The case stemmed from SEBI's investigation into two intra-group business transfer transactions undertaken in FY20 and FY22. The regulator had alleged that the accounting treatment adopted for the transactions inflated profits and net worth, resulting in misleading financial statements.
In its final order, SEBI held that the allegations were not established. The adjudicating officer noted that the accounting provisions cited in the show-cause notice applied to the acquiring entity, while Prime Focus was the transferor in the transactions.
The regulator also observed that the company had followed the correct accounting treatment in its standalone financial statements and found no evidence that gains from the intra-group transactions remained in the consolidated financial statements after mandatory eliminations.
As the primary allegations against the company were not established, the related charges against its promoters, directors, audit committee members and chief financial officer also did not survive.
Accordingly, SEBI disposed of the adjudication proceedings initiated through a show-cause notice issued in December 2023.
Prime Focus is engaged in the business of post-production activities including digital intermediate, visual effects, 2D to 3D conversion and providing complete solutions in terms of other technical and creative services to the media and entertainment industry.
On a consolidated basis, Prime Focus reported net profit of Rs 82.35 crore in Q4 March 2026 as against net loss of Rs 230.97 crore in Q4 March 2025. Net sales rose 42.20% YoY to Rs 1375.47 crore in Q4 March 2026.
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