India's market regulator said Zee pledged Hyderabad land for promoter-linked loans without approvals or disclosure, while shareholders separately backed a Rs 3,144 crore warrant issue to the promoter group.
India's Securities and Exchange Board of India barred Zee Entertainment Enterprises founder Subhash Chandra and former managing director and CEO Punit Goenka from the securities market for one year, barred ZEEL itself for two months and imposed total penalties of Rs 1.48 crore, payable within 45 days, after finding the company's Hyderabad land was pledged without approvals or disclosure to secure Rs 726 crore of loans for four promoter-linked Essel Group companies from Indiabulls Housing Finance Ltd. SEBI said ZEEL was neither a borrower nor a beneficiary of the proceeds, and held that the undisclosed mortgage, the lack of board and audit committee approval, and the failure to disclose the arrangement to investors amounted to governance, disclosure and related-party transaction breaches. The order arrived as shareholders separately approved a Rs 3,144 crore issue of convertible warrants to the promoter group, a move expected to raise its stake to 24% from 4%, while Zee shares closed 2.85% higher at Rs 115.45 on the BSE on July 31.