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.
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.
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.
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.
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.
Visit www.cagurujiclasses.com for practical courses
