Eros Intl hires US law firm for independent internal review

Entertainment firm Eros International today said it has engaged a US-based law firm to conduct an independent internal review in the wake of an anonymous campaign spreading "false and malicious information" that has negatively impacted the company's share prices.
"In the past two weeks, there has been a vicious campaign to damage the credibility of Eros International by spreading false rumors and misinformation regarding its business with an objective to create panic amongst the investor community," the company said in a statement.
Stating that the company is "confident in our business fundamentals", it said no new facts about it have come to light since the filing of the FY2015 financials or its Q1 FY2016 financials at which time the market sentiment was extremely positive.

"Our Audit Committee has engaged the US law firm Skadden, Arps, Slate, Meagher & Flom LLP to conduct an independent internal review and also to advise us on related matters," it added.
Commenting on the increase in receivables, which have reportedly come under question from a section of investors, the company said its revenues from FY2014 to FY2015 increased by 20.7 per cent from USD 235 million in FY2014 to USD 284.2 million in FY2015.
"On its own, this increase in revenues accounts for approximately USD 50 million of the overall increase in receivables.

"Additionally, in FY2015 the company disclosed that it had renegotiated and given extended payment terms to customers amounting to USD 31.2 million of receivables," it said.

The increase in revenues combined with receivables having extended payment terms, substantially explains the jump in overall receivables from FY2014 to FY2015, it added.
"As at March 31, 2015, USD 6 million of the company's total receivables were over 12 months old and USD 160.5 million of receivables, including USD 31.2 million of renegotiated contracts, were not due," Eros International said.
The company's target is to bring the overall receivables down from USD 209 million as of FY2015 to USD 150-160 million by the end of FY2016.
On UAE transactions, which have been reportedly questioned by investors, it said: "Many sub-distributors exploiting Indian content in international territories have companies set up in UAE, British Virgin Islands or similar tax-friendly jurisdictions.

"The geographic reported revenue in accordance with IFRS as per company or customer domicile does not always represent the end market where the content is being consumed.