Earlier this month, Karan Johar's Dharma Productions generated quite a lot of frenzy in the cinema business world when they sold 50% stake to Adar Poonawalla for ₹1000 crore. As one of the biggest and most influential production houses in Indian cinema, Dharma was long considered infallible, almost invincible. However, the deal showed that there was a lot wrong with the company beneath the glitzy exterior. Now, the company's financials - which have been revealed this week - show just how dire the situation was. 

Dharma Productions's brave return after Covid-19

Dharma had been on the rise throughout the 2010s under Karan Johar's stewardship. As the filmmaker left direction to take on the role of studio head full time, the production house gave hits like Yeh Jawaani Hai Deewani, 2 States, Humpty Sharma Ki Dulhania, Dear Zindagi, Raazi, and Simmba. By 2019, Dharma was generating annual revenue of over ₹700 crore with profits of around ₹27 crore, as mentioned in the company's annual reports submitted to the Ministry of Corporate Affairs.

Then, the pandemic hit, and it all came crashing down for the cinema industry. Dharma had a dramatic 83% drop in revenue and a 75% dip in profits as did many other production houses. But the company bounced back. With hits like JugJugg Jeeyo, Brahmastra, and Sooryavanshi, Dharma exceeded its pre-pandemic earnings, topping with an annual revenue of over ₹1000 crore in the financial year 2022-23. Its digital unit - Dharmatic - also did well with successful shows like Fabulous Lives and Koffee With Karan.

Where it all went wrong

But 2023-24 proved to be the nadir for Dharma. Its revenue dipped by 50%, dropping to just over ₹500 crore. The profits were hit even harder, dropping 95% to the lowest the company has seen in over a decade. As per figures procured by Tofler, Dharma showed a meagre profit of only ₹59 lakh in 2023-24. The figures raise speculation if this was the cause behind the company needing the influx of ₹1000 crore from Adar Poonawalla, which effectively meant it is no longer a family-owned establishment for the first time in history.

An insider who does not wish to be named says, "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 did in its heyday. And as a result, cash flow was very diminished." Those in the know say that Karan Johar's hand was almost forced into selling the stake even though the producer wanted to retain control of his father's company.

The deal and the future of Dharma

Adar Poonawalla's ₹1000-crore investment comes via his new production venture Serene Pictures, which makes it a 50% partner in Dharma. This frees Karan Johar from worrying about the finances, albeit only temporarily. The filmmaker would hope he can once again shepherd the company to a healthy state like how he did post-pandemic. However, trade analysts feel that the deal will allow more freedom to Dharma with regard to content and greater room for bigger budgets. It all boils down to whether it will work or not, and that remains to be seen.

Read Also: Diljit Dosanjh fan watches his Delhi concert from the best seat: On an aeroplane! Singer reacts