Today we intend to provide support for longstanding questions posed by short sellers relating to Eros’s potentially misleading accounts receivables. Eros has consistently maintained a large uncollected accounts receivables balance which has indicated at the very least that the company has unusual difficulty in collecting its revenue. At worst, the balance could be indicative of illegitimate revenue transactions or ‘round tripping,’ a means of boosting the operating metrics of a company without ultimately providing any real economic benefit.

With this report, we intend to update the market on our findings following Eros’s (NYSE:EROS) latest annual results released on July 28th and the company’s 20-F filing released on July 31st. Much of the market seemed focused on Eros’s top line and bottom line miss and how the results tarnished the company’s growth story. Despite those important takeaways, we believe the full story is significantly worse.

We have uncovered details of highly irregular related-party transactions. For example, Eros has directed $153 million to a supposed production company based in tiny office located in what looks to be a rehabilitated Mumbai slum. The entity is operated by the brother-in-law of Eros’s Chairman and CEO. We have also documented what we believe to be multiple undisclosed related-party transactions that appear designed to hide receivables.