Mumbai: Shares of Zee Entertainment Enterprises Ltd (ZEEL) plunged 13 percent on Monday after the Securities and Exchange Board of India (Sebi) announced market restrictions and penalties in the Hyderabad land pledge case.
The stock fell 13 percent to Rs 100.40 on the BSE. On the NSE, it declined 12.37 percent to Rs 100.37, reflecting selling pressure following the regulator’s order.
Market Restrictions
In its 150-page order issued late on Friday, Sebi barred ZEEL from accessing the securities market for two months. Chairman Emeritus Subhash Chandra and Managing Director and CEO Punit Goenka were prohibited from the market for one year.
The regulator imposed total penalties of Rs 1.48 crore. ZEEL was fined Rs 30 lakh, while Chandra and Goenka were penalised Rs 60 lakh and Rs 58 lakh, respectively.
Land Pledge Case
The matter relates to an agreement executed on December 27, 2018. Under the arrangement, title deeds of ZEEL’s Hyderabad property were handed to Indiabulls Housing Finance Ltd as security for loans taken by Essel Home and other promoter-linked Essel Group entities.
Sebi classified the use of ZEEL’s property as a related-party transaction. It said the company failed to secure prior approval from its audit committee, violating listing regulations.
Disclosure Failures
The regulator found that ZEEL did not make the required disclosures in its financial statements, although Chandra and Goenka were aware that the land had been offered as security. The title deeds remained with the lender until June 2020.
Sebi said Chandra misused his position by handing over the deeds after falsely claiming that ZEEL’s management had approved the action. According to the regulator, this placed a material company asset at risk for his personal benefit.
ZEEL Seeks Advice
ZEEL said on Sunday that it is seeking legal advice on Sebi’s order. The company maintained that the action has no direct impact on its ongoing Rs 2,300 crore fundraising plan and said it would take necessary steps to complete the proposed capital raise.
