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Case B of the two-part series “Zee Entertainment and Essel Group: A Quest for Legacy and Beyond” describes the evolution and eventual resolution of the personal crisis that looms in front of Subhash Chandra, Chairman of Zee Entertainment Limited, in Case A. Chandra was very well-known in India as a successful entrepreneur who brought entertainment to the masses in the 1990s through his television channel Zee. Although Zee had performed very well over three decades, Chandra found himself under significant debt stress due to failures associated with his infrastructure business, which he had founded in 2007. By January 2019, Chandra had offered most of the shares of the listed firms he owned as collateral to banks to borrow additional debt to sustain his infrastructure business. Several developments had occurred by this time that deepened Chandra’s predicament, including the tightening of credit by financial institutions, a statutory body investigation into a firm that he owned, and an investigative report outlining his personal indebtedness. These factors contributed to a dip in the stock price of many listed Essel Group companies, and banks threatened to sell the shares of companies of Chandra’s thriving media business to recover the debt. Chandra had to sell assets of his infrastructure business and most of his stake in Zee to pay off his debt. Corporate governance lapses at Zee also emerged at the time of the stake sale by Chandra, particularly around related party transactions with other companies that he and his brothers owned. Although his son Punit Goenka continued as the CEO of Zee, Chandra had to resign his chairmanship of the company and was left with a measly 5% stake in Zee, with the dominant shareholders now being institutional investors.
By offering a first-hand view of Chandra’s decisions and challenges, the case shows how skilled entrepreneurs often end up destroying value and personal wealth in the hunt for legacy and wealth creation. The case also looks at the potential corporate governance challenges that may arise when a powerful figure is at the helm of the firm.