Chandra, family to recover ₹1,300 cr in one year to fund investment in ZEEL

Essel Group promoters expect to recover dues and invest Rs 2,237 crore through convertible warrants, potentially increasing stake in ZEEL to 18.39 per cent

The promoters of Zee Entertainment Enterprises Ltd (ZEEL), Subhash Chandra and his family, are expected to recover through the Essel group around ₹1,300 crore in one year from various parties who owe money to them, according to a source close to the family office.

 

The source added that ZEEL’s promoters, who are also the founders of the company, have already received confirmations from various parties indebted to them. So far, the promoters have recovered ₹800 crore, mainly from three sources: a municipality corporation in Maharashtra, a public sector unit in Haryana, and another public sector unit in Madhya Pradesh. The company’s response to an email sent by Business Standard in this regard did not come till press time.

 

On Monday, the board of directors of ZEEL had approved 169,503,400 fully convertible warrants at ₹132 per warrant to the promoter group entities on a preferential basis. These warrants are also proposed to be allotted to Altilis Technologies and Sunbright Mauritius Investments, which are related to the promoter group entities. Through this, the promoter family is expected to invest ₹2,237.44 crore for the growth of the company, raising their shareholding to 18.39 per cent from the current 3.99 per cent in 18 months.

 

While the company has not stated where exactly the funds will be used, its latest investor presentation, released in May, highlighted that the firm was exploring value-accretive merger and acquisition (M&A) opportunities in pursuit of scalable growth. In June, the company also announced a strategic equity partnership with content and technology startup Bullet, where ZEEL is expected to either invest or acquire a stake in the platform. 

 

Apart from this, the investor presentation mentioned that it was focused on providing a dividend of 25-30 per cent of its consolidated net profit to the shareholders.

 

According to brokerage firm Prabhudas Liladher, each warrant will be convertible into one fully paid-up equity share within 18 months from the date of allotment. About ₹33 per warrant, or 25 per cent of the warrant issue price, is likely to be paid upfront.

 

“ZEEL’s current outstanding shares stand at 960.5 million. Assuming all warrants get converted into equity, there will be a dilution of 17.6 per cent,” said an analyst note from Prabhudas Liladher. It further explained that the promoters increasing their skin in the game could be a big confidence booster for the market.

 

The note added, “However, as 25 per cent of the money is likely to be received upfront, ZEEL will get ₹559.4 crore immediately. ZEEL had a cash balance of ₹2,406.4 crore as of 2024-25 (FY25). Thus, the total cash balance will rise to ₹2,965.8 crore on an immediate basis.”

 

This comes after the promoter family had pledged almost all of their shares in ZEEL to fund their business in the Essel group amid huge debts. Later on, these shares were sold by lenders, reducing Chandra and his family’s shareholding in the company. Back in March 2017, the promoters had 43.07 per cent of shareholding in the company, which went down to 22.37 per cent for the quarter ended in September 2019. This came down to 4.87 per cent for the quarter ended in December 2019. Since March 2021, the promoter stake in the company has been 3.99 per cent. Last year, according to media reports, Chandra, chairman emeritus of ZEEL, had said that they were interested in raising the promoter shareholding to about 26 per cent.

 

Another setback for the company had been the Securities and Exchange Board of India’s (Sebi’s) investigation for an alleged fund diversion of over ₹2,000 crore by Chandra and his son Punit Goenka from ZEEL. In an order in August 2023, Sebi had barred both of them from holding key positions in four group firms. In June 2023, the market regulator had also alleged fraudulent practices and fund diversion by the promoters from Shirpur Gold Refinery, an Essel group firm. According to media reports, in January 2025, Sebi dismissed settlement applications submitted by ZEEL, and ordered additional investigation into the issue. 

 

In September 2024, Chandra had claimed that the uncertainty created by Sebi’s action against the founders “scuttled” the $10 billion merger between ZEEL and Japan’s Sony’s India unit. Before the formation of JioStar — the $8.5 billion joint venture between Reliance Industries, Viacom18 Media, and The Walt Disney Company — the Sony-Zee merger was expected to create India’s biggest media conglomerate.