Zee Entertainment Enterprises witnessed a more than 5% decline in its shares on February 28, following the company’s announcement of establishing a committee to investigate allegations leveled against the company, its promoters, and key managerial personnel by regulatory bodies.
The newly formed “Independent Investigation Committee,” led by retired Justice Satish Chandra, aims to thoroughly examine the allegations with the primary objective of safeguarding the interests of the company’s shareholders and stakeholders, as per Zee’s statement.
However, investors appeared unconvinced by the decision, as evidenced by the stock trading at Rs 164.15 on the NSE at 1:51 pm, marking a 5% decrease from the previous day’s close.
Zee Entertainment shares have plummeted by 41% since the beginning of the year, significantly underperforming the benchmark Nifty index, which has recorded a marginal increase during the same period.
Comprising independent directors Uttam Prakash Agarwal and PVR Murthy, the committee is tasked with presenting a detailed report to the company’s board, which will then determine the appropriate course of action based on the recommendations.
Zee’s chairman, R Gopalan, emphasized the commitment to conducting an impartial assessment of all allegations, with Justice Chandra’s guidance, and implementing necessary measures for the company’s benefit following the committee’s report.
The announcement comes amidst an ongoing investigation by the market regulator SEBI against Zee’s promoters for alleged fund diversion. Managing Director Punit Goenka, son of the company’s founder Subhash Chandra, remains under SEBI’s scrutiny for his purported involvement in misappropriating company funds.
While both Chandra and Goenka faced managerial restrictions imposed by SEBI last year, the ban on Goenka was overturned by the Securities Appellate Tribunal (SAT) in October 2023.
