Biznextindia : The Chairman of Essel Group, Subhash Chandra, and the CEO of Zee Entertainment Enterprises (ZEEL), Punit Goenka, have been prohibited by the Securities and Exchange Board of India (SEBI) from serving as directors or holding key managerial positions in listed companies or their subsidiaries. SEBI made this decision following its investigations, which revealed that Chandra and Goenka misused their authority as directors or key managerial personnel in a listed company to divert funds for their personal gain.
SEBI issued an interim order on June 12, stating that “the Noticees (Chandra and Goenka) shall be disqualified from acting as directors or Key Managerial Personnel in any listed company or its subsidiaries until further instructions.”
The regulator further clarified that this order should be interpreted in conjunction with the interim order dated April 25, 2023, issued in relation to Shirpur Gold Refinery Ltd.
The order stated, “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 fact that some of the entities used in these layers are common to the ones used for fund diversion in Shirpur Gold Refinery Limited case only strengthens the prima facie finding in this case that funds have been diverted from ZEEL, which needs to be investigated thoroughly”.
It added that there were no processes and structures inside ZEEL to stop poor governance practices, and that the flagship company of the group ZEEL was “used like a piggybank by the Noticees (Chandra and Goenka)”.
It is, thus, no surprise that during the period FY 2018-19 to FY 2022-23, the share price of ZEEL has come down from a high of close to Rs. 600/- per share to the current price of less than Rs.200/- per share. This erosion of wealth despite the Company being so profitable and generating profit after tax consistently would lead to a conclusion that all was not well with the Company. During this period, the promoter shareholding dropped from 41.62% to current level of 3.99%.