Sebi bars Subhash Chandra, Punit Goenka from holding directorial, key managerial roles
The ban, effective for a year, has been imposed on the two for 'siphoning off funds' from ZEEL for their own benefit
Market regulator Sebi has barred Chairman of the Essel Group Subhash Chandra and Chief Executive Officer (CEO) of Zee Entertainment Enterprises (ZEEL) Punit Goenka from holding any directorial or key managerial position for a year. The action has been taken against the two for “siphoning off funds from the listed entity for their own benefit.”
Sebi issued a notice in this regard on June 12.
“The Noticees (Chandra and Goenka) shall cease to hold the position of a director or a Key Managerial Personnel in any listed company or its subsidiaries until further orders,” read the notice.
"The Noticees 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 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," it read further.
"The Noticees may, within 21 days, from the date of the receipt of the order, file their reply/objections if any to this order and may also indicate whether they desire to avail an opportunity for personal hearing on a date and time to fixed in this regard," it satetd further.
The notice mentioned that this order shall take effect immediately and shall remian in force untill further orders.
Explaining the matter, an industry source said, "Subhash Chandra had provided a Letter of Comfort (LoC) dated September 04, 2018 towards credit facilities availed by certain group companies from Yes Bank, wherein it was stated that “this is with regards to the Rs 200 crore loan outstanding in Essel Green Mobility Ltd from Yes Bank Ltd. We will ensure that a fixed deposit of at least Rs 200 crore is available with Yes Bank Ltd, from any one of Essel Group of companies (including Zee Entertainment Enterprises Ltd), at all times whilst the said facility remains due and outstanding and that in the event of default under the said facility, you may appropriate the fixed deposit towards repayment of the said Facility.”
"When probed by Sebi with regard to the above, ZEEL submitted that Rs 200 crore, equivalent to the value of FD which was encashed by Yes Bank for the dues from Associate Entities owned by Promoter Family, had subsequently been received back from those Associate Entities in September/October 2019," he added.
According to Karan Taurani of Elara Capital, "Zee will file an appeal with SAT (Securities Appellate Tribunal), to fight against the SEBI order."
