Zee calls InGovern report “misleading”; says a rebuttal is coming

New Delhi: Zee Entertainment Enterprises has rejected claims made in a corporate governance report by proxy advisory firm InGovern, calling the document “factually incorrect, misleading and prejudiced,” and said it will issue a detailed rebuttal.

In a detailed statement, a Zee spokesperson said, “The points mentioned in the report published by InGovern are factually incorrect, misleading and prejudiced. The report consists of certain dated issues, which have already been addressed by the Company. The absence of any new points in the report, coupled with multiple factual inaccuracies, misrepresentation of facts and lack of basic diligence questions the intent of the firm behind the report. The Company has consistently ensured that all the shareholders are apprised about the developments in a proactive and transparent manner.” 

“A detailed rebuttal to the proxy advisory firm will be issued by the Company, addressing the baseless allegations,” a Zee spokesperson said, adding that the company “has always maintained the highest standards of Corporate Governance” and remains committed to shareholder value.

InGovern’s February 2026 note frames Zee as a “shareholder activism opportunity” and links its thesis to a board communication issued during the Q3 FY26 results cycle on January 16, 2026, which defended the promoters’ decision not to increase their stake immediately. 

The report said the board letter indicated the promoters had around Rs 500 crore liquidity but viewed buying 4–5% from the market as “not meaningful”, and were “waiting for sufficient liquidity arrangements”.

The report’s central argument is built around what it calls a misalignment between ownership and control. It notes that promoter shareholding stood at 3.99% as of Q3 FY26, while key executive roles continue to be held by the promoter family, including CEO Punit Goenka.

InGovern also flagged what it describes as a “governance vacuum” after shareholders rejected Goenka’s reappointment as a director in November 2024, while the board allowed him to continue as CEO. 

The report said this structure weakens accountability and “bypasses” the shareholder mandate.

Among the key risk points, InGovern highlighted a large contingent liability tied to the ICC cricket rights dispute with Star, now JioStar. 

It said Star’s damages claim rose to $1.003 billion as of June 2025, and contrasts that with Zee’s counterclaim, which the report puts at $8 million plus interest.

The report also pointed to regulatory scrutiny, including a fresh SEBI show cause notice dated January 16, 2026, linked to inter-corporate deposits, and said this continued regulatory pursuit sits uneasily with the board’s earlier internal review conclusions.

It further noted a GST demand aggregating to Rs 173.6 crore, inclusive of interest and penalties, saying the adjudicating authority upheld the demand in Q3 FY26 and Zee plans to contest it.

InGovern argued that cost-cutting has been sharp. It cited a reduction of about 951 full-time employees from FY23 to FY25, or nearly 28%, and said the company also booked restructuring-related exceptional items in recent periods.

It also raised executive pay as a corporate governance issue, citing CEO remuneration of Rs 17.44 crore in FY25 and an estimated pay ratio of about 40 times the median employee remuneration.

The note laid out a set of “activism levers,” including calls for a board refresh, a forensic audit of related party transactions, and the appointment of a professional managing director to separate “management” from “promoter control.”

It also suggested that institutional investors could consider a buyback if promoters do not increase their stake and proposes stronger governance disclosures, including date-stamped shareholder communications and periodic legal risk updates.

Zee, however, has pushed back strongly on the report’s intent and accuracy, saying it contains “dated issues” that have already been addressed and includes “multiple factual inaccuracies” and “misrepresentation of facts.” 

The company said it has kept shareholders apprised “proactively and transparently” and will issue a detailed rebuttal.