SEBI Finds Mediaone Global Entertainment Ltd. and Directors Guilty of Fund Diversion, Financial Manipulation

SEBI Finds Mediaone Global Entertainment Ltd. and Directors Guilty of Fund Diversion, Financial Manipulation​

The Securities and Exchange Board of India (SEBI) has concluded an investigation into M/s. Mediaone Global Entertainment Ltd. (MGEL), finding the company and several directors guilty of systematic financial manipulation, fund diversion, and failure to pay declared dividends over multiple financial years. The SEBI Order directed MGEL to recover ₹99.48 crore diverted funds and transfer ₹6,17,73,168 to the Investor Education and Protection Fund (IEPF).

The investigation examined allegations related to transactions between MGEL and entities including Eros International Media Limited (EIML), Ritestone Solutions Private Limited (RSPL), Metro Films Private Limited, Metronet Multimedia Pvt. Ltd., and Shan Global Manufacturing & Trading Pvt. Ltd., alongside the management of financial statements across various periods.

Key Findings of Financial Misconduct​

The investigation revealed a sustained pattern of financial irregularities by MGEL, culminating in serious violations across multiple financial years (FY2013-14 to FY2024-25).

Financial Statement Manipulation:

• MGEL was found to have manipulated its books of accounts by reflecting fictitious non-current liabilities for eleven consecutive years, sustaining a closing balance of approximately ₹59.96 crore related to EIML, starting from FY2013-14 onwards (Table-13).
• The company committed systematic financial misstatements and fraud, including recording fictitious revenue and purchases during the period spanning FY2013-14 to FY2015-16. This accounted for a total of ₹143.05 crore in fictitious revenue against a total recorded revenue of ₹296.44 crore (48.26% fictitious), with losses amounting to ₹173.54 crore out of the total purchases of ₹198.85 crore being fictitious (87.27%).
• For the period FY2022-23, FY2023-24 and quarters ending June 2024 and September 2024, MGEL recorded fictitious revenue totaling ₹47.67 crore out of a total recorded revenue of ₹65.29 crore (73.01% manipulated).

Fund Diversion and Fictitious Transactions:

• MGEL diverted funds amounting to ₹99.48 crore back to EIML, either directly or through intermediary entity Metronet Multimedia Private Limited. This was established by tracing fund flows showing funds transferred from EIML to MGEL being routed back immediately, sometimes on the same day (Table-12).
• The investigation determined that revenue of ₹72.05 crore recorded with Ritestone Solutions Private Limited and ₹25 crore with Metro Films during FY2014-15 were fictitious entries, lacking commercial substance and supporting documentation. This was found through examination of transactions with connected entities.

Dividend Misappropriation:

• MGEL failed to pay declared dividends for Financial Years (FY) 2010-11 and FY2011-12 (amounting to ₹1,18,07,280 and ₹1,17,76,000 respectively).
• The company later reversed this unpaid dividend liability as 'other income' in FY2021-22, which was determined to be a fictitious income entry.

Directives Issued by SEBI​

SEBI issued orders against the Noticees (the Company and its Directors/CFO), directing them to:

• Fund Recovery: MGEL is directed to take necessary steps to recover ₹99.48 crore diverted from EIML, along with interest at 12% per annum from the date of diversion, and restore it to the books within three months of the order.
• IEPF Transfer: MGEL must transfer a total of ₹6,17,73,168 (comprising dividend of ₹2,31,46,149 and interest) to the Investor Education and Protection Fund (IEPF) within one month.

Penalties and Restraint​

The SEBI Order imposed monetary penalties on the Noticees based on the nature and frequency of violations:


The order also imposed restrictions on the securities market for MGEL and several directors/KMPs:

• MGEL: Restricted from being associated with the securities market in any manner for a period of three years.
• Suryaraj Kumar (MD): Restricted from associating with the securities market for a period of three years.
• J Murali Manohar and K Sai Prasad: Restricted from associating with the securities market for a period of two years.
• M Srinivas Kumar (CFO): Restricted from associating with the securities market for a period of two years.

Director Accountability​

The investigation found that directors and Key Managerial Personnel (KMPs) were complicit in the misconduct:

• Mr. Suryaraj Kumar (MD): Found to have abused his position by diverting company funds and misrepresenting financial statements, thus defrauding shareholders.
• Mr. J Murali Manohar (Ex-Director): Found to be the "driving force" behind the affairs of the Company and involved in devising a scheme for manipulation and fund diversion through non-genuine agreements with UK entities.
• Mr. K Sai Prasad (Whole Time Director): Alleged to have misrepresented his role as an Independent Director, actively participating in executive functions, including representing the company before SEBI and approving financial statements containing manipulative entries.
• Mr. M Srinivas Kumar (CFO): Found to have failed in his duties by certifying financial statements that contained fictitious revenue and misstated liabilities.

The Audit Committee was also deemed to have violated regulations, as it failed to meaningfully scrutinize the severe irregularities—including the reversal of long-outstanding dividend liability and sudden recognition of revenue from non-genuine UK entities—despite having oversight responsibility for these matters (Table-2).

Stock Price Movement​

Mediaone Global Entertainment Ltd. shares are ticking up at ₹15.29, gaining 2.96% as of 15:20; throughout the trading session, the stock moved between a low of ₹14.11 and an intraday high of ₹15.40.