‘Incorrect, false’: ZEE on reports of missing $241 mn; share tanks 10%

News and entertainment major Zee Entertainment Enterprises Ltd (ZEEL) has said reports regarding missing $241 million from the company’s accounts are “incorrect and false”, and that post the SAT order, it’s responding to queries of SEBI.

"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 the comments, information or explanation requested by SEBI, and has extended complete co-operation on all aspects,” a company spokesperson says today.

ZEE shares tanked 14% in the early morning trade on Wednesday amid alleged reports of missing $240 million in the books of the company, dealing another blow to the crisis-hit news, entertainment and broadcasting major. At the time of filing of the report, the stock was trading 10.47% down at ₹172.80 on the BSE.

A global news agency on Tuesday night reported that the market regulator, the Securities and Exchange Board of India, or SEBI, in its ongoing probe, allegedly found that about $241 million might be missing from the company books. If true, the amount thus mentioned might be many times more than the initially estimated figure. However, it is said that the regulator, after receiving responses from the company officials, may change its stance on the said amount.

Harried investors, meanwhile, resorted to selling on Wednesday as the stock opened a gap down at ₹173.70 on the BSE. The scrip soon plunged to its intra-day low of ₹165.55, just above the lower price limit of ₹164.10.

The stock had recorded over 10% rise on yesterday after reports about a huddle between the Zee officials and Sony group in a last-ditch effort to save the $10-billion merger deal, which fell through last month.

On reports of an attempt to revive the $10-billion Zee-Sony deal, the company later issued a statement, saying it is not "involved in any negotiations, or any other event". "The company is not aware of any information that has not been announced to the exchanges which could explain the aforesaid movement in the trading," the company said.

Sharing a transcript of the conference call held on February 13, 2024, Zee CEO Punit Goenka said the company’s proposed merger was terminated by Sony, and that it has taken appropriate steps, in consultation with the legal experts, which are in the best interest of its shareholders and stakeholders. "We have even approached the National Company Law Tribunal (NCLT) to seek directions on the implementation of the scheme."

Goenka said he wanted the merger to be implemented. "In line with this aspiration, we even took several steps towards divestment or closure of profitable businesses in the domestic and international markets."

He said he "personally offered several proposals" and solutions to Sony, to address their demands, but they remained unaccepted. 

He said ZEE's FY 2026 aspiration will be to target an 18 to 20% EBITDA margin profile. "A steady-state aspiration will be to target 8 to 10% CAGR revenue growth, with digital business growing at a much faster pace."

In Q3 FY24, ZEE's advertising and other segment revenue declined 3% and 36% on a YoY basis to ₹1,030 crore and ₹100 crore, respectively. On January 22, 2024, Sony Group put an end to two-year-long merger negotiations with ZEE, citing the inability of the latter to fulfil the merger agreement. Sony also approached the international arbitration court and sought a termination fee worth $90,000,000 for "alleged breaches" by ZEE. The $10-billion deal, which was initially announced in December 2021, would have created the country’s largest entertainment network with more than 70 entertainment channels.