Eros International Media saw its shares plunge nearly 20% after the Securities and Exchange Board of India (SEBI) barred the media and entertainment firm, along with its managing director (MD) Sunil Arjan Lulla and chief executive officer (CEO) Pradeep Kumar Dwivedi, from the securities markets on Thursday for accounting irregularities.

SEBI said in a 53-page interim order that the company’s books of accounts had been overstated and did not present an accurate and fair picture of its financial health. The order followed an investigation conducted by SEBI into the company’s affairs after receiving a preliminary examination report (PER) from the NSE.

It was noted in the PER that revenue from operations, trade receivables, and loans given by Eros International mainly comprised related party transactions, and the same had increased substantially in FY 2019-20.

According to the interim order, Lulla and Dwivedi have been further prohibited from holding the position of a director or key managerial personnel in any listed company, including Eros International or its subsidiaries, until further orders. The market regulator also restrained the two promoter entities, Eros Worldwide FZ LLC and Eros Digital Private Ltd. 

The regulator has directed the Bombay Stock Exchange (BSE) to appoint a forensic auditor to examine the books of accounts of the three exclusively BSE-listed companies who, prima facie, acted as conduits in Eros’s alleged diversion of funds – Thinkink Picturez, Mediaone Global Entertainment, and Spicy Entertainment and Media Ltd. The forensic auditor will submit the report to the exchange within three months. 

Shares of Eros Media were trading at Rs 21.10 at 02:40 pm on the NSE, 19.92% lower from the previous close.