Adjudication Order in the matter of Prime Focus Limited.

What is this order about?

SEBI issued an order against Prime Focus Limited and its officials for allegedly misstating financials by selling business divisions to subsidiaries under common control, inflating profits and net worth during FY 2019-20 and FY 2021-22.

Who it concerns

Prime Focus Limited, Naresh Malhotra, Namit Malhotra, Ramakrishnan Sankaranarayanan, Nishant Avinash Fadia, Rivkaran Singh Chadha, Kodi Raghavan Srinivasan, Padmanabha Gopal Aiyar, Samu Devarajan

What was found or directed

• SEBI found Prime Focus Limited and its officials failed to comply with SEBI Act, PFUTP Regulations, and LODR Regulations
• PFL sold VFX business division to DCSL (90.29% subsidiary) in FY 2019-20, showing ₹200.27 crore gain
• PFL sold post-production services to DIMSL (90.29% subsidiary) in FY 2021-22, showing ₹250.20 crore gain
• SEBI observed transactions between entities under common control violated accounting standards
• PFL received ₹224.48 crore from DIMSL post-investigation initiation
• SEBI rejected settlement application filed by PFL on March 11, 2026

Points worth noting

• PFL's reported profit for FY 2021-22 increased by 618% due to the sale transaction
• 79.10% of funds received from DIMSL were post-investigation initiation
• Transactions involved entities under common control (90.29% subsidiary with same promoters)