Subhash Chandra: Brilliant Entrepreneurship, Dodgy Business Practices & Nine Lives
By any reckoning, Subhash Chandra, best known as the high-profile founder of the Zee group (now chairman emeritus) is a maverick entrepreneur who pioneered several new businesses in India—private television news, laminated packaging and giant theme parks. He also attempted to launch a private satellite communications network and a private cricket league! 
However, the road to achieving his goals of rapid growth, quick riches and diversification has always been suspect and controversial, just like his penchant to change his name every few years. Over the past three decades, he has variously called himself Subhash Goel, Subhash Goenka, Chandra Goyal or simply Subhash Chandra. 
In fact, the myriad new businesses he launches are matched by the number of investigations launched into his business dealings over the past 30 years, right from the time he was into rice exports in the 1980s and later.  His enormous political clout and networking ability has allowed him to brush off all regulatory and enforcement action, however serious, with tiring regularity. Will history repeat itself? 
Well, for the first time last month, the Securities and Exchange Board of India (SEBI) has acted in a manner that would actually hurt Subhash Chandra and his family. It has restrained him and son Punit Goenka from holding a directorship or key managerial position in any listed entity. In its order of 12th June, SEBI has charged the Zee promoters of diverting funds
Earlier, on 25th April, SEBI issued an interim order-cum-show-cause notice (SCN) in connection with Shirpur Gold Refinery Ltd (, barring the company and its promoter Amit Goenka (Subhash Chandra’s son) and six others, from selling, disposing or diluting their shareholding in the company. The charges were: misrepresentation of financial statements and diversion of funds
This may have serious implications for the Sony-Zee merger announced in 2021, where Sony Corporation came in as a white-knight after the fracas at Zee Entertainment Enterprises (ZEE) between the promoter group and Invesco Developing Markets Fund. The institutional investor, once a strong backer of Mr Chandra, had demanded that Punit Goenka be thrown out as managing director (Zee-Sony Merger–Many Unanswered Questions). The promoter group checkmated Invesco by announcing a deal with Sony, where Punit Goenka would continue to lead the operations. All that is in doubt now, with the SEBI order. Although Sony and Punit Goenka have made comforting noises to indicate that the deal is on, a lot will depend on the final outcome of  SEBI’s action.
Predictably, the group has challenged SEBI’s orders before the securities appellate tribunal (SAT) on 19th June but  failed to obtain an immediate stay order. Instead, SAT has reserved its orders after a hearing on 27th June.  
Millions of new investors who entered the market during the COVID lock-down of 2020 may be shocked at the extent of wrongdoing and diversion of funds exposed by  SEBI’s orders; but market veterans know that Zee has been in similar trouble every few years. Let’s take a look by starting with the current SEBI action.
Serious SEBI Allegations
The SEBI orders make some eye-popping charges against the Zee promoter group. They are based on a report by National Stock Exchange (NSE), followed by a forensic audit by KPMG Assurance & Consulting LLP. 
In 2019, Zee Entertainment pledged a Rs200-crore fixed deposit (FD) with Yes Bank, against loans to seven companies controlled by the promoter group. The action was not cleared with the Zee Entertainment board and, when Yes Bank adjusted the money against  dues of these entities, the promoters hatched an elaborate scheme involving further diversion of funds and hiding the trail of money, by layering it through several family-controlled entities, leading to a fictitious repayment. The SEBI order has detailed how such transactions were used to mislead the board of directors and also get a clean chit from the auditors. 
As for Shirpur Gold, SEBI details how this company, controlled by Amit and Punit Goenka has systematically diverted several hundred crore rupees to group entities. Shirpur Gold was listed in 1985-86 and has suspended operations since February 2020. In this case, a loan of over Rs400 crore was diverted to a host of promoter entities. While the SEBI order is very detailed, let us stick to the highlights. Shirpur Gold diverted a large sum of money to Altrarex Traders, also a group entity which, in turn, lent the money to several other promoter entities including one called Ekmart.
In a brazen action, Ekmart filed bankruptcy proceedings against Altrarex over default of a Rs50-crore loan. Although both Ekmart and Altrarex owed money to Shirpur Gold, which was the primary borrower, it chose to remain silent in order to allow the bankruptcy action to close the obligation. SEBI calls this ‘an elaborate scheme’ geared to ‘divert assets’ to the family entities. 
While we wait to see what the SAT thinks of these stunning charges, it may be instructive for new investors to take a quick look at the Zee group’s chequered past and how none of these investigations prevented the group from forging very strong connections across the political spectrum and also allowing Mr Chandra to become an MP (member of Parliament) quite easily under a ‘corruption-fighting’ government. 
The KP Scam of 2000 
In 2000, Zee Telefilms was at the top of the list of K-10 stocks that  ramped up by stockbroker Ketan Parekh, before the big collapse leading to a joint parliamentary committee (JPC) investigation. The subsequent investigation had revealed that Subhash Chandra had diverted a massive Rs515 crore to Ketan Parekh for his market operations. In addition, he had borrowed Rs256 crore from Global Trust Bank (GTB) for the same purpose. Worse, when Ketan was in deep financial trouble, Zee group worked hard to bail him out with corporate funds routed through GTB (the Bank also collapsed in July 2003 and was force-merged with a public sector bank). The JPC report and SEBI investigations had also detailed diversion of funds to several entities abroad.
After breathing fire for months, the JPC avoided dealing with powerful corporate houses that had colluded with the scamster on the plea that they did not have the benefit of deep investigation by a multi-disciplinary committee (Janakiraman committee), as in the 1992 scam. 
SEBI was asked to investigate the misdeeds of corporate houses who colluded with Ketan Parekh, but  the  investigation lost momentum. In 2008, a SEBI whole-time member, at the end of his term,  let the group off with a mere warning (TC Nair: Right Man, Right Place, Right Time!). Investigations launched by the enforcement directorate (ED) also vanished and none of this drew a peep of protest from any political party or members of the JPC. 
2012 and Naveen Jindal
In 2012, Zee was making headlines for the wrong reasons, again. This time, industrialist and Congress MP Naveen Jindal of Jindal Steel & Power conducted a sting operation against two high-profile anchors of the Zee group and filed a first information report (FIR) alleging a Rs100-crore extortion attempt on him. After many months of unsavoury headlines and some arrests, etc, the matter was quietly buried after a truce was brokered between the two warring industrialists. 
2018 and Mutual Funds
A more recent brush with scandal, which is at the root of Subhash Chandra’s current financial troubles, started in 2018. It was discovered then that the immensely profitable group had pledged promoter-equity in its flagship company, ZEE, to borrow funds that were transferred to shaky infrastructure companies of the group. All this was hidden from shareholders in collusion with mutual funds which acted as lenders. While ZEE bought time to raise funds, it is Invesco that came to the rescue with an 11% stake and willingness to look the other way at the group’s dodgy business dealings (The Many Hidden Links That Will Dictate the Outcome of the Zee-Invesco Saga). I learn from sources that the promoters had promised to play straight but forgot about it. 
Clearly, Subhash Chandra is like the cat with many lives and many names. Will he get away with a clean chit again? Only the naive would bet against such a possibility—doesn’t matter how much dirt has been dug and included in SEBI’s orders. 
9 months ago
Only if the rhetoric of our honourable PM of weeding out the corrupts itself becomes first morally incorrupt.
10 months ago
SEBI still exists? /s
10 months ago
The Government wrings its hands in despair at the UN when China blocks a bid to blacklist a 26/11 accused but does hardly anything to punish financial terrorists like Subhash Chandra, who collectively continue to do several times more damage to the country.
10 months ago
Agarwal samaj has its origin from Maharaja Agrasen of Agroha, near to Hissar in Haryana. Legend has it that out of compassion Maharaj refused to slaughter animals in yajnas. Since then, Aroha and Hissar became a predominant center of Banias - business community with many leading names. Their passion is earning money.
10 months ago
Nothing has changed since the SCAM , nexus of politicians, businessmen , fund houses, banks are still rampant . Hope the Regulator regulate themselves first
Kamal Garg
10 months ago
Really an absolute rustic and ground level person having the ability to understand the nitty gritty of any intricate working. So far survived with nine lines, it would be absolute surprising to see that he is brought to books during the current regime.
10 months ago
Brazen manipulations exposed by Moneylife. Unfortunately the last two sentences are likely to be the outcome.
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