Zee Entertainment's shares saw an 8% surge after shareholders blocked the reappointment of Punit Goenka as a director during the company's annual general meeting (AGM) on Thursday.
The shares reached a high of Rs 132.60 on the Bombay Stock Exchange (BSE). Voting results revealed that 50.45% of shareholders opposed the resolution to reappoint Goenka as director.
This decision follows Goenka's recent resignation as managing director and his withdrawal of consent for reappointment, which had been scheduled for the AGM on November 28. However, despite these changes, Goenka remains the CEO of Zee Entertainment, a role he will hold for a five-year term, running until 2029.
In addition to the developments surrounding Goenka’s reappointment, the Zee board approved the appointment of Saurav Adhikari as an additional non-executive director, effective November 29.
This appointment, recommended by the Nomination & Remuneration Committee, is pending shareholder approval. During the AGM, Goenka presented his vision for the company’s future, emphasizing efforts to improve short-term performance while ensuring long-term sustainability.
He reiterated the company’s goals of generating attractive returns for shareholders and maintaining profitability with healthy margins. Goenka attributed Zee Entertainment's operational strategy to three pillars: frugality, optimization, and quality content.
Despite challenges like a subdued advertising environment and declining ad spend in sectors such as FMCG, gaming, and direct-to-consumer brands, Goenka remained optimistic.
He highlighted the introduction of New Tariff Order (NTO) 3.0, which allows inflation-linked subscription price adjustments, as a factor helping to mitigate some of the revenue pressures.
Furthermore, Zee Entertainment's growing viewership in key markets has bolstered its position as India’s second-largest entertainment network. Goenka expressed confidence in the company’s ability to navigate a dynamic competitive landscape and continue achieving robust growth.
Zee Entertainment has faced significant challenges in recent months, including the collapse of its planned merger deal with Sony Pictures Networks India. This setback forced the company to streamline operations and control costs.
According to Shriram Subramanian, founder and managing director of InGovern Research Services, the failure to secure the necessary votes for Goenka’s reappointment was expected, as shareholders were dissatisfied with the leadership's inability to complete the merger with Sony.
Subramanian suggested that the board should take this opportunity to reflect on the company's future and leadership.
Goenka had informed the board on November 18 of his decision to step down as managing director to focus more on his operational responsibilities as CEO.
Prior to the AGM, several proxy advisory firms, including Institutional Investor Advisory Services (IiAS) and InGovern Research Services, had advised shareholders to vote against Goenka’s reappointment as director and managing director.
Over the past year, Zee Entertainment's shares have dropped by 48.04%, and in the last three to five years, the shares have fallen by more than 50%.
