Zee Entertainment Enterprises faced a significant setback today as its shares plummeted over 6.50% during morning trade. The decline was triggered by the recent decision of the Securities and Exchange Board of India (SEBI) to ban Essel Group chairman Subhash Chandra and ZEEL’s MD and CEO Punit Goenka from holding any directorial or key managerial position in a listed company.

As a result of this news, the stock price took a sharp drop of 6.28% to Rs 182.60 per share on the Bombay Stock Exchange (BSE) after a weak start. Similarly, on the National Stock Exchange (NSE), it tanked 6.59% to Rs 182 per share.

It’s worth noting that the broader equity market, represented by the 30-share BSE benchmark, was trading with a gain of 328.44 points or 0.52% at 63,053.15.

SEBI’s interim order, issued on Monday, accused Subhash Chandra and Punit Goenka of misappropriating funds from Zee Entertainment Enterprises. The regulatory body has prohibited them from holding directorial or key managerial roles in any listed company. The case pertains to alleged misconduct during Chandra’s tenure as the chairman of ZEEL and Goenka’s involvement in the misuse of their positions for personal gains.

SEBI’s investigation revealed that Chandra and Goenka diverted assets from ZEEL and other Essel Group companies for the benefit of their associate entities, which they control. The decline in ZEEL’s share price from a high of around Rs 600 per share to the current level of under Rs 200 per share between FY 2018-19 and FY 2022-23 raised concerns about the company’s well-being, despite its consistent profitability and positive post-tax earnings.

This ruling by SEBI has significantly impacted Zee Entertainment Enterprises, resulting in a substantial drop in its share value.