Adar Poonawalla of Serum Institute to Acquire 50% Stake in Karan Johar's Dharma Productions

Billionaire vaccine maker Adar Poonawalla, CEO of the Serum Institute of India, is selecting up a 50% stake in Dharma Production and dharmatic Entertainment, for Rs 1000 crore, valuing Karan Johar’s film and television production and distribution flagship at Rs 2000 crore, said people aware, further posting the ongoing whirl of merger in the entertainment industry.

Ponnawalla’s is making this investment in his private capacity through Serene Productions. Dharma will keep the remaining stake, with Karan Johar continuing as the creative leader of the company in his role as Executive Chairman. Apoorva Mehta will stay on as Chief Executive Officer. 

Karan Johar owns 90.7% of Dharma entertainment, while his mother Hiroo has a 9.24% shares.

A formal announcement is anticipated this week, potentially as soon as today. 

Poonawalla and Johar were unavailable for comment and did not respond to ET’s inquiries.

According to informed sources, a key factor in forming this alliance is Karan Johar's retention of creative control while partnering with a financially robust family he knows well. The Poonawalla investment will provide the production house with the financial strength needed to adapt to the rapidly evolving demands of digitally savvy, often digital-native consumers. The investment will enhance Dharma’s efforts to focus on content for new platforms and formats while still providing engaging stories for a global audience. Film production is a volatile industry, with earnings closely tied to box office performance. Major Hindi film production houses, including Dharma, have been wary of greenlighting new projects due to the unpredictable box office environment, which also affects the value of streaming and satellite rights, according to reports from October 14th.

Dharma has been actively pursuing investments for some time and has held discussions with several major conglomerates and industrialists, including Sanjiv Goenka’s Saregama, with which they already have business ties, in an effort to become part of a cash-rich conglomerate. Conversations with Reliance Industries and Jio Cinema also occurred.

Dharma Productions reported an instant increase in income, escalating nearly fourfold to Rs 1,040 crore in FY23, up from Rs 276 crore the previous year. However, net profit dropped by 59% to Rs 11 crore, largely due to expenses rising 4.5 times to Rs 1,028 crore, according to the latest financial data from Tofler. In FY23, the company generated Rs 656 crore from distribution rights, Rs 140 crore from digital platforms, Rs 83 crore from satellite rights, and Rs 75 crore from music. This compares with earnings of Rs 19 crore, Rs 167 crore, Rs 34 crore, and Rs 21 crore from these streams, respectively, in FY22.

The company was founded by Yash Johar in 1976, with its inaugural film featuring Amitabh Bachchan in "Dostana," Dharma Productions has been guided by Karan Johar and his team since his father's passing. Karan directed his first movie, "Kuch Kuch Hota Hai," at the age of 25 and has since produced nearly 50 Bollywood films, including popular titles like "Kabhi Khushi Kabhie Gham", "Yeh Jawaani Hai Deewani","2 States","Kapoor & Sons" and "Dear Zindagi". Dharma Productions is recognized as a launchpad for numerous young actors, many of whom hail from prominent film families, including Alia Bhatt, Varun Dhawan, Janhvi Kapoor, Ishaan Khatter, and Ananya Panday. In 2018, the company established Dharmatic Entertainment to diversify and produce original content for global streaming platforms. It has collaborated with major OTT platforms like Netflix and Amazon Prime to create shows such as "The Fabulous Lives of Bollywood Wives" and "Call Me Bae". Alongside his blockbuster films, Johar was one of the first among his peers to transition into multimedia, becoming the host of the popular chat show "Koffee with Karan." 

Similarly, over the years, Poonawalla has expanded his business interests, venturing into financial services, real estate, hospitality, and more.