- India’s Income Tax Department began searches at Prime Focus offices in Mumbai on October 7, 2026, reportedly focusing on overseas transfers.
- Prime Focus shares fell as much as eight percent; the company said operations continued and it was cooperating.
- Investigators have not identified the transfers or announced findings; the searches do not establish wrongdoing.
The Income Tax Department began searches at Prime Focus Limited’s Mumbai offices on October 7, 2026, in an operation reportedly focused on overseas transfers. The Ramayana producer confirmed the searches. They began Wednesday morning.
Investigators also examined premises linked to people associated with the company, according to reports on the operation. The reported focus was foreign remittances, or transfers of money from India to other jurisdictions.
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Prime Focus shares fell as much as 8% after news of the action became public. The company told stock exchanges that its business continued without disruption and that it was cooperating with the department.
It also said it had received no communication about a tax demand or findings at that stage. The searches alone do not establish wrongdoing.
Investigators have not identified the transfers under review
Reports said the searches were still underway on October 7. Public accounts of the operation did not identify the transactions, their values, the individuals searched or the tax provisions investigators may be examining.
One account said the action followed documents and evidence gathered during searches the previous week at locations linked to film personalities and production companies. Investigators were reportedly examining financial records, the purpose of transactions, overseas transfers and possible tax evasion or other financial irregularities. Those remain lines of inquiry, not findings.
A chartered accountant connected with Prime Focus was also reportedly searched. The accountant and the other individuals whose premises were examined were not publicly named.
The department has not announced a conclusion on the matter. Any tax liability would depend on its findings and any subsequent proceedings.
The stock fell sharply during morning trading
Market reports recorded several measures of the decline during the session. The share price reached an intraday low of about ₹265.
| Trading measure | Reported figure |
|---|---|
| Fall after the searches became public | 8% |
| Decline at 10:11 a.m. IST on October 7 | 8.1% |
| Intraday low and reported fall from the previous close | ₹265; about 9% |
| Gain during 2026 before the decline | 17% |
The shares surrendered the previous day’s gains and ended a three-day losing streak in the context of the report. The intraday low represented a steeper fall than the decline recorded at 10:11 a.m.
Overseas revenue is substantial, but it does not prove a tax violation
Prime Focus’s investor information showed that 92% of its revenue came from markets outside India. The Mumbai-based company works across visual effects, animation, post-production and content production, alongside its film business.
Its overseas operations make international payments part of its business context. But the revenue split does not show that ordinary company remittances were connected to the search, or that any transfer breached tax rules.
The reported inquiry concerns the purpose and treatment of particular transactions, but those transactions have not been publicly detailed. The company said it was cooperating with the department.
The operation comes ahead of the first Ramayana film
Prime Focus Studios is producing the two-part mythological film associated with founder Namit Malhotra. The project is being made with DNEG and Monster Mind Creations; DNEG is handling its visual effects.
Nitesh Tiwari is directing the film. Its principal cast includes Ranbir Kapoor, Sai Pallavi, Yash and Sunny Deol.
Naresh Malhotra is the company’s Chairman Emeritus and Whole-time Director. Namit Malhotra is the founder and the producer associated with the project through Prime Focus Studios.
The searches arrived about a month before the reported Indian theatrical opening of the first instalment. It is scheduled for November 5, 2026, during the Diwali period, with the second part planned for Diwali 2027.
Earlier corporate cases had different outcomes
Prime Focus also faced separate regulatory and insolvency proceedings during 2026. In June, the Securities and Exchange Board of India closed adjudication proceedings involving the company and its directors, after concluding that the accounting treatment and disclosures under review did not amount to misleading financial statements or accounting irregularities.
The insolvency case began with a ₹353.79 crore claim from Reliance Alpha Services Pvt. Ltd. The National Company Law Tribunal admitted proceedings on that claim.
In July, the National Company Law Appellate Tribunal set aside the admission order and approved a settlement. Prime Focus then disclosed that its Corporate Insolvency Resolution Process had closed.
There was no immediate indication that the income-tax operation was linked to either the SEBI matter or the insolvency case. The October searches remain an investigation, not a confirmed assessment, prosecution or finding of tax evasion.
The first Ramayana instalment is due in Indian theaters on November 5, 2026. The planned second part is set for Diwali 2027.
