Subhash Chandra, who ushered in the cable and satellite revolution in India with Zee TV, has stepped down as chairman of the board at the company he founded three decades ago. The decision was taken following a board meet on Monday.
Chandra, who will turn 69 years old on Saturday, becomes non-executive director with immediate effect.
Zee has also reconstituted its board, appointing three new independent directors — former IAS officer R Gopalan, retired IPS officer Surendra Singh, and art collector Aparajita Jain. The reconstituted board consists of six independent directors and two members from Essel Group.
Company sources said Chandra’s decision was in keeping with rules mandated by the Securities and Exchange Board of India (Sebi), which says the chairman cannot be related to the managing director (MD) and chief executive officer (CEO) of a company from April 2020.
On November 5, Chandra’s son, Punit Goenka, was reappointed as MD and CEO of Zee, a position he has held since January 1, 2010. The reappointment is effective from January next year.
Zee said Chandra would continue to “mentor” the management, coming at a time when the promoter family has retained management control with only 5.9 per cent stake in the company.
Financial investors, including GIC, BlackRock, HSBC Global, Fidelity India, SBI Mutual Fund and Reliance Mutual Fund, brought 15.7 per cent of the promoter’s stake in Zee for Rs 4,343.18 crore on Thursday.
An additional amount of nearly Rs 427 crore was raised through off-market transactions, taking the total to Rs 4,770 crore, Zee disclosed on Monday. A total of 16.5 per cent of the promoters’ stake was sold to investors, the company said.
While this was below Rs 5,000 crore that Chandra and his family were expecting from the stake sale, it will still go a long way, said experts, in paying off promoter debt, which is about Rs 7,000 crore.
In August, Invesco Oppenheimer, an existing investor in Zee, had picked up 11 per cent stake in the company for Rs 4,224 crore, taking its total shareholding to 18.74 per cent. On Monday, the Zee stock closed trade at Rs 343.65 per share, down nearly 4 per cent from the previous day’s close, on the BSE, following a downgrade by Kotak Institutional Equities.
The brokerage had said resolution of balance sheet concerns, robust free cash flow generation, and success of Zee5 were near-term concerns.