![Zee board reviewing Sebi order on Subhash Chandra, Punit Goenka; Share price crash 7% Zee board reviewing Sebi order on Subhash Chandra, Punit Goenka; Share price crash 7%](https://images.cnbctv18.com/wp-content/uploads/2023/06/ZEEL-stock-1-1019x573.png?impolicy=website&width=590&height=264)
Shares of ZEE Entertainment Enterprises Ltd (ZEEL) tumbled as much as 7 percent in Tuesday's trade after capital markets regulator Securities and Exchange Board of India (Sebi) barred company's promoters Subhash Chandra and Punit Goenka from being directors or key management personnel in any publicly listed company. At 10:43 am, the scrip was trading 1.41 percent lower at Rs 192.10 per share on the NSE.
The stock opened 4 percent lower at Rs 185 apiece on Tuesday and went on to hit an intra-day low of Rs 182 level. ZEEL shares have gained 1.24 percent in the last one month, while it fell 21 percent on a year-to-date basis.
The company's board is reviewing the detailed order by Sebi and seeking legal advice in order to take the next steps as required, said Zee Chairman R Gopalan, adding that appropriate action will be taken in the interest of the company and shareholders.
Here's Zee Chairman's official statement —
The Board of Directors of Zee Entertainment Enterprises Ltd (ZEEL) has noted the interim ex-parte order issued by the Securities and Exchange Board of India (SEBI), with respect to Dr Subhash Chandra and Punit Goenka. The Board is currently in the process of reviewing the detailed order, and appropriate legal advice is being sought in order to take the next steps as required.
With a singular focus on enhancing the shareholder value year after year, the Board of the Company has continued to guide the management towards its strategic goals and priorities for the future.
All the appropriate steps will be actioned as necessary, in order to ensure that the interest of the Company and all its valuable shareholders is kept at the forefront.
The Board recognises the significant contribution made by Subhash Chandra as the founder of the company and the growth and value generation centric leadership showcased by Punit Goenka. The Board is confident that the company, will continue to achieve the set goals for the future and most above, create value for all stakeholders.
Sebi order on Subhash Chandra, Punit Goenka
In its interim order, Sebi has said it banned Essel Group chairman Subhash Chandra and ZEE CEO Punit Goenka from holding a director or key managerial position in any listed company or its subsidiaries until further orders.
The move came on alleged abusing of positions by Chandra and Goenka in the firm and siphoning off funds for own benefit.
To recall, two independent directors of ZEEL resigned back in November 2019 after raising concerns over multiple issues, including appropriation of certain fixed deposit of ZEEL by Yes Bank for squaring off loans of related entities of the Essel group. The interim order by Sebi comes on the back of a probe into such allegations.
"The Noticees alienated the assets of ZEEL and other listed companies of Essel Group for the benefit of associate entities, which are owned and controlled by them. The siphoning of funds appears to be a well-planned scheme since, in some instances, the layering of transactions involved using as many as 13 entities as pass-through entities within a short period of two days only," the Sebi order read. The associate entity it referred to is Shirpur Gold Refinery.
The market regulator noted that there were no processes and structures inside ZEEL to stop poor governance practices and that the flagship company "used like a piggybank by the Noticees (Chandra and Goenka)".
The investigators pointed to the share price of ZEEL declining from Rs 600 to Rs 200 over FY19 to FY23, despite the firm being so profitable, and said it showed that "all was not well with the company". It added, that during the period, the promoter shareholding dropped from 41.62 percent to the current level of 3.99 percent.
(Edited by : C H Unnikrishnan)
First Published: Jun 13, 2023 11:06 AM IST
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