Punit Goenka to remain Zee's MD as lenders prepare for share sale

Goenka, who is the elder son of Essel group promoter and Zee chairman Subhash Chandra, has been MD of the media firm since January 1, 2010.

Zee Entertainment’s (Zee’s) Managing Director and Chief Executive Officer Punit Goenka has been reappointed to the position, effective January 1 next year, the broadcaster said on Tuesday, as lenders prepare to sell their pledged shares.

In a statement to the stock exchanges, Zee said that an in principle approval for Goenka’s reappointment for a period of five years was finalised by its board of directors in a meeting. Shareholder approval, it said, would be subsequently sought.

Goenka, who is the elder son of Essel group promoter and Zee chairman Subhash Chandra, has been MD of the media firm since January 1, 2010.

He was appointed CEO in July 2008 after then CEO Pradeep Guha stepped down. The top-level rejig at that time was viewed as Chandra's attempt to put succession planning in place at Zee, which is the flagship firm of the Essel Group.

While Zee is among the leading broadcasters in India, the others being Star, Sony and Viacom18, the firm in the last one year has faced intense scrutiny amid concerns over mounting debt.

Almost 96 per cent of the promoter stake of 22.37 per cent in Zee is pledged to lenders. Of this, 10.71 per cent is pledged to VTB Capital, the investment arm of Russian financial services major VTB Group.

Last month, VTB Capital said it had received lender protection rights in Essel Media Ventures, a promoter group entity, whose shares were pledged to it against loans taken by the latter. Essel Media holds 10.71 per cent in Zee.

The announcement by VTB Capital had paved the way for a likely sale of its pledged shares in Zee, though Goenka insisted in a subsequent concall with analysts that his firm was in "active dialogue" with the former. VTB has since appointed investment bankers for the sale process, including JPMorgan and Citigroup.

VTB’s action, media industry sources said, had emboldened other lenders of Zee to sell their pledged shares, who've begun the process by transferring their shares to an escrow account.

Business Standard

Danger ahead: $63-bn stalled real estate projects a threat for Indian banks

As lenders stop new credit, builders are forced to offload properties.

Business Standard : Ashish Shah is caught in the middle of India’s latest financial crisis. As chief operating officer of Radius Developers, he’s struggling to fund construction of apartment complexes because of a liquidity crunch in the nation’s bloated shadow-banking sector.

“Real estate is a sitting duck,” said Shah. “The timing is very crucial as the slowdown has hit the real estate market quite hard. The industry can’t service interest, new interest, additional interest, because there is no cash flow.”

Radius and hundreds of other developers relied on loans from what India calls non-banking financial companies (NBFCs) to fuel a five-year property boom. That came to a halt a year ago with the default of one of the shadow banking sector’s leading lenders, Infrastructure Leasing & Financial Services Ltd. The resulting credit squeeze has left builders such as Radius and Omkar Realtors & Developers Pvt. looking for support, or, like scandal-hit Housing Development & Infrastructure Ltd., filing for bankruptcy.

There are $63 billion of stalled residential projects across the country, according to Anarock Property Consultants, and their developers have become locked in a downward spiral with shadow banks. As lenders stop new credit, builders are forced to offload properties. Prices fall, causing more real estate loans to turn sour, pushing more shadow banks toward default.

In turn, that has cast a shadow on traditional banks and dried up funding to other businesses, putting more stress on an already slowing economy.

For Radius, the crunch started when one of its main lenders, Dewan Housing Finance Corp., shut off new loans as it attempts to restructure some $12.7 billion debt to avoid bankruptcy. Shah said he gained a temporary reprieve by selling a project to Blackstone Group Inc., but like all builders, his company needs cash to operate while projects are being built.

Edelweiss Financial Services Ltd. and Indiabulls Housing Finance Ltd., which have some of the largest exposures to the sector, are also tightening funding.

The risks of exposure to real estate were underlined by the scandal surrounding HDIL. The Reserve Bank of India abruptly imposed withdrawal curbs on a small cooperative bank that it said had under-reported loans to the developer. The decision triggered panic withdrawals from the bank, prompting the RBI to issue a statement to reassure the public that the banking system is “safe and stable.”