SEBI Bars Zee CEO Punit Goenka, Essel Chairman Subhash Chandra From All Directoral Positions – News18
Last Updated: June 12, 2023, 23:16 IST
Sebi order comes after it was alleged that the two have been siphoning off funds. (File/News18)
In its 17-page interim order, Sebi said 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 Securities and Exchange Board of India (SEBI) on Monday banned Essel Group Chairman Subhash Chandra and Chief Executive Officer (CEO) of Zee Entertainment Enterprises (ZEEL) Punit Goenka from holding any key managerial position in any of its listed companies or subsidiaries until further notice.
This comes as Chandra and Goenka allegedly siphoned off funds from the listed entity for their own benefit.
In its 17-page interim order, Sebi said 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.
SEBI said that 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.
Sebi also noted that the share price of ZEEL came 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, news agency PTI said.
During this period, the promoter shareholding dropped from 41.62 per cent to the current level of 3.99 per cent, it added.
“Noticees (Chandra and Goneka) created a faade through sham entries to misrepresent to the investors as well as the regulator that money had been returned by associate entities, whereas in reality, it was ZEEL’s own funds which were rotated through multiple layers to finally end in ZEEL’s account. The noticees have attempted to ride piggyback on the success of ZEEL, the flagship company of Essel Group, to bankroll the associate entities, which are owned and controlled by them,” Sebi said.
This comes after Sebi conducted an examination in the wake of the resignation of two independent directors — Sunil Kumar and Neharika Vohra — of ZEEL in November 2019 and how they had raised concerned over several issues.
Sebi’s investigation found that Chandra had provided a Letter of Comfort (LoC) in September 2018, that was towards a Rs 200 crore loan outstanding from Essel Group Mobility.
According to the latter, the Rs 200 crore FD available with Yes Bank from any of the Essel Group companies, including ZEEL, could be taken to settle it.
Accordingly, Yes Bank had adjusted the loans of seven associate entities with this Rs 200 crore of ZEEL. Later, it was found that these seven entities were owned or controlled by family members of Chandra and Goenka, Sebi noted, news agency PTI said.
Upon further investigation it was revealed that ZEEL submitted that Rs 200 crore had been returned by the associate entities to ZEEL.
Since Chandra and Goenka had signed the LoCs without consulting or informing the Board, both were found to have violated provisions of LODR (Listing Obligations and Disclosure Requirements) rules.
With PTI inputs
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