The regulator has to complete its investigation by mid-April and initiate further legal proceedings based on its findings.
Sebi’s initial findings in June last year said ₹200 crore from the company was diverted through related party transactions. This was contested by the father-son duo before the Securities Appellate Tribunal (SAT). However, Sebi later informed the tribunal that it was conducting a wider investigation as there were several layers to the transactions.
The regulator told the tribunal it found Chandra had issued a letter of comfort for ₹4,210 crore in his capacity as chairman of Essel Group.
“It was urged that eight months were required to complete a wider investigation, since now, the respondent (Sebi) finds that there are a large number of transactions – running into Rs 2,000 crore – involving companies owned, controlled or otherwise related to the promoters,” said the October 30, 2023, SAT order.
Sebi is examining thousands of pages of transactions, bank statements, agreements, partnership deeds and board minutes, said one of the persons cited above. ZEE’s current chairman is R Gopalan, former secretary of the Department of Economic Affairs (DEA).ZEE shares tumbled 14.8% on the BSE on Wednesday to close at Rs 164.50 apiece, after Bloomberg reported Sebi had found that about $241 million (Rs 2,000 crore) might have been diverted by the company promoters. This has added to the steep decline in the ZEE share price after Sony Group scrapped a $10-billion merger plan involving its India business. A key factor for the collapse of the deal was the Sebi finding.The regulator didn’t respond to queries.
A spokesperson for Zee said, “The reports and rumours pertaining to accounting issues in the company are incorrect and false. Pursuant to the SAT order, which granted relief to the current key managerial personnel (KMP), the company has been in the process of providing all comments, information or explanations requested by Sebi, and has extended complete cooperation on all aspects.”
Probe So Far
The genesis of Sebi’s investigation is the resignation of three independent ZEE directors in November 2019, after they raised concerns over several issues, including the appropriation of a fixed deposit of Rs 200 crore of the company by Yes Bank for squaring off loans of related parties of Essel Group, promoted by Chandra and his family. Goenka is Chandra’s son.
Its examination revealed that Chandra had issued a letter of comfort dated September 4, 2018, to Yes Bank regarding credit facilities availed by Essel Green Mobility.
Through this letter, it was stated that ZEE would ensure that a fixed deposit of at least Rs 200 crore would be made available to the bank at all times while the loan remained outstanding and, in the event of a default, the bank could appropriate the fixed deposit towards repayment.
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