Karan Johar, the head of Dharma Productions, has acknowledged the increased pressure he feels regarding the company's profitability following a deal with Adar Poonawalla. In a recent interview, Johar opened up about selling a 50% stake in his production company to Poonawalla's Serene Productions for ₹1000 crore. This move marks a significant shift for Dharma Productions, known for its "heartfelt storytelling".
Johar explained that while Dharma Productions was "continuously profitable" and a "zero debt company," the deal was strategically pursued for growth and expansion. He stated that he had dreams that required more funding than was available. He also mentioned that earlier, Dharma Productions had to share profits, but he wanted profitability to stay within Dharma. The partnership aims to transform content creation, distribution and audience engagement by integrating advanced technologies and pioneering production methods.
The deal, announced in October 2024, has placed Dharma Productions under scrutiny, especially considering its financial performance in recent years. In FY23, the company reported revenue of ₹1,040 crore with a net profit of ₹10.72 crore. However, FY24 saw a decline, with revenue halving to ₹512.3 crore and net profit dwindling to just ₹59 lakh. Despite this downturn, the company has been valued at ₹2,000 crore.
Johar admitted that he now has to consider profitability in every decision. He expressed that before the deal, there was never any real accountability, and he is still learning about the business side. He acknowledged that while he will always be artistic, it is important to be commercial as well.
The investment from Poonawalla is expected to enable grander productions. Some industry experts believe that this partnership frees the creative team to focus on content development, creating IPs that resonate not only with Indian audiences but also with the Indian diaspora and global audiences.
Adar Poonawalla stated he was delighted to partner with Karan Johar, hoping to build and grow Dharma and scale even greater heights in the years to come. Karan Johar described the collaboration as "a perfect blend of our emotional storytelling prowess and forward-thinking business strategies," emphasizing the importance of honoring their roots while embracing the future of global entertainment.
Dharma Productions was founded in 1976 by Karan Johar's father, Yash Johar. Karan took over the reins after his father’s death and has led the company since then.
The recent financial data reveals the challenges faced by Dharma Productions, with a steep decline in revenue and profit in FY24. The company's revenue streams include film distribution, digital rights, satellite rights, and music. While revenue from digital platforms and music increased, there was a significant decline in revenue from film distribution and satellite rights.
Despite the challenges, Karan Johar remains optimistic about the future of Dharma Productions. He is also planning to start a music label. With Adar Poonawalla's investment and Karan Johar's creative vision, the company aims to adapt to the evolving preferences of digitally savvy consumers and expand its reach on a global stage.
