ZEE shares plunge 13% after Sebi bans company for 2 months, bars Goenka and Chandra

Shares of Zee Entertainment Enterprises Ltd (ZEEL) plunged 13% on Monday after the Securities and Exchange Board of India (Sebi) barred the company from the securities market for two months and prohibited Chairman Emeritus Subhash Chandra and Managing Director & CEO Punit Goenka from accessing the market for one year. The stock fell 13% to ₹100.40 on the BSE while on the NSE it declined 12.37% to ₹100.37. 

In a 150-page final order issued late on Friday, Sebi imposed a total penalty of ₹1.48 crore on the company and its executives over the unauthorised pledge of ZEEL's Hyderabad land to secure loans availed by promoter-linked Essel Group entities. 

The regulator levied a penalty of ₹30 lakh on ZEEL, ₹60 lakh on Chandra, and ₹58 lakh on Goenka. 

The case pertains to a Deposit and Declaration (D&A) Agreement executed on December 27, 2018, under which the original title deeds of ZEEL's Hyderabad property were handed over to Indiabulls Housing Finance Ltd (IHFL) as collateral for loans taken by Essel Home and other Essel Group-linked entities. 

According to Sebi, the deployment of ZEEL's property amounted to a related-party transaction, but the company failed to obtain prior approval from its audit committee, violating the Listing Obligations and Disclosure Requirements (LODR) Regulations. 

The regulator also held that ZEEL failed to make the required disclosures in its financial statements even though Goenka and Chandra were aware that the Hyderabad property had been offered as security and that the title deeds remained with the lender until June 2020. 

In its findings against Chandra, Sebi said he misused his position as chairman by handing over the original title deeds of ZEEL's Hyderabad land to IHFL after falsely representing that the move had the approval of the company's management. 

"Noticee No.3, being the chairman of ZEEL, misused his position and authority... and handed over the original title deeds of the asset (Hyderabad Land) of ZEEL to IHFL by falsely declaring that the said action had the approval of the management of ZEEL. Through such actions, the noticee put the material asset of ZEEL at risk for his personal benefit," Sebi said in its order. 

Responding to the order, ZEEL on Sunday said it is seeking legal advice and evaluating the available remedies. The company, however, maintained that Sebi's order has no direct bearing on its ongoing ₹2,300-crore fundraising exercise and said it remains committed to completing the proposed capital raise.