Serum Institute of India CEO Adar Poonawalla will acquire a 50% stake in Karan Johar’s Dharma Productions and Dharmatic Entertainment for Rs 1,000 crore. The deal clinched by Poonawalla’s Serene Entertainment in his personal capacity values the film and television production and distribution company at Rs 2,000 crore. Johar will retain the ownership of the remaining 50%.
For Serene, this deal offers a foothold in a Rs 20,000-crore (2023; Statista) Indian film industry, while Dharma Productions gets crucial resources amid rising production costs. Unconfirmed reports earlier said that Johar was in talks with Reliance and Saregama for the stake sale.
“The Indian film industry is moving through a phase wherein it’s a winner-takes-all market, as large budget films account for 85-90% of Hindi box office in the post-Covid era. We believe this deal is a longer-term equity-led partnership, wherein Dharma will continue to invest in large budget films, given the capital raise,” said Karan Taurani, senior analyst at Elara Capital.
“India has seen exit/scale down by multiple global studios in the film content business in the past. The Serene-Dharma deal might trigger the entry of other large conglomerates with deep pockets in the film industry,” Taurani added.
Dharma has had partnerships with studios such as Disney and Zee in the past to produce Hindi films. The current investment is aimed at expanding large-scale, multilingual productions, building franchises, and taking traditional entertainment formats a notch higher, say observers.
“We hope to build and grow Dharma and scale even greater heights in the years to come,” Poonawalla said on the investment.
Dharma stands to gain much from the Serene investment. According to financial data from Tofler, the film production company’s total revenue declined 50% from Rs 1,044 crore in FY23 to Rs 520.20 crore in FY24. Revenue from distribution and exhibition of films fell to Rs 111 crore in FY24 from Rs 656 crore in FY23. Even revenue from satellite rights saw a drop of 15% to Rs 70.3 crore against Rs 83 crore in FY23. The business digital platforms and music, however, performed better. While the digital platforms revenue touched Rs 163 crore in FY24 against Rs 140 crore in FY23, revenue from music touched Rs 82 crore, compared with Rs 75 crore.
Improving earnings is currently a challenge not just for Dharma Productions but also for the entire Hindi film industry due to a slowdown in the number of box office hits. Besides, the growth of OTT platforms has upended the traditional ways the production companies made money while opening up new opportunities for digital content.
While the film production cost remains high (the budget for an average large-scale Hindi film is in the range of Rs 200-300 crore), footfalls in theatres haven’t gone up significantly to cover it, analysts point out.
On the day Dharma announced the Serene deal, Ormax Media released a report that said the Rs 1,066-crore box office earnings in September were led by non-Hindi movies—with Devara Part-1 (Telugu), The Greatest Of All Time (Tamil), A. R. M. (Malayalam), Kishkindha Kaandam (Malayalam), and Lubber Pandhu (Tamil) being the top 5.
The cumulative box office collections for the January-September releases stand at Rs 7,949 crore, according to Ormax, which is 9.5% below the same period in 2023.