India’s market regulator, the Securities and Exchange Board of India (SEBI), has uncovered a significant financial discrepancy exceeding $240 million or around ₹2,000 crore in the accounts of Zee Entertainment Enterprises, as reported by Bloomberg.
Probe and Company Responses
SEBI’s investigation into Zee founders has revealed that approximately ₹2,000 crores ($241 million) may have been redirected from the company, a sum nearly ten times higher than initially estimated. The regulator has summoned senior officials, including Subhash Chandra, Punit Goenka, and certain board members, for explanations. While SEBI’s spokesperson did not respond to queries, a Zee spokesperson stated that the company is cooperating with the ongoing probe.
Impact on Zee CEO and Merger Attempt
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These revelations pose challenges for Zee CEO Punit Goenka as he seeks to reassure investors following the collapse of the merger with Sony. The terminated $10 billion merger plan aimed to leverage Zee’s content library to strengthen Sony. Zee reported a significant decline in profit, further complicating the situation. Despite reports of re-engagement with Sony for a potential merger revival, significant differences persist.
Background of Regulatory Wrangling
Conflicts between Sony and Zee arose amid SEBI’s investigation into alleged financial improprieties involving Zee’s founders. Sony’s apprehension about Goenka’s leadership and Goenka’s insistence on his CEO position led to the deal’s termination in January. SEBI’s order in August barred Zee founders from executive positions, though Goenka secured a partial reprieve allowing him to hold an executive position during the ongoing probe.
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