The shares of this leading entertainment stock surged over 4 percent on Tuesday’s trading session after the Arbitral Tribunal rejected Aditya Birla Finance’s Rs 134 crore claim. In this article, we will look at the history and the claim details.
With a market capitalization of Rs 11,699 crores, the shares of Zee Entertainment Enterprises Ltd are currently trading at Rs 122 per share, down by 28 percent from its 52-week high of Rs 168.70 per share. Over the last five years, the stock has corrected by over 26 percent.
About the incident
Zee Entertainment Enterprises Ltd (ZEEL) has achieved a success in obtaining a favorable ruling from the Arbitral Tribunal in a Rs 134 crore case filed by Aditya Birla Finance Ltd (ABFL). The dispute had been pertaining to a Letter of Comfort (LOC) which ABFL alleged that Zee had given in relation to a term loan granted to Siti Networks Ltd.
ABFL contended that the LOC was a corporate guarantee and requested several reliefs, including a direction to Zee to repay the due loan as well as interest, totaling Rs 174.57 crore. It also requested a refund of Rs 108 crore, which Siti had remitted to Zee in FY 2020–21.
In turn, Zee strongly refuted that the LOC was not a financial guarantee. The company asserted that the Rs 108 crore was a component of a valid commercial transaction for signals and channels supplied to Siti, as specified in Interconnection Agreements regulated by the TRAI Act. In addition, Zee also made a counterclaim of Rs 15 crore, alleging that this sum was deposited by Siti in fixed deposits on behalf of Zee.
In its latest order, the Arbitral Tribunal rejected all the claims by Aditya Birla Finance Ltd (ABFL) against Zee Entertainment Enterprises Ltd (ZEEL). But the Tribunal failed to pass a final ruling on Zee’s counterclaim of ₹15 crore. Rather, it left the issue in the air, giving both sides the freedom to pursue further redressal before the National Company Law Appellate Tribunal (NCLAT).
With the Tribunal rejecting all of ABFL’s claims, the judgment is a clear legal victory for Zee, which has improved investor sentiment and raised the stock price of the company.
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About the company
Zee Entertainment Enterprises Limited owns TV channels and digital media platforms in India and overseas. It provides Hindi and regional entertainment and movie channels, as well as international and niche content. Zee also makes films (Zee Studios), has a music label (Zee Music Co.), and operates the OTT platform Zee5. It also sells media content and is a space-selling agent.
Written by Satyajeet Mukherjee
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