Earlier this month, Karan Johar’s Dharma Productions stirred up significant buzz in the film industry by selling a 50% stake to Adar Poonawalla for ₹1,000 crore. Once regarded as one of the most formidable and influential production houses in Indian cinema, Dharma now finds itself grappling with financial challenges that are only just coming to light.
A Promising Decade
Dharma Productions enjoyed remarkable success throughout the 2010s under Karan Johar’s leadership. As Johar transitioned from directing to focusing on studio management, the production house produced a string of hits including Yeh Jawaani Hai Deewani, 2 States, Humpty Sharma Ki Dulhania, Dear Zindagi, Raazi, and Simmba. By 2019, Dharma was generating annual revenues exceeding ₹700 crore with profits around ₹27 crore, as detailed in the company’s annual reports to the Ministry of Corporate Affairs.
The Impact of the Pandemic
The onset of the COVID-19 pandemic brought the entire cinema industry to its knees, and Dharma Productions was no exception. The company faced an alarming 83% decline in revenue and a 75% drop in profits, mirroring the struggles of many in the industry. However, Dharma made a comeback with hits like JugJugg Jeeyo, Brahmastra, and Sooryavanshi, surpassing pre-pandemic earnings to achieve an annual revenue of over ₹1,000 crore for the financial year 2022-23. Its digital unit, Dharmatic, also thrived with popular shows like Fabulous Lives and Koffee With Karan.
Financial Decline in 2023-24
Despite the earlier resurgence, the financial year 2023-24 has proven to be a low point for Dharma Productions. Revenue plummeted by 50%, dropping to just over ₹500 crore. Profits saw an even steeper decline, plummeting 95% to the lowest levels the company has reported in over a decade, with only ₹59 lakh in profits for 2023-24. Such figures have raised speculation regarding the necessity of Poonawalla’s ₹1,000 crore investment, signaling a significant shift away from the family’s control.
Internal Challenges
An anonymous insider noted, “A lot went wrong for Dharma in 2023-24. Selfiee and Yodha were massive disappointments at the box office. Koffee With Karan also failed to generate the kind of interest it had in its prime. As a result, cash flow was severely diminished.” This turmoil reportedly pressured Karan Johar into selling a stake in the company, despite his desire to maintain control over his father’s legacy.
A New Era for Dharma Productions
Adar Poonawalla’s investment through his new production venture, Serene Pictures, positions him as a 50% partner in Dharma. While this partnership relieves Karan Johar of some financial concerns, it raises questions about the future direction of the company. Analysts believe this deal could offer Dharma more creative freedom and potentially larger budgets for future projects. However, whether this strategy will yield successful outcomes remains uncertain.
As Dharma Productions navigates this tumultuous period, the film industry watches closely to see how this legendary production house will redefine itself in the coming years.