ZEEL shares plunge 13% after SEBI order in Hyderabad land pledge case
ZEEL asserts SEBI’s order has no direct bearing on its ongoing ₹2,300 crore fundraising exercise
Zee Entertainment Enterprises' shares plummeted 13% on Monday following SEBI's prohibition of the company, its Chairman Emeritus Subhash Chandra, and MD & CEO Punit Goenka from the securities market for two months and one year, respectively. The restriction was imposed due to an unauthorized pledge of the company's Hyderabad land as collateral for loans taken by Essel Group entities.
This pledge was executed through a Deposit and Declaration Agreement (D&A) on December 27, 2018, which transferred ZEEL's property title deeds to Indiabulls Housing Finance Ltd (IHFL) as security. SEBI deemed this a related-party transaction and criticized the company for not obtaining prior approval from its audit committee, resulting in a violation of LODR regulations.
Furthermore, SEBI found that ZEEL failed to disclose the unauthorized pledge in its financial statements, despite Goenka and Chandra being aware of the situation. In its findings against Chandra, SEBI alleged that he misused his position as chairman by handing over the original title deeds to IHFL after falsely claiming to have received approval from ZEEL's management. By doing so, the regulator stated, Chandra placed ZEEL's valuable asset at risk for personal gain.
SEBI imposed a total penalty of ₹1.48 crore against these individuals. Individually, ZEEL was fined ₹30 lakh, Chandra ₹60 lakh, and Goenka ₹58 lakh. The regulator's final order, which consists of 150 pages, was issued late on Friday.
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