Zee, Punit Goenka move SAT against SEBI market ban

SAT has listed the matter for hearing on Wednesday after the appellants sought an urgent hearing and interim relief in the matter. The appellants have sought a stay on the market-access restrictions pending the final hearing of their appeals. They have also sought relief to proceed with Zee’s fund-raising plans, which will boost promoter stake in the media firm to nearly 24% from 3.99% currently. The fund raise will happen through fully convertible warrants to promoter group entity Sunbright Mauritius. The funding structure requires a 25% upfront payment, with an 18-month window for converting warrants into equity shares.

In an analysts’ call on Monday, Zee’s management said that it had written to Sebi seeking clarity on its proposed fund raise. “We have not received any response from the regulator (Sebi). We have also appealed to SAT and are hopeful of a resolution soon,” Mukund Galgali, deputy CEO & CFO, Zee Entertainment, said.

According to the appeal document submitted in SAT, Goenka has asked the tribunal to “permit the Proposed Allottee (Sunbright) to subscribe to the Warrant Issue and permit the Appellant in his capacity as CEO of the Company to give effect to the shareholder’s resolution dated July 31, 2026.”

SEBI, in its July 31 order, barred Zee from accessing the securities market for two months. It also restrained Goenka and promoter Subhash Chandra from accessing the market for a year each. The regulator also imposed penalties totalling Rs 1.48 crore in the matter pertaining to the unauthorised pledge of Zee’s land in Hyderabad to secure loans taken by promoter-linked Essel Group entities.

Challenge to SEBI’s Findings

The appeal said Sebi’s findings of fraud were based on an “incorrect interpretation of the PFUTP Regulations” and that Goenka did not exercise any “control” over the four borrower entities, or know about or participate in the alleged mortgage creation. He derived no benefit from any alleged mortgage creation, and did not induce any investors to deal in Zee’s securities in any manner.

“The Impugned Order fails to consider that the Appellant in his capacity as CEO of the Company is bound to give effect to the shareholders’ resolution for the issue of warrants to the Proposed Allottee in terms of the EGM dated July 31, 2026, where the Warrant Issue was approved with a majority of 76.6 percent, following the in-principle approval from the Exchanges,” the appeal document said.

The market-access restriction on the CEO is “punitive” and “not preventive” in nature, the appeal said, arguing that the finding that Goenka had knowledge of the alleged mortgage was based on conjecture and lacked any evidentiary basis.

According to the regulator’s findings, the property was used to secure loans worth about Rs 726 crore. Its title deeds were deposited with the lender on December 27, 2018, and were released on June 1, 2020, after about Rs 225 crore was repaid.

SEBI said the transaction did not have the required approvals from Zee’s audit committee, board and shareholders. It also alleged that the company did not make adequate disclosures about the pledge, the related-party transaction and the contingent liability arising from it.

Zee Q1 profit halves on weak ad revenue

Zee Entertainment’s consolidated net profit saw a 47% year-on-year decline to Rs 76 crore in the first quarter (Q1) of FY27, according to its financial results released Monday. The company’s revenue saw a 4.5% year-on-year uptick to Rs 1,908 crore, from the preceding fiscal’s Rs 1,825 crore. Zee’s ad revenue saw a 12% year-on-year decline to Rs 671 crore from Rs 759 crore reported last year. The company’s subscription revenue increased 16% year-on-year to Rs 1,137 crore. The firm’s Ebitda (earnings before interest, tax, depreciation and amortisation) saw a 58% year-on-year decline to Rs 101 crore, from Rs 239 crore in the year-ago period. Ebitda margins contracted to 5.3% from 13.1% on a year-on-year basis.