2 former directors of ZEEL flagged issues; co says matter discussed, acted upon

Two former directors of Zee Entertainment - Subodh Kumar and Neharika Vohra - who resigned from its board, had raised concerns over several issues, including Rs 2,200 crore film advance given in 2018-19, according to a regulatory filing by the firm.

They also had flagged the issue of no action on large outstanding from group firms Dish TV and Siti Cable for content. The company, however, said its Board of Directors have noted that all of the issues raised by the resigning directors have been duly discussed, deliberated and acted upon from time to time in the previous committee/ board meetings in which the said directors were also present.

On Monday Zee Entertainment Enterprises Ltd (ZEEL) had announced that Independent Directors Neharika Vora and Sunil Sharma along with Non-Independent Director Subodh Kumar have resigned. ZEEL said Sharma had informed that his resignation followed the sale of shares by the promoter group and reconstitution of the board.

On the other hand, Vohra and Kumar raised many issues and cited them as reasons for their resignation from the board. According to a BSE filing by ZEEL, the two directors flagged the issue of "film advances given in 2018-19 to the tune of Rs 2,200 crore", to which the company responded by saying the information has already been disclosed in its annual report and clarified in various investor interactions.

Kumar and Vohra also raised the matter of "a scheduled bank" appropriating "Rs 200 crore of the company's fixed deposits towards promoter loans and the management did not take legal action".

ZEEL, however, said issues pertaining to the wrongful revocation of the bank guarantee stand resolved with the company having being secured by the promoter companies and appropriate legal notices were sent to the bank at the relevant time.

The two directors also stated that no action was taken on large outstanding from Dish TV and Siti Cable for the content supplied by ZEEL. The company, however, said, "the same has been secured by definitive plan and situation is being strictly monitored as instructed by the Board and also discussed in various analyst calls".

They also raised the issue of non-implementation of the certain decision of the board meeting held on October 17, 2019, relating to treasury operations, to which ZEEL said it is "exploring options to withdraw these deposits in a phased manner without affecting the long term relationship with these banks".

Vohra and Kumar also alleged "laxity in spending of CSR amounts given to a related party foundation/trust" but the company said CSR funds have been allocated in compliance with the law and necessary certification was obtained.

The two directors also brought up the matter of a bank writing to all directors in October 2019, that a subsidiary of the company had guaranteed the repayment of certain loan given by the bank to a related party.

ZEEL said it has a "legal opinion to state that the Company is not liable and in any event, there has been no enforcement of the 'guarantee' by the bank, other than to write letters, including to all the directors".

In their reasons for resignation, Vohra and Kumar also highlighted a matter relating to a "letter received from a PMS (Portfolio Management Services) entity holding preference shares of the company raising questions regarding the build-up of related party balances and advances for content acquisition".

To this, ZEEL said, "Audit of the issues pertaining to related party transactions and advances is underway by auditors". In the regulatory filing, ZEEL said the company, "while accepting the resignations and intimating the exchanges about the same, has discussed the same in detail in the board meeting held on November 25, 2019".

The issues raised by the resigning directors have been duly discussed, deliberated and acted upon from time to time and disclosed in the public domain in financial statements and investor calls which are available on the company website, ZEEL said.