Active Stocks
Mon Apr 15 2024 11:04:03
  1. Tata Steel share price
  2. 163.80 0.18%
  1. ITC share price
  2. 426.60 -0.81%
  1. Tata Motors share price
  2. 1,002.60 -1.55%
  1. State Bank Of India share price
  2. 758.65 -1.06%
  1. Wipro share price
  2. 465.80 -1.08%
Business News/ Companies / News/  Zee Entertainment faces setback as SEBI reveals 2,000 crore fund diversion
BackBack

Zee Entertainment faces setback as SEBI reveals ₹2,000 crore fund diversion

SEBI investigation reveals potential fund diversion of ₹2,000 crore from Zee; founders summoned for explanations as regulatory challenges intensify.

File image of Punit Goenka, MD and CEO of Zee Entertainment Enterprises in Mumbai. SEBI has summoned senior officials, including founders Subhash Chandra, Goenka, and board members, to provide explanations. (Photo by Abhijit Bhatlekar / Mint)Premium
File image of Punit Goenka, MD and CEO of Zee Entertainment Enterprises in Mumbai. SEBI has summoned senior officials, including founders Subhash Chandra, Goenka, and board members, to provide explanations. (Photo by Abhijit Bhatlekar / Mint)

India's market regulator, the Securities and Exchange Board of India (SEBI), has unearthed a financial discrepancy exceeding $240 million or around 2,000 crore in the accounts of Zee Entertainment Enterprises, Bloomberg reported. This comes as another setback for the beleaguered media firm, occurring within a month of the collapse of its merger with Sony Group Corp's India unit.

As part of its investigation into Zee founders, SEBI has disclosed that approximately 2,000 crore ($241 million) may have been redirected from the company. This amount is nearly ten times more than SEBI investigators initially estimated.

Also Read | Watch: SpaceX Falcon 9 completes its 300th mission, Elon Musk is elated

Pending Review and Company Responses

The identified sum is not final and may change SEBI's review of responses from company executives. The regulator has summoned senior officials, including founders Subhash Chandra, his son Punit Goenka, and certain board members, to provide explanations.

SEBI's spokesperson did not respond to email queries from Bloomberg and Reuters.

Meanwhile, a Zee spokesperson, while declining to comment on the fund diversion, told Bloomberg via email that the company is actively cooperating with the market regulator's ongoing probe.

Also Read | JSW, Tata Steel, ACC bid for coal mines

Impact on Zee CEO and Merger Attempt

These recent findings by SEBI compound challenges for Zee CEO Punit Goenka as he endeavours to reassure investors following the termination of the $10 billion merger plan with Sony. The two-year-long transaction was halted in January, amid a prolonged disagreement over the leadership of the new entity.

The collapsed merger would have fortified Sony by accessing Zee's extensive content library in regional Indian languages, potentially improving Zee's financial health. Zee reported a 95 percent decline in full-year profit up to March 31 and a profit of 58.5 crore for the quarter ending December 31, missing analyst estimates.

Also Read | SC orders EIH to hand over Wildflower Hall to Himachal govt

Zee is reportedly re-engaging with Sony to explore the possibility of reviving the merger. However, significant differences persist, according to reports.

Background of Regulatory Wrangling

The regulatory investigation into alleged financial improprieties involving Zee's founders has sparked conflicts between Sony and Zee since mid-2023. Sony, wary of letting Goenka lead the merged entity, and Goenka, insisting on his promised CEO position, ultimately resulted in the deal's termination in January.

Also Read | Hindalco takes its crown jewel to the public

SEBI, in an August order, prohibited Zee founders Chandra and Goenka from holding executive or director positions in any listed firm, citing the "abuse of their position" and fund siphoning for personal benefit. Zee appealed this order, securing a partial reprieve in October, allowing Goenka to hold an executive position during the ongoing probe.

(With inputs from Bloomberg)

 

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 21 Feb 2024, 07:31 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App