Can Punit Goenka survive the coup?

14 Sep,2021


By Our Staff


Primetime, 9pm, is the beginning of the top-rated shows across all general entertainment channels. It’s the same on Star Plus, Sony, Colors as well as Zee TV. But on Monday, September 13, at Zee, there was a fair amount brewing off-air as well.


Two directors – Ashok Kurien and Manish Chokhani – resigned from the Board. Or so the stock exchanges were intimated. Now, Kurien has been founder Subhash Chandra’s friend, and confidante from even before he set up Zee. Journalists like this correspondent took Zee and Chandra (he would suffix Goyal or Goel in his early days) seriously in the early 1990s thanks to Kurien, then one of the posterboys of Indian advertising.


Chandra started out as a rice trader, and anyone who has been exposed to agricultural trading will tell you that one needs to be very sharp to be able to navigate the vagaries of the business. Media may be dramatically different, but in the days when Chandra was entering the scene, there were many situations to contend with.


One was Rupert Murdoch who wasn’t obviously being kind to Zee which had emerged ahead of his Star network. Chandra wasn’t one to let Murdoch have it easy. But come 2000 and Kaun Banega Crorepati happened as did an assortment of saas-bahu sagas, and Zee lost its numero uno status amongst Hindi general entertainment channels.


In the early 2000s, Zee – which was also a darling of the stockmarkets – saw some trouble with government regulators about the ways the company holdings were structured. Chandra steadily got out of the tangles, and started rebuilding the Empire.


In the meantime, he grew the rest of the network. Investments in regional and news channels, distribution, films and overseas fare ensured that the empire had derisked itself from only flagship Zee TV being the cash cow.


In the early 2000s, Chandra’s sons Punit and Amit got active with the various ventures and eventually headed critical components of the media empire.


It was all hunky dory until many incorrect investments led to the company notching up heavy debts. This resulted in the family being pushed to having a minority holding in the all-important Zee Entertainment. Media and distribution were part of other companies. In early August 2021 though, Chandra wrote an open letter stating that he had 91.2 per cent of his debt with 43 lenders. Also, the balance dues will be settled soon.


Cut to last week, when Bengaluru-based proxy advisory firm, Institutional Investor Advisory Services India (IiAS), raised some red flags on corporate governance issues at Zee Entertainment.


This led Zee Entertainment to file a letter it received from its key investors to the stockmarkets.


The letter started with this: We, Invesco Developing Markets Fund (formerly Invesco Oppenheimer Developing Markets Fund) and OFI Global China Fund llC are shareholders of Zee Entertainment Enterprises Limited and hold, as on the date of this letter, 7,43,18,476 equity shares and 9,73,50,000 equity shares, respectively representing an aggregate of 17.88% of the paid-up share capital of the Company that carries the right of voting.


Invesco and OFI asked for the removal of Punit Goenka, Manish Chokhani and Ashok Kurien as directors, and the appointment of six independent directors.


So will Goenka exit as CEO is the question that’s being asked by everyone. The annual general meeting is scheduled for today, September 14, at 4.30pm. The extraordinary general meeting that the investors have asked for in their mail dated, Saturday, September 11, has not been scheduled so far.


There have been views that Invesco and OFI couldn’t have acted in the way they did without a clear study of the situation.


However, according to industry sources, what turn this entire episode takes will depend a fair bit on how some quarters in the government react. The Subhash Chandra family has 3.99 per cent equity, and other than the 17.88 held by the Invesco and OFI, there are investors like LIC and other financial institutions which could follow the central government’s advisory.


Clearly this is a soap opera that’s going to see some twists and turns for sure.

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