Zee Entertainment Enterprises promotors on Tuesday approached the Securities Appellate Tribunal (SAT) to seek relief against the market regulator’s order banning Essel group Chairman Subhash Chandra and Zee MD & CEO Punit Goenka from holding key positions.
The case pertains to Chandra, who was also the chairman of ZEEL during the alleged violation, and Goenka having abused their position as directors or KMPs of a listed company for siphoning off funds for their own benefit.
In its interim order, Sebi noted that Chandra and Goenka 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, it added.
Sebi noted that 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 during the period FY 2018-19 to FY 2022-23. 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 per cent to the current level of 3.99 per cent.
Although the promoter family is only holding 3.99 per cent shares in ZEEL, Chandra and Goenka continue to be at the helm of affairs of ZEEL, the order noted.
SAT will take up the matter for admission on June 15. The promoters’ lawyer said that the Securities and Exchange Board of India (Sebi) had not given a show cause notice before issuing the order, nor did it indicate any urgency for implementing a ban on them. The lawyer said that Sebi’s order had led to a steep fall in the stock prices.
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