Sebi to question Subhash Chandra, Punit Goenka on fund diversion: Report

This comes just a day after media reports suggested that Sebi has found an accounting 'hole' of Rs 2,000 crore in Zee's books

The Securities and Exchange Board of India (Sebi) will soon question the top management of media firm Zee Entertainment Enterprises Ltd (ZEEL) on the alleged fund diversion, The Economic Times (ET) reported on Thursday, citing people close to the development. These include the company's founders Subhash Chandra and its managing directors and chief executive officer Punit Goenka.

The investigation is likely to be completed by April.

This comes just a day after media reports suggested that the market regulator has found an accounting "hole" of Rs 2,000 crore in Zee's books. It is ten times bigger than Rs 200 crore in the initial findings of Sebi. Zee, however, later denied the report and said that it was cooperating with Sebi on the investigation.

In June 2023, Sebi announced the charges of fund diversion and barred Chandra and Goenka from holding key positions in the listed firm. The two moved to the Securities Appellate Tribunal (SAT) against the order.

SAT later set aside Sebi's order against Goenka. It is scheduled to hear Chandra's appeal against the order on Thursday.

The Sebi investigation has also been the primary reason Sony called off its $10 billion merger with Zee in January. The merger would have bolstered Sony by giving it access to Zee's deep library of content in regional Indian languages while improving Zee's financial health.

Zee's full-year profit plummeted by 95 per cent in the twelve months to March 31. It reported a profit of Rs 58.54 crore for the quarter ended December 31 but missed analyst estimates.

Economic Times, however, reported that Zee was making a final attempt to restart discussions with Sony to revive the deal. Zee has denied being involved in any such negotiations.

After the reports of fund diversion emerged on Wednesday, the company's shares fell over 14 per cent. On Thursday, however, the shares of the company were up over 2.5 per cent and were trading at Rs 168.75 apiece as of 10:30 am.