporation 1 Express Image Pvt Ltd 09/09/2009 Trading, distribution of all types of fabrics, iron steel, etc. 2 Upkar Dealtrade Pvt Ltd 27/03/2012 Trader – Industrial goods, homecare products, etc. 3 Encash Entertainment Ltd 28/03/2008 Film Production Distribution And Exhibition 4 Ritestone Solutions Pvt Ltd 09/11/2001 (Struck Business consulting and development of off on 23/04/2016) software and Information Technology Solutions (Source: MCA Records/GST Records) 46. On analysing the ledgers provided by Eros, it was noted that a substantial amount - Rs.1247.49 Crore - was identified as untraceable (neither any film rights were created nor the funds returned to Eros) and 94% of this amount (Rs.1172.41 Cr) was subsequently written off by Eros. Therefore, to understand the actual utilization of the funds provided by Eros, the bank statements of the aforesaid entities for the period 2012-13 to 2019-20 were examined. The analysis revealed that, prima facie, Eros appeared to have siphoned off/diverted funds using these CAEs since FY2012-13. SEBI Investigation, which is ongoing, has at this stage identified that potentially Rs. 687. 37 Cr out of Rs.1247.49 Cr, which was untraceable, was siphoned off/diverted by Eros. The details of the same are given in the table below and explained in subsequent paragraphs:

Table 18 Funds diverted/siphoned off to/by Name of Content Amount Total Advance entity who identified Amount siphoned/diverted (Rs.in Crore) (Rs.in funds Crore) Through multiple layers to Spicy 114.04 332.00 connected/unconnected entities by not Express 52.00 producing any movie Upkar 36.50 Dil Multimedia 28.50 Adarsh 52.85 Siddharth Anand 17.36 Red Eye Kraft 8.95 Encash 21.80 Overseas promoter of Eros, i.e. EWW Nextgen 36.44 66.11 Virgo 29.67 Overseas connected entities of Eros Nextgen & Virgo 14.23 14.23 Relatives of Promoters and Lulla Family, i.e. Nextgen 56.73 56.73 Rajani Family Loan Repayments Nextgen 73.26 111.09 Virgo 37.83 Other Group companies of Eros viz. Eros Nextgen 39.31 46.71 Television India Private Ltd., Eros International Virgo 6.90 Films Pvt. Ltd. M M Movies 0.50 Potentially connected parties of Eros Virgo 3.55 59.50 Nextgen 4.00 M M Movies 21.70 Ritestone 30.25 Total 686.37 686.37

Siphoning-off of funds to Overseas promoter of Eros, i.e. EWW:

47. The investigation so far has revealed that Eros has transferred Rs.66.11 Crore to its overseas promoter EWW, Dubai. The details of which are as follows:

Table 19 Payment made by Eros Utilization by Entity Date of Entity to Amount Bank and Payment Date of Name Amount payment whom (Rs.) account for utilization of (Rs.) by Eros amount number production entity was paid from of movie to (Bank which whom name amount amount and was paid was account paid number) 26.12.2016 Nextgen 3,25,00,000 IDBI Next Gen- 26.12.2016 EWW 27,12,80,000 (IOB – (00041/36) Sanjay 01990/21) Puran 25,00,000 7 Kadam 5,00,00,000 Rahul Dholakia Untitled 4,00,00,000 Next Gen- Vikram Jeet Singh 5,00,00,000 Chanda Mama Door Ke 5,00,00,000 IOB Desi Boyz (01990/72) 2 5,00,00,000 Desi Boyz 2 Total 27,50,00,000 Total 27,12,80,000 30.08.2016 Nextgen 1,25,00,000 IOB Munna 30.08.2016 EWW 3,20,82,219 (IOB – (01990/72) Michael 01990/21) 2,00,00,000 Munna Michael Total 3,25,00,000 Total 3,20,82,219 11.08.2016 Nextgen 5,00,00,000 IOB Munna 11.08.2016 EWW 6,10,99,601 (IOB – (29980/72) Michael 01990/21 2,50,00,000 7 Kadam Total 7,50,00,000 Total 6,10,99,601 28.07.2016 Virgo 5,60,00,000 IOB Virgo- 28.07.2016 EWW 5,53,98,750 (IOB – (01990/72) Ranbir, 01990/58 Sonakshi Total 5,60,00,000 Total 5,53,98,750 05.08.2016 Virgo 3,45,00,000 IOB Virgo- 05.08.2016 EWW 3,34,50,000 (IOB – (01990/72) Ranbir, 01990/58 Sonakshi Total 3,45,00,000 Total 3,34,50,000

Table 19 Payment made by Eros Utilization by Entity Date of Entity to Amount Bank and Payment Date of Name Amount payment whom (Rs.) account for utilization of (Rs.) by Eros amount number production entity was paid from of movie to (Bank which whom name amount amount and was paid was account paid number) 05.08.2016 Virgo 4,50,00,000 IOB Virgo- 05.08.2016 EWW 4,48,06,975 (IOB – (01990/72) Ranbir, 01990/58) Sonakshi Total 4,50,00,000 Total 4,48,06,975 09.08.2016 Virgo 1,00,00,000 IOB The Real 09.08.2016 EWW 3,34,80,000 (IOB – (01990/72) Heroes 09.08.2016 01990/58 1,00,00,000 Virgo- Ranbir, Sonakshi 09.08.2016 1,50,00,000 Aankhein 2 Total 3,50,00,000 Total 3,34,80,000 09.08.2016 Virgo 3,25,00,000 IOB Aankhein 2 11.08.2016 EWW 7,36,23,000 11.08.2016 (IOB – 4,85,00,000 (01990/72) Aankhein 2 01990/58 Total 8,10,00,000 Total 7,36,23,000 18.08.2016 Virgo 20,00,000 IOB Virgo- 19.08.2016 EWW 3,35,50,000 (IOB – (01990/72) Ranbir, 01990/58 Sonakshi 18.08.2016 3,25,00,000 Aankhein 2 Total 3,45,00,000 Total 3,35,50,000 23.08.2016 Virgo 2,25,00,000 IOB Aankhein 2 23.08.2016 EWW 2,23,67,691 (IOB – (01990/72) 01990/58 Total 2,25,00,000 Total 2,23,67,691 Grand Total 69,10,00,000 Grand Total 66,11,38,236

48. It can be noted from the Table above that Eros had transferred Rs.69.10 Crore to certain CAEs for the production of various movies. However, neither the Company nor the CAEs nor any of its present Directors could produce any material before SEBI to show the utilization of the funds transferred by Eros. The past Directors of Nextgen (Vikram V Rajani & Drishti V Rajani), in their reply dated March 31, 2023, provided a list of movies which were not produced. The list inter-alia included movies such as Desi Boyz 2, Untitled - Sanjay Puran Singh, Untitled – Rahul Dholakia etc. They stated that movies were not produced due to factors such as the non-availability of star cast, change in priority of Director-producer etc. However, as mentioned in the table above, the bank statement analysis revealed that the amount given by Eros to Nextgen for the production of these movies was never utilized for any production-related activities, rather on the very same day of receipt, it was transferred to EWW, the promoter of Eros. One such instance of transfer of funds to EWW is detailed below: 49. On December 26, 2016, Eros made a payment of Rs.27.50 Crore to Nextgen for making certain movies. However, on the very same day, out of Rs.27.50 Crore, Nextgen transferred Rs.27.13 Crore to EWW. The relevant extract of the bank statement of Nextgen (IOB- 01990XXXXXXXX21) and SWIFT message is as follows:

50. The fact that the amount paid was never utilized for the intended purpose of production of movies is further corroborated by the remarks mentioned in the aforesaid SWIFT message, wherein it is mentioned that the remittance is part payment towards purchase of theatrical rights.

51. During the investigation, news reports dated December 22, 2022, with the title “Remake of Omkara, Desi Boyz sequel in the works. Upset fans ask ‘why?”, was noted. The articles stated that the movie would be jointly produced by Eros, Anand Pandit and Parag Sanghvi. However, it was noted that an agreement dated April 11, 2014, was already signed between Eros, NextGen and EWW to produce Desi Boyz 2 and in FY 2016-17 Eros had made a payment of Rs. 21.75 Crores to NextGen towards this end. Therefore, vide Summons dated April 21, 2023, Eros was inter-alia advised to provide clarification for payments of Rs.21.75 Cr. to NextGen for Desi Boys 2. 52. In its reply dated April 28, 2023, Eros provided copies of two agreements: one dated April 11, 2014 and the other December 12, 2022. These agreements were entered by Eros for production of Desi Boyz 2 and certain other movies. The first agreement dated April 11, 2014 was entered between Eros, NextGen and EWW, wherein Eros and NextGen were co-producers and EWW was the “Confirming Party” without any role in production of the movie. The second agreement dated December 12, 2022, was entered by Eros with Anand Pandit Motion Pictures LLP and Parag Sanghavi, wherein all the three parties are co-producers.

It was, therefore, noted that Eros has entered into two agreements for same movie. 53. Eros, further, submitted that the aforesaid payment of Rs.21.75 Cr. was made towards pre-production activities i.e. payment to male lead cast, pre-production activities like development of concept, development of script, screenplay, etc. The Company, however, failed to submit any documentary evidence to support this claim. It was also submitted that the production of Desi Boyz 2 with Nextgen had stalled due to the failure of the management of Nextgen and the director to complete the concept development, failure to finalize the screenplay of the film due to certain difference in opinion, change in management of Nextgen and due to Covid. However, as mentioned above, the entire amount paid by Eros was diverted to the overseas promoter of Eros (EWW), overseas connected entity of Eros (Velocity Films Ltd, UK) and utilized for servicing a loan taken by NextGen. It was also noted that change in management of NextGen took place only in September 2019, which was almost five years after entering into the initial agreement, and Covid related restrictions were imposed only in March 2020.

54. Eros also submitted a copy of an arbitration notice dated January 09, 2023, which was sent by Eros to recover monies from NextGen, However, certain inconsistencies were noticed in the aforesaid arbitration notice which is detailed below;  There was no mention regarding payment of Rs.21.75 Cr. in the arbitration notice. The notice demanded a payment of Rs.12.00 Cr. from NextGen, which was a payment made by Eros for Cocktail-2, which was never produced by Eros;  The said notice was sent six years from the date of initial payment and after the initiation of the investigation by SEBI;  The arbitration notice also mentions that the first legal notice for recovery from NextGen by Eros was sent only on September 19, 2022, which was two years after providing for provision for impairment of content advance given to NextGen. 55. Given the above, it appears that the arbitration notice and the legal notice sent by Eros to NextGen were a mere formality and the company appears to not have taken any effective steps for recovering the amounts transferred to NextGen.

Siphoning-off of funds to Overseas connected entities of Eros 56. Investigation has at this stage identified that out of the funds transferred by Eros to CAEs, Rs.14.23 Crore was transferred by these entities to overseas connected entities of Eros, namely. Velocity Films Ltd., UK (Previously known as Silverscreen Films Ltd, UK) and Globus Ent FZE, UAE. The details of their connection with Eros have already been explained in the earlier part of this Order. The details of funds transferred to these entities are given in the Table below:

Table No. 20 Payment made by Eros Utilization by Entity Date of Entity to Amount Bank and Payment Date of Name of Amount payment whom (Rs.) account for utilization entity to (Rs.) by Eros amount number production whom was paid from of movie amount (Bank which was name amount paid and was paid account number) 20.02.2017 Nextgen 1,75,00,000 IOB Desi Boyz 21.02.2017 Velocity 4,38,79,500 (IOB – (01990/72) 2 Films 01990/21) 50,00,000 Untitled – Ltd, UK Nikita Pai (Through 1,00,00,000 Chanda Virgo) Mama Door ke Virgo (IOB – 50,00,000 IOB Aankhein – 01990/58 (01990/72) 2 75,00,000 Kick - 2 Total 4,50,00,000 Total 4,38,79,500 29.04.2016 Virgo 75,00,000 IOB The Real 29.04.2016 Velocity 66,48,000 (IOB – (01990/72) Heroes Films 01990/58) Ltd, UK Total 75,00,000 Total 66,48,000 22.12.2016 Virgo 1,25,00,000 IDBI The Real 23.12.2016 Velocity 1,04,65,000 (IOB – (00041/36) Heroes Films 01990/58 Ltd, UK Total 1,25,00,000 Total 1,04,65,000 28.12.2016 Virgo 2,50,00,000 IDBI The Real 29.12.2016 Velocity 7,31,93,750 (IOB – (00041/36) Heroes Films Ltd, 01990/58 3,00,00,000 Untitled UK 2,00,00,000 Untitled Total 7,50,00,000 Total 7,31,93,750 29.03.2017 Virgo 85,00,000 IOB Cobra 30.03.2017 Velocity 80,97,000 (IOB – (01990/72) Films Ltd, 01990/58 UK Total 85,00,000 Total 80,97,000 Grand Total 14,85,00,000 Grand Total 14,22,83,250 57. Even in this instance, it was noted that neither the CAEs nor their past/present Directors could provide any information regarding the utilization of funds received from Eros. Further, the bank statement analysis revealed that a sum of Rs. 14.23 Cr was transferred to overseas connected entities of Eros. One such instance of transfer of funds is detailed below: On February 20, 2017, Eros made a payment of Rs.3.25 Crore to Nextgen and Rs.1.25 Crore to Virgo for the stated purpose of producing certain movies. It is, however, noted from the bank statements that on the very same day, Nextgen transferred the entire amount received from Eros (Rs.3.25 Cr) to Virgo. Therefore, by the end of the day, Virgo’s account is holding Rs. 4.5 Cr, which has effectively originated from the accounts of Eros, and on the very next day Virgo transfers Rs.4.39 Crore to its connected entity Velocity Films Ltd., UK. The relevant extract of bank statements of Nextgen (IOB- 01990XXXXXXXX21), Virgo (IOB- 01990XXXXXXXX58) and SWIFT message is as follows:

Nextgen (IOB- 01990XXXXXXXX21)

Virgo (IOB- 01990XXXXXXXX58)

SWIFT Message

58. The fact that the amount paid was never utilized for the intended purpose of production of movies, namely Desi Boyz 2, Untitled – Nikita Pai, Chanda Mama Door ke, Aankhein – 2, Kick - 2, is further corroborated by remarks mentioned in aforesaid SWIFT message, wherein it is mentioned that the remittance is an advance payment towards the production of a movie titled Cobra. Diversion of funds to Relatives of Promoters of Eros, i.e. Vikram V Rajani: 59. Investigation so far has revealed that at least Rs.56.73 Crore out of the funds transferred by Eros was ultimately transferred by the CAEs to a relative of the Promoters of Eros i.e. Mr. Vikram V. Rajani (he is brother in law of MD and vice chairman of Eros, Sunil Arjan Lulla). The details of his connection with Eros have already been explained in the earlier part of this Order. To understand the reason for these payments to Vikram V. Rajani, Summons dated March 08, 2023, March 23, 2023, and March 31, 2023, were issued to present and past Directors of Nextgen, including Vikram V. Rajani for personal appearance. However, he failed to appear before SEBI despite being granted multiple opportunities. Further, Vikram V Rajani, vide letter dated March 31, 2023, responded to SEBI’s Summons without providing any reason for his failure to comply with the Summons issued by SEBI. Vide this letter, he inter allia provided a list of movies which were not produced by Nextgen

60. On examination of the ledger of Nextgen in the books of Eros and bank statements of Nextgen, it was noted that in FY2014-15, 2015-16, 2016-17, 2017- 18 and 2018-19, Eros had funded Nextgen for production of certain movies which inter-alia included Phobia 2, Untitled – Sanjay Puran and some other untitled movies. On further analysis of the bank statements of Nextgen, it was noted that instead of utilizing the funds for the intended purpose of production of movies, Nextgen diverted some of the funds to bank account its Director – Vikram V Rajani. The said amount was diverted in 85 transactions on 68 different dates. The details of the diversion of funds to Vikram V Rajani are as follows:

Table No. 21 FY Amount diverted to Vikram Rajani (Rs.) No. of Transactions 2014-15 34,31,41,060 13 2015-16 1,05,42,950 12 2016-17 2,41,56,500 17 2017-18 16,95,92,000 25 2018-19 1,98,42,000 18 Total 56,72,74,510 85

The instances of two such transactions are detailed as follows: Instance -1: On January 10, 2018, Eros paid Rs. 5.25 Crore to Nextgen for three movies, namely Untitled – Sanjay Puran Singh, Untitled – starring Tiger Shroff and HIT. However, on the very same day, i.e. January 10, 2018, Nextgen transferred the entire amount of Rs.5.25 Crore to Mr. Vikram V. Rajani’s personal bank account (HDFC bank account). The relevant extract of bank statements of Nextgen (IOB- 01990XXXXXXXX38) is as follows:

Instance -2: On January 05, 2018, Eros paid Rs. 6.5 Crore to Nextgen for production of movie “Phobia 2”. However, within four days, i.e. on January 09, 2018, Nextgen transferred Rs.6.10 Crore to Mr. Vikram V. Rajani’s personal bank account (HDFC bank account). The relevant extract of bank statements of Nextgen (Yes Bank- 00108XXXXXXXX40) is as follows:

61. The examination of publicly available information revealed that the movies, namely Phobia 2, Untitled – Sanjay Puran Singh, Untitled – starring Tiger Shroff etc., were never produced. This fact was also confirmed by Mr. Vikram V Rajani in his letter dated March 31, 2023, wherein he provided a list of movies which were not produced by Nextgen. Further, the ledger analysis revealed that Nextgen has not refunded or returned this amount to Eros. Diversion of funds to connected entities for making Loan Repayments: 62. It is noted that as per the terms of the agreements entered by Eros with the CAEs, for the co-production of various movies, entire production-related expenses was to be met by Eros. The relevant extract of one of such agreements dated April 11, 2014, entered between Eros, NextGen and EWW is extracted below:

63. However, on analysis of the bank statements of Nextgen and Virgo, it was noted that instead of utilizing the amount for the intended purpose of producing movies, Nextgen/Virgo utilised the funds for servicing loans which had already been availed by them. It was noted that, by following this modus operandi, prima-facie Nextgen/Virgo diverted Rs.111.09 Crore out of the funds transferred by Eros. Two such instances are described below: Instance-1: On January 09, 2017, Eros made a payment of Rs.26 Crore to Nextgen as part-payment for production of four movies (Desi Boyz 2, Untitled Aditya Dutt, Untitled Sanjay Puran Singh and Chanda Mama Door Ke). However, instead of utilizing the said amount towards the production of movies, on the same day, NextGen made payments to its other account maintained with HDFC Bank - account number 054XXXXXXXXX02. On analysis of the said HDFC Bank account statement, it was noted that the said amount was paid by NextGen towards repayment of its loan/OD Limit. The relevant extract of HDFC Bank account of Nextgen is as follows:

Instance-2: On January 11, 2017, Rs. 13 Crores were paid by EIML in the “Indian Overseas Bank Account no. 0199XXXXXXX58” of Virgo, and as per the narration of accounting entries, Rs. 10 Crores was towards an “Untitled Movie” and Rs. 3 Crores was towards a movie named “The Real Heros”. However, on the same day, Virgo instead of using it for production expenses, used the amount for servicing its HDFC, FCNR (B) Loan Account. Further, from the loan sanction letter, it was observed that the said loan was sanctioned to Virgo against the guarantee of EIML. The relevant extract of HDFC bank account of Virgo is as follows:

Diversion of funds to Other Group companies of Eros: 64. Investigation so far has revealed that Eros has siphoned Rs.46.71 Crore to group companies of Eros, namely Eros Television India Private Ltd. and Eros International Films Pvt. Ltd using prima-facie three Content Advance entities as conduit viz. Nextgen, MM and Virgo. One such instance is presented as under: On December 22, 2014, Eros made a payment of Rs. 25.25 Crore to Nextgen (IOB – 0199XXXXXXXXX21) towards payment for the co-production of “Untitled Movie”. However, on the same day, Nextgen diverted Rs. 25 Crore to Eros Television India Private Ltd. The relevant extract of the Nextgen (IOB – 0199XXXXXXXXX21) is as under:

Note: CD3637 account belongs to “Eros Television India Private Ltd. (Formerly known as Eros Green Energy Private Ltd.)

Diversion of funds to potentially connected parties of Eros: 65. During the course of the investigation, certain entities were identified to be connected with Eros. The details of funds diverted to the potentially connected entities to Eros and details of their relationship with Eros are as follows:

Table No. 22 Name of Entity Details of relationship with Eros Content Amount Advance entity Diverted (Rs. through whom in Crore) amount diverted Lahoti Holdings Ltd Lahoti Holdings Ltd is a company owned and Nextgen 4.00 controlled by the family of Vimal Lahoti, who is connected with Eros, Spicy and Thinkink Picturez Ltd. Moonshine Movies Pvt Zoeb Springwala, Director of Moonshine, Virgo 0.48 Ltd was also a Director in Velocity Films Ltd., UK, Zoeb Springwala from March 01, 2013 to January 30, 2020 i.e. Virgo 0.57 the connected entity of Eros. Xfinite Technologies Pvt Anand Shankar Kamtam, the finance Virgo 2.50 Ltd controller of Eros, is the Director of this company Jeewan Commodities Connected to trade receivable entity and one MM Moviez 21.70 Pvt Ltd of the entities which were used for diversion of funds Mediaone Content advance entity Ritestone 30.25 TOTAL 59.50 66. One such instance is presented as under: In January 2016, Eros again made a payment of Rs. 30.25 Crores to Ritestone, which as per the narration in the ledger is “Paid towards 2 Untitled Films”. However, on the very same day of receipt of the amount from Eros, a sum of Rs. 30.16 Crores was transferred by Ritestone to “Mediaone Global Entertainment Ltd” (PNB – 1384XXXXXXXXX20). Further, as per the MCA records, Ritestone has been struck off w.e.f. April 23, 2016. The details of payment by Eros to Ritestone and Ritestone to Mediaone are as under:

Table 23 Company Date of Account no. Amount End Date of Account no. Amount Payment of Eros paid party Diversion of Mediaone diverted (Rs. in (Rs. in Crore) Crore) Eros 02/01/2016 IOB - 0199/ 72 2.50 Mediaone 02/01/2016 PNB - 1384/20 2.50 05/01/2016 2.50 05/01/2016 2.50 06/01/2016 5.10 06/01/2016 5.05 11/01/2016 5.10 11/01/2016 5.10 13/01/2016 5.05 13/01/2016 5.01 14/01/2016 5.50 14/01/2016 5.00

18/01/2016 5.00 18/01/2016 5.00 30.25 30.16 Diversion of funds through multiple layers to connected/unconnected entities by not producing any movie: 67. As mentioned in the above paragraphs, Eros made a payment of Rs.332.00 Crore to 8 entities for the production of movies. However, the ledger analysis of these entities indicated that the Company had not recorded any assets from these entities. 68. The bank statement analysis so far has been carried out for 6 of these entities. The same has indicated that these entities had never utilized the funds for the intended purpose of production of movies, but rather diverted the received funds to some other entities on the very same day of receipt or after a gap of few days. The details of which are as follows:

Table 24 Sl. Entity Name Purpose Amount Total diversion No. diverted for amount each purpose identified so far (Rs. in Crore) (Rs. in Crore) 1 Spicy Payment to Nextgen 0.80 101.23 Trade Receivable entities 15.87 Other Entities not in Media/ Entertainment 84.56 business (Jeewan Commodities Private Ltd., Rainbow Finance India Ltd., GSR Tradefin Pvt. Ltd. K. R. Overseas Pvt. Ltd., etc.) 2. Express Payment to Nextgen 4.38 36.68 Trade Receivable entities 0.25 Payment to promoter of Eros i.e. EWW 3.90 Other Entities not in Media/ Entertainment 28.15 business (K. R. Overseas Pvt. Ltd., Lahoti Holdings Pvt. Ltd., Linkpoint Advisory Private Ltd., Juhi Comotrade Ltd., etc.) 3 Upkar Payment to Nextgen 10.99 29.68 Trade Receivable entities 2.53 Other Entities not in Media/ Entertainment 16.17 business (Ganguly Home Search Pvt Ltd, Affinity Securities Pvt Ltd, etc.) 4 Dil Content Advance entities – Metronet 27.05 27.19 Multimedia Multimedia Private Ltd. and Mediaone Global Entertainment Ltd. Individuals potentially connected to Eros group 0.14 (J Murli Manohar and Timothy Moses) 5 Adarsh Other Entities not in Media/ Entertainment 52.44 52.44 business (Radha Swami Infracon & Engineers Ltd., Welltech Infrabuilders Private Ltd., Ultimate Infrabuild Private Ltd., Uno Infratech Private Ltd., etc.)

Table 24 Sl. Entity Name Purpose Amount Total diversion No. diverted for amount each purpose identified so far (Rs. in Crore) (Rs. in Crore) 6 Encash Other Entities not in Media/ Entertainment 19.22 19.22 business (Radhaswami Infra Con And Engineers Ltd., Innovative Commercial Private Ltd.) TOTAL 266.44

69. It can be noted from the table that around Rs. 23 Cr, which was transferred to CAE, was in turn transferred by them to TREs, which, as stated in the earlier part of this Order, were prima facie observed to be mostly paper entities having no real business operations. This raises the possibility that funds which were transferred by the TRE to Eros actually originated from Eros and were round tripped through CAE to TREs and back to the books of Eros, raising serious questions about the integrity of the financial statements of Eros. It was also noted that significant sums were also transferred to entities connected to the prompters of Eros and to entities that were not engaged in activities related to the entertainment industry, raising further questions about the purpose of these transactions.

70. Given the above, it appears that Eros entered into potentially fictitious agreements with “content advances entities” and a significant portion of the money transferred as content advances was siphoned off/diverted to entities connected to the promoters of the company. Price volume analysis of Scrip: 71. The price movement of the shares of Eros from 01.04.2011 to 31.03.2022 is as under: 700 3000000 600 2500000 500 2000000 400 1500000 300 1000000 200 100 500000 0 0

No.of Shares Close Price

72. It was observed that the price of the share touched a high of Rs. 644.40 on July 20, 2015, and started falling thereafter. It continuously fell and touched a low of Rs. 7.17 on March 24, 2020. It currently trades at a price of Rs. 26.72 (June 21, 2023) per share with a market capitalization of Rs. 251.29 Cr. 73. On examination of promoter shareholding, it was noted that before the price fall, promoter shareholding was 74.41% as on March 31, 2015. Thereafter, it remained more or less in the same range and was 73.34% as on March 31, 2017. Thereafter, as on March 31, 2023, the promoter shareholding stood at 16.25%, i.e. reduction of 57.09% from March 31, 2017. On further examination, it is noted that this reduction is primarily because of the invocation of pledge and on-market sale by EWW. Violation of SEBI Act and PFUTP Regulations: 74. Mr. Sunil Arjan Lulla, the executive Vice Chairman and Managing Director of Eros (Noticee 4), has been associated with the Company since its inception and Mr. Pradeep Dwivedi, Chief Executive Officer (Noticee 5), has been acting as the Group CEO since January 2020. It is therefore noted that Noticee 4 has been part of the management of the Company throughout the period when these alleged transgressions were observed, whereas Noticee 5 was acting as the CEO during the period when the impairment was recognized and substantial questionable related party transactions were observed. EWW (Noticee 2), is one of the promoters of Eros (Noticee 1), and EDPL (Noticee 3), which is controlled by EWW and Sunil Lulla, has been noted to be the potential beneficiaries of the funds diverted from the Company. In view of the same, Noticees 1 to 5 have prima-facie violated Section 12A(a), (b) and (c) of the SEBI Act, 1992 r/w Regulation 3(b), (c), (d), 4(1), 4(2) (f), (k), (r) of SEBI (PFUTP) Regulations, 2003.

SEBI Act, 1992: Sec 12A. No person shall directly or indirectly— (a) use or employ, in connection with the issue, purchase or sale of any securities listed or proposed to be listed on a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of this Act or the rules or the regulations made thereunder; (b) employ any device, scheme or artifice to defraud in connection with issue or dealing in securities which are listed or proposed to be listed on a recognised stock exchange; (c) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognised stock exchange, in contravention of the provisions of this Act or the rules or the regulations made thereunder; SEBI (PFUTP) Regulations, 2003 3. Prohibition of certain dealings in securities No person shall directly or indirectly – (b) use or employ, in connection with issue, purchase or sale of any security listed or proposed to be listed in a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of the Act or the rules or the regulations made there under; (c) employ any device, scheme or artifice to defraud in connection with dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange; (d) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made there under.

4. Prohibition of manipulative, fraudulent and unfair trade practices (1) Without prejudice to the provisions of Regulation 3, no person shall indulge in a manipulative, fraudulent or an unfair trade practice in securities markets. Explanation – For the removal of doubts, it is clarified that any act of diversion, misutilisation or siphoning off of assets or earnings of a company whose securities are listed or any concealment of such act or any device, scheme or artifice to manipulate the books of accounts or financial statement of such a company that would directly or indirectly manipulate the price of securities of that company shall be and shall always be deemed to have been considered as manipulative, fraudulent and an unfair trade practice in the securities market. (2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely: — (f) publishing or causing to publish or reporting or causing to report by a person dealing in securities any information which is not true or which he does not believe to be true prior to or in the course of dealing in securities; (k) disseminating information or advice through any media, whether physical or digital, which the disseminator knows to be false or misleading and which is designed or likely to influence the decision of investors dealing in securities (r) knowingly planting false or misleading news which may induce sale or purchase of securities

Need for Interim Directions: Payments to same content advance entities even after impairment of substantial amount: 75. It was noted during the SEBI investigation that even after the impairment of Rs.1290.15 Cr. of content advances in FY2019-20, Eros making content advances to CAEs even in FY 2020-21, 2021-22 and 2022-23. The details of which are as follows;

Table 26 Name of Entity Amount impaired in FY 2019-20 Amount paid during FY 2020-21 to (In Cr.) 2022-23 (In Cr.) Next Gen Films Pvt Ltd 251.70 40.03 Virgo Entertainment Pvt Ltd 88.23 7.96 Spicy Entertainment and Media Ltd 92.20 5.19 RV Films 163.47 1.82 Total 595.60 55.00 76. As brought out in the preceding part of this Order, out of the funds transferred by Eros to these entities, substantial amounts had been potentially diverted by these entities to related parties of the promoters of Eros and not utilized for the stated purpose for which these funds were transferred. It was also noted during the Investigation based on the analysis of the bank statements and GST registration data, that many of the TREs appeared to be bogus entities having no real business. 77. In view of the same, at the instance of SEBI, a BSE Team made a surprise site visit to the registered office of Spicy Entertainment & Media Limited (a BSE Listed company), situated at “Office No. 12, Block A-3, Cows Ghat Road, Ganges

Garden, Premises No. 106, Shibpur, HMC Ward No. 36, Howrah, West Bengal – 711 102” on April 25, 2023, and submitted a report to SEBI. It is noted from the report that “the registered office was permanently closed and no employee or any other person was there. As informed by local people, the Company’s office remains closed all the time, and once in 2-3 months, it is opened for maintenance purposes.” Along with site visit report, BSE also submitted a video taken at the time of the site visit. The same can be viewed from the following QR Code:

78. It is pertinent to note that soon after the BSE site visit, Spicy made a corporate announcement on May 09, 2023, stating that the registered office of the company has been shifted to “4th Floor, Room No. 421A, 18 Rabindra Sarani, Poddar Court, Kolkata, West Bengal – 700 001”. A BSE team, subsequently, visited the new registered address of Spicy on May 24, 2023. However, again the premises were found to be closed. The video taken at the time of the site visit to the new office of Spicy can be viewed from the following QR Code:

79. It has already been noted in this Order that Eros had transferred Rs.114.04 Crore to Spicy, out of which Rs.92.20 Crore was written off, and no film/rights were recorded in the books of Eros out of Rs.114.04 Crore paid to them. The BSE site visit report and visuals further strengthens the suspicion that Spicy has no actual business operations and is merely a paper company.

80. Further, with respect to two of the other content advance entities viz. Nextgen and Virgo, it is noted that the GST Registration of these entities has been cancelled by the GST department suo-moto. This raises serious doubts about the actual business operations of these entities. Even after the cancellation of GST certificates, the Company has made payments to these two entities. The details of same are as follows:

Table 27 Sr. Content Advance Entity GST Registration Details Payment made by Eros No. Name post cancellation of GST Registration (Rs. In Crore) 1 Next Gen Films Pvt. Ltd GST Cancelled suo-moto by GST 40.90 Department (Effective from 07/01/2020) 2 Virgo Entertainment Pvt. Ltd GST Cancelled suo-moto by GST 22.06 Department (Effective from 27/11/2019) Total 62.96 81. It is also worth highlighting here that in the past, Eros has made payments amounting to Rs. 1107.28 and Rs. 580.20 Crore to Nextgen and Virgo, respectively and out of this, an amount of Rs.325.14 Crore and Rs. 105.26 Crore, respectively, has remained untraceable. Further, during the course of the investigation, multiple instances involving significant amounts have been identified wherein the funds paid by Eros to these entities were potentially diverted by these entities to the overseas promoter of Eros (EWW), an overseas connected entity of Eros, etc. 82. In light of the above, given the fact that Eros continues to transfer funds to these potentially bogus entities, the same raises concerns that the Company is still diverting resources to entities connected to its promoters to the detriment of the public shareholders.

Continuing misrepresentation of financial statements of the Company: 83. NSE, based on an alert generated at the exchange level, examined the books of accounts of Eros for the period FY 21 to FY 23, and submitted their second preliminary examination report in the matter to SEBI vide email dated February 16, 2023. The said report inter-alia pointed out the following: a) Qualified Audit Opinion for FY2021-22 - As per the Standalone Financial Statements, the Company has trade receivables of Rs.406.45 Crore from Eros Worldwide FZ LLC ("EWW"), Rs.86.52 Crore from Eros International Ltd. UK (a fellow subsidiary of EWW) and Rs.28.84 Crore from Eros

International USA Inc. (fellow subsidiary of EWW). Dues from EWW of Rs.325.77 Crore are overdue. As per the management, the net worth of these companies has been eroded, and these companies have incurred losses in the FY 2021-22. Further, EWW has made significant write down in the carrying amount of film content. Statutory Auditors of the Company for FY2021-22 qualified their audit report inter-alia stating that “we are unable to obtain sufficient appropriate audit evidence to comment on the extent of the recoverability of the carrying value of the above receivables and the consequential effects on the loss for the year”. b) More than 95% of Eros’s revenue in FY 2019-20, 2020-21 and 2021-22 was from the aforesaid related parties. c) In FY 2019-20, Eros recorded standalone revenue of Rs.669.00 Cr. and as on March 31, 2020, trade receivables were Rs.525.90 Cr. i.e. 78.61% of revenue. In the subsequent two financial years i.e. FY 2020-21 and FY 2021-22, the revenue of the Company decreased by more than 60%; however, trade receivables increased by more than twice and thrice, respectively. In FY 2020-21 and 2021-22, Eros recorded standalone revenue of Rs.244.50 Crore and Rs.218.68 Crore respectively, whereas trade receivables as on March 31, 2021, and March 31, 2022, were Rs.460.81 Crore and Rs.650.99 Crore respectively, the details of which are as follows:

Table No. 28 (Rs. In Crore) Particulars 2019-20 2020-21 2021-22 Revenue 669.00 244.50 218.68 Trade receivables 525.90 460.81 650.99 Trade receivables (% of revenue) 78.61 188.47 297.69 Trade receivables from related parties 490.12 416.64 605.95 Trade receivables from related parties (% of total trade 93.20 90.41 93.08 receivables) d) In the FY 2019-20, 2020-21 and 2021-22 majority of trade receivables i.e. more than 90%, were from related parties. Trade receivables from related parties majorly include dues from the promoter company of Eros, i.e. Eros Worldwide FZ LLC. The same stood at Rs.378.84 Crore, Rs.351.24 Crore and Rs.406.45 Crore as on March 31, 2020, March 31, 2021, and March 31, 2022, respectively.

e) The Company has mentioned that content advances were written off, amounting to Rs.55.96 Crore in FY2020-21. Provision for doubtful advances stood around Rs.38.07 Crore in FY2021-22.

84. Given the above, I observe that there is sufficient material on record to arrive at a prima-facie finding that the books of accounts of the Company have been overstated and do not present a true and fair picture of the financial health of the Company. The transactions between the “content advance entities” and the “trade receivable entities”, raises the possibility that Eros was circulating funds whereby amounts transferred as content advances were subsequently recognized as revenue by routing it through trade receivables entities. The fidelity of the financial statements of the Company have been rendered a chimera by virtue of these transactions. This coupled with the fact the Company is still advancing funds to entities which have been potentially involved in siphoning off funds to entities related to the promoters, makes it imperative for SEBI as the market regulator to take action in the interest of the public shareholders of the Company. I also note that most of the TREs and CAEs and their directors failed to cooperate with the SEBI investigation. This recalcitrant and refractory action by entities suspected of siphoning off public funds needs to be dealt with firmly. 85. The potential transgressions, observed during the investigation, dates back to FY 2012. The Board of Directors and the Audit Committee should have been vigilant enough to sound the alarm when they saw flags so red they are downright crimson. The apparent failure of the Board of Directors and the Audit Committee can at best be termed callous and at its worst may indicate a complete abdication of responsibilities and granting a free run to the promoters. The investigation, I therefore note, should enquire into apparent failure of the Board and the Audit Committee to take steps to protect the interests of the shareholders. 86. In light of the foregoing, I am of the view that 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.

Order:

87. Keeping in view the foregoing, I, in exercise of the powers conferred upon me under Sections 11, 11(4) and 11B (1) read with Section 19 of the SEBI Act, 1992, hereby issue by way of this interim order the following directions, which shall be in force until further orders: - a) Noticee 4 is restrained from holding the position of a director or a Key Managerial Personnel in any listed company, including Eros, or its subsidiaries or any SEBI registered intermediary until further orders. b) Noticee 5 is restrained from holding the position of a director or a Key Managerial Personnel in any listed company other than Eros or any SEBI registered intermediary until further orders. c) Noticees 1 to 5 are restrained from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever until further orders. If the said Noticees have any open position in any exchange-traded derivative contracts, as on the date of the order, they can close out /square off such open positions within 3 months from the date of order or at the expiry of such contracts, whichever is earlier.

The said Noticees are permitted to settle the pay-in and pay-out obligations in respect of transactions, if any, which have taken place before the close of trading on the date of this order. d) Noticee 1 shall provide a detailed report to SEBI including details of end-to-end utilization of content advances paid by it to 18 “content advances entities” within 30 days from the date of passing of the order. e) The Depositories are directed to ensure that till further directions, no credits or debits are made in the demat accounts of Noticees, held individually or jointly. f) The Registrar and Transfer Agents are also directed to ensure that till further directions, the securities/mutual funds units held in the name of the Noticees, individually or jointly, are not transferred/redeemed. g) BSE is directed to appoint a forensic auditor to examine the books of accounts of the three exclusively BSE listed companies, namely Thinkink Picturez Ltd., Mediaone Global Entertainment Ltd. and Spicy Entertainment and Media Ltd., who prima facie acted as conduits in the alleged misrepresentation/diversion of funds by Eros.

The forensic auditor/ audit firm so appointed shall verify, inter alia, the following – i) Manipulation of Books of Accounts; ii) Misrepresentation, including of financials and/or business operations; iii) Wrongful diversion/siphoning of company funds; iv) The genuineness of business operations of these companies; v) Any other related matter. h) The forensic auditor/ audit firm so appointed as per this Order shall submit a Report to BSE within three months from the date of this Order. BSE shall submit the forensic audit report (including all annexures) along with its recommendation within 15 days from the date of receipt of the forensic audit report. 88. The foregoing prima facie observations contained in this Order are made on the basis of the material available on record. The concerned Noticees may, within 21 days from the date of receipt of this Order, file their reply/objections, if any, to this Order and may also indicate whether they desire to avail an opportunity of personal hearing on a date and time to be fixed in that regard. 89. This Order is without prejudice to the right of SEBI to take any other action against the Noticees in accordance with law.

90. The above directions shall take effect immediately and shall be in force until further orders. 91. A copy of this order shall be served upon Entities, Stock Exchanges, Registrar and Transfer Agents and Depositories for necessary action and compliance with the above directions.

DATE: JUNE 22, 2023 ASHWANI BHATIA PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA