Zee Entertainment shares plunge 7% to new 52-week low amid high volume. Here's why

Shares of ZEE Entertainment Enterprises (ZEEL) on Tuesday plunged 7 per cent to hit a fresh 52-week low amid high volumes amid concerns over merger with Sony after Sebi's recent order against Subhash Chandra and Punit Goenka. 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, siphoning off funds for their own benefit.

To recall, ZEE Entertainment and Sony Picture Networks India had in December 2021 announced a definitive agreement for merger, which was largely similar to the non-binding agreement signed in September 2021. As per the definitive agreement, Sony would have hold 50.86 per cent, Essel Group 3.99 per cent and public shareholders 45.15 per cent stake in the merged company. As per the deal, Punit Goenka would have been the MD & CEO of the merged company and that the Essel Group’s was allowed to take its stake in the company potentially to 20 per cent from 4 per cent over time subject to regulatory approvals.

But Sebi has now barred Subhash Chandra and Punit Goenka from being directors or key management personnel in any listed firm. ZEE Entertainment Enterprises is listed on both BSE and NSE. ZEE Entertainment shares fell 6.71 per cent to hit a one-year low of Rs 172.85 on BSE. The stock is down 27 per cent year-to-date.

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On NSE, the stock saw 2.46 crore shares worth Rs 439 crore changing hands so far. On the other hand, a total of 21.52 lakh ZEEL shares changed hands on BSE against a two-week average of 6.96 lakh shares.

In 2019, two independent directors of ZEEL resigned 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. 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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