ZEE Entertainment shares plunge 6% as Sebi bars Punit Goenka, Subhash Chandra from holding key posts

Shares of ZEE Entertainment Enterprises (ZEEL) plunged 6 per cent in Tuesday's trade after Sebi barred Subhash Chandra and Punit Goenka from being directors or key management personnel in any listed firm. Goenka is the MD and CEO while Chandra is the Chairman Emeritus at the media firm. Chandra is also the Chairman at Essel group. Chandra and Goenka allegedly abused their positions in the company and siphoning off funds for their own benefit.

To recall, two independent directors of ZEEL resigned in November 2019 after raising concerns over several issues, including appropriation of certain fixed deposit of ZEEL by YES Bank for squaring off loans of related entities of Essel group. The interim order by the capital markets regulator comes on the back of an investigation into such allegations.

ZEE Entertainment shares declined 6.28 per cent to hit a low of Rs 182.60 on BSE. The stock, however, recovered and was later traded at Rs 188.25, down 3.39 per cent. With this, the stock is down 23 per cent in 2023 so far.

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According to the Sebi probe, Chandra, the then chairman of ZEEL/Essel Group, had provided a ‘Letter of Comfort’ (LoC) towards credit facilities availed by certain group companies from YES Bank. The LoC was known only to a few persons in the management and even the board of ZEEL was not aware of the letter, the Sebi order read.

On the basis of the LoC, YES Bank adjusted fixed deposit of Rs 200 crore of ZEEL for meeting the obligations of seven entities – associate entities, as per Sebi order -- which, in turn, were found to be owned/controlled by family members of Chandra and Goenka, as per the Sebi probe.

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