Income tax officials search Prime Focus offices, weeks before 'Ramayana' hits theaters

Highlights:

• The Income Tax Department reportedly searched Prime Focus Ltd's Mumbai offices on Wednesday, October 7
• Reports citing CNBC-TV18 say the searches relate to foreign remittances
• Prime Focus shares slid roughly 8% during the day
• No detailed statement has come from the department or the company
• Ramayana: Part One is due in early November, with Part Two set for Diwali 2027

Wednesday morning in Mumbai started with an unwelcome visit for one of Bollywood's most closely watched producers. Income Tax officials reportedly arrived at the offices of Prime Focus Ltd, the company Namit Malhotra founded and leads, and began a search that, according to several reports, also touched people connected to the firm.

The reason, as reported by CNBC-TV18, is foreign remittances: money sent out of India to overseas destinations. That's about as far as the public information goes. How wide the inquiry is, how long it will run and what officials are looking for haven't been spelled out. Prime Focus hasn't issued a detailed response, and neither has the department. A search, to be clear, is a step in an investigation. It isn't a finding of wrongdoing.

Investors reacted before anyone explained anything

The stock market didn't wait for details. Prime Focus shares dropped about 8% intraday as the news spread. That stings for a stock that had been up around 17% for the year. The company had also reportedly received some good news on the regulatory front in June, when SEBI is said to have closed adjudication proceedings over accounting treatment and financial disclosures without finding irregularities.

For a listed media company, even the possibility of a tax probe is enough to make traders nervous, and Wednesday's move showed it.

The company and its biggest bet

Malhotra started Prime Focus in the late 1990s and grew it into a global visual effects and post-production business. The group's reach includes DNEG, the effects house with eight Academy Awards behind it and credits like Dune and Inception. A good chunk of the business reportedly comes from overseas clients, which is part of why the foreign remittance angle is drawing attention.

Ramayana is the project Malhotra has pushed hardest. It's produced by Prime Focus Studios with DNEG and Yash's Monster Mind Creations, and it's split into two films. Ranbir Kapoor plays Rama, Sai Pallavi is Sita and Yash plays Ravana, with Sunny Deol, Ravie Dubey and Rakul Preet Singh (as Surpanakha) also in the cast. Reported budget figures run as high as ₹4,000 crore, though the makers haven't confirmed a number.

A busy few days around the set

The timing is awkward in other ways too. A minor fire was reportedly spotted near the Ramayana set at Prime Focus Studios in Mumbai only days ago. One report also noted income tax action at premises linked to producers Vashu Bhagnani and Kumar Mangat Pathak shortly before this, though nothing connects those cases to Prime Focus.

What happens to the release

For now, nothing in the reports points to a change in plans. The first part is expected in theaters in the first week of November, with outlets citing November 5 and November 6. The trailer, which came out in late July, got a mixed response, with some viewers questioning the CGI and character designs even as others praised the scale.

The second part is scheduled for Diwali 2027. Whether Wednesday's search turns into a bigger story or fades quietly will depend on what Prime Focus and the department say next.