Zee Seeks SAT Relief From Sebi Ban, Says It Needs ₹1,200 Cr To Fund Operations

Zee Entertainment Enterprises Ltd has approached the Securities Appellate Tribunal (SAT) seeking relief from a two-month market-access ban imposed by the Securities and Exchange Board of India (Sebi), saying it needs to sell about ₹1,200 crore of liquid mutual fund investments to fund its day-to-day operations.

During the hearing on Wednesday, Zee’s counsel told the tribunal that the money would be used for short-term business requirements, including film production, employee payments and payments to creditors, according to a Mint report.

The company is challenging Sebi’s 31 July order that barred Zee from accessing the securities market for two months. The order also restricted CEO Punit Goenka and promoter Subhash Chandra from accessing the market for 12 months each.

Zee Says Sebi Ban Has Hit Fundraise

Zee told SAT that it had planned to raise nearly ₹3,100 crore, but the market-access restriction has affected the fundraising plan because the company’s share price has declined.

On 31 July, Zee shareholders approved a ₹3,143.5-crore fundraising plan that would increase the promoter stake in the company to 23.79% from around 4% currently. Zee’s counsel argued that the fundraise would benefit public shareholders, who hold about 96% of the company.

The tribunal also questioned Sebi on why Zee should be prevented from raising funds during the two-month ban if the proposed transaction could otherwise take place after the restriction ends.

Counsel representing Goenka separately argued that Sebi’s order had contributed to the fall in Zee’s share price, meaning the planned fundraising could now take place at a lower valuation.

Sebi Defends Market-Access Restrictions

Sebi opposed Zee’s plea, arguing that the case involved serious violations allegedly linked to the company’s promoters.

The regulator told the tribunal that properties belonging to the listed company were allegedly used as security for loans taken by privately held promoter-linked entities. Sebi also referred to concerns raised by Zee’s statutory auditor over the availability of original title deeds for certain properties.

The case relates to Sebi’s findings concerning a December 2018 transaction, in which a Zee-owned property was allegedly used as security for loans taken by promoter-linked private companies. According to the regulator, the transaction was carried out without the required approvals and disclosures.

Sebi’s 31 July order also alleged that Zee failed to disclose the “fraudulent and unauthorized pledging” of its Hyderabad land to stock exchanges and on its website.

After hearing arguments from both sides, SAT reserved its order and directed Sebi to file its reply within six weeks.