Indian authorities raided the Essel Group's Continental Office in Mumbai on Wednesday, adding to the woes of Zee Entertainment Enterprises Ltd. amid ongoing investigations by market regulator Sebi and the Sony merger collapse.The Enforcement Directorate (ED) conducted the search, which began in the afternoon, according to a report by ET Now. No official confirmation has been provided by the ED or Essel Group. Zee Entertainment, a subsidiary of Essel Group, confirmed the raid in a statement but did not provide details. The company is already facing scrutiny from Sebi, which barred Zee's managing director Punit Goenka and founder Subhash Chandra from boardrooms of four Zee companies in August 2023 over alleged financial irregularities.
Further compounding Zee's troubles, Sony Pictures Networks India (SPNI) abruptly called off its $10 billion merger deal with Zee on Monday, citing unmet "closing conditions" despite extended negotiations. Both companies announced the termination in separate statements, expressing disappointment while hinting at future endeavors in the Indian market.Zee shareholders reacted negatively to the news, with the company's stock plummeting 30% on Tuesday. The ED raid adds another layer of uncertainty to the company's already turbulent situation.In August last year, Sebi barred Zee's Punit Goenka and Subhash Chandra from boardrooms of four Zee group companies, including Zee Entertainment Enterprises Ltd for allegedly siphoning off funds to the tune of Rs 200 crore for their own benefit. However, this amount has now increased substantially. The regulator is likely to have zeroed in on ZEE MD & CEO Punit Goenka's role in misuse of funds as Key Managerial Personnel (KMP) in Essel entities, the report said, adding that the Sebi could look at upholding its order restraining Goenka From holding position as a director.