SEBI Uncovers $240 Million Hole in Zee Entertainment’s Accounts

Sebi has summoned Subhash Chandra and his son Punit Goenka, along with several other board members.

Mumbai: Zee Entertainment Enterprises Ltd., one of India’s leading media firms, faces yet another setback as the country’s market regulator, the Securities and Exchange Board of India (Sebi), reveals a gaping hole of over $240 million in its accounts. This revelation comes shortly after the collapse of Zee’s merger with Sony Group Corp’s local unit, sending shockwaves through the media industry and financial markets.

Sebi’s investigation into Zee’s founders has unearthed potential diversions amounting to about 20 billion rupees ($241 million) from the company’s coffers, according to sources familiar with the matter. This figure dwarfs initial estimates by Sebi investigators and underscores the severity of the financial irregularities plaguing the media conglomerate.

Following the news, Zee’s shares plummeted by as much as 15% in Mumbai trading, marking the most significant decline in a month. Meanwhile, the benchmark S&P BSE Sensex saw marginal gains, according to data compiled by Bloomberg.

SEBI Uncovers $240 Million Hole in Zee Entertainment's Accounts
Zee Entertainment Share Price today – NSE

However, the exact amount missing from Zee’s accounts remains tentative, pending further review of responses from the company’s executives. Sebi has summoned senior officials, including founders Subhash Chandra and his son Punit Goenka, along with several board members, to provide explanations for these discrepancies.

For Punit Goenka, Zee’s CEO, the regulatory findings compound existing challenges stemming from the failed $10 billion merger with Sony. Despite efforts to salvage the deal, significant differences persist between Zee and Sony, hindering any potential revival of the merger.

While Zee explores possibilities with Sony, regulatory scrutiny continues to intensify. Sebi’s investigation into alleged financial improprieties involving the father-and-son duo has been a source of contention between Zee and Sony since mid-2023. The regulatory order in August resulted in the barring of Chandra and Goenka from executive or directorial positions in listed firms due to abuse of position and fund misappropriation.

Although Zee managed to secure a partial reprieve in October, allowing Goenka to retain an executive position during the probe, the fallout from the regulatory scrutiny persists. The scuttled merger not only impacts Zee’s financial prospects but also deprives Sony of access to Zee’s vast content library in regional Indian languages.

As Zee grapples with financial turmoil and regulatory challenges, the future of the media conglomerate remains uncertain. The unfolding saga underscores the importance of transparency and accountability in corporate governance, serving as a cautionary tale for both investors and industry players alike.

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