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Five things you need to know before the Zee Entertainment AGM

Proxy advisory firm Institutional Investors Advisory Services (IIAS) had asked the shareholders to vote against the proposal to re-appoint Ashok Kurien on the company's board.

September 14, 2021 / 03:24 PM IST
Punit Goenka.

Punit Goenka.

Media company Zee Entertainment will be holding its 39th annual general meeting (AGM) of the equity shareholders today. Here are a few things to know before the AGM.

Read | Zee Entertainment boardroom coup: What’s in store for investors?

1. ​Ahead of the meeting, two independent directors Manish Chokhani and Ashok Kurien, resigned from the board on Monday after the company's two biggest investors, Invesco Developing Markets Fund and OFI Global China Fund LLC, sought the ouster of three directors, including CEO Punit Goenka.

Proxy advisory firm Institutional Investors Advisory Services (IIAS) had asked the shareholders to vote against the proposal to re-appoint Ashok Kurien on the company's board. However, the two directors stepped down ahead of the AGM with Chokhani citing changed life circumstances and Kurien due to his pre-occupation.

Also read: What triggered the boardroom scrap at Zee Entertainment?

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2. ​While the extraordinary general meeting will be the deciding factor, for the AGM the key things to look for will be business growth prospects, strategy on digital, views on new board composition, said analyst Karan Taurani, senior Vice-President, Elara Capital.

Zee network's market share has declined from 19.7 percent in FY19 to 18.4 percent and 18 percent in FY20 and FY21 respectively.

The company in its annual report has noted that the network's share dropped in FY21 due to the non-availability of fresh content in the first quarter and the weak performance of some of the channels especially in Hindi, Tamil and Marathi markets.

Experts also point out that the company will need to focus on Zee5's content strategy to acquire new users.

3. Another key aspect will be views on new board composition if Goenka steps down as CEO.

IIAS which is a member of the Nomination and Remuneration Committee (NRC) of ZEEL had recommended voting against Goenka's reappointment on account of the weak oversight over the business, concerns over related party transactions, and other governance concerns.

IIAS also pointed out that Zee management had confirmed that Goenka had taken a voluntary pay cut of 20 percent in his fixed salary from April 2021, but his pay increased by 46 per cent, higher than what was approved by shareholders in the 2020 AGM while the employees did not get any hike.

4. Analysts tracking the media company are saying that appointment of new directors will improve corporate governance. Hence, it will also be important to see the views on names suggested by Invesco -- Surendra Singh Sirohi, Naina Krishna Muurthy, Rohan Dhamija, Aruna Sharma, Srinivasa Rao Addepalli and Gaurav Mehta for independent directors’ position at Zee.

5. Analysts are expecting re-rating of Zee Entertainment stocks and the gap between Zee’s market value and intrinsic value to narrow. According to Kotak Securities, the changes in the company will result in an end to governance concerns, improvement in cash generation and a possible change in management.

Also read: Zee Entertainment share price zooms; what should investors do?
Maryam Farooqui
first published: Sep 14, 2021 02:49 pm

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