Zee Entertainment Enterprises Ltd shares tanked 14% Wednesday after Bloomberg reported that the Securities and Exchanges Board of India (SEBI) found a discrepancy of Rs 2000 crore ($241 million) in the accounts of the beleaguered media major.
Shares of ZEE cracked 14.3% to Rs 165.5 apiece on the BSE in Wednesday’s trade even as ZEE stated the “rumours pertaining to accounting issues in the company are incorrect, baseless and false”.
“Reports and rumours pertaining to accounting issues in company are incorrect and false. We are in process of providing all comments requested by SEBI and have extended complete co-operation on all aspects,” Reuters quoted the company as stating.
The Bloomberg report, which comes a day after Economic Times reported that talks between ZEE and Sony Group Corp’s local unit had been initiated to revive their $10 billion merger plan, which collapsed last month, deals another blow to the the embattled media major.
However, ZEE clarified later in the day that the report was false and the company is not in talks to renegotiate the merger. “We would like to clarify that the company has not been involved in any negotiations or any other event,” ZEE said in a stock exchange filing.
Meanwhile, as part of its ongoing investigation into the ZEE founders, SEBI found that about Rs 2,000 crore may have been diverted from the company, Bloomberg quotes people familiar with the matter as having confirmed. That is roughly ten times of what was initially estimated by SEBI investigators, said people told the business newswire.
The amount found missing is not final and may change after SEBI reviews the responses from the company executives, the people said. The regulator has been calling in senior officials at ZEE including ZEE founder and chairman Subhash Chandra and CEO Punit Goenka, and some board members to explain their stance, they added.
This comes a year after the market regulator alleged that ZEE’s founders were actively involved in diverting company funds to the group’s other listed entities and other firms related to its founding shareholders.
ZEE shares have seen a massive downfall recently after the collapse of its merger with Sony Group Corp’s India unit. The stock has fallen 30 per cent year-to-date (YTD).
