After Saregama, report claims Reliance eyeing stake in Dharma Productions

Reports emerged last week that Saregama is eyeing a majority stake in Dharma Productions. Now Reliance Industries Ltd (RIL) is reportedly in discussions to acquire a stake in Bollywood filmmaker Karan Johar's Dharma Productions, reported The Economic Times.

If finalised, the deal would strengthen the oil-to-telecom giant's foothold in India's content production sector. However, the exact size of the stake under negotiation remains unclear.

Karan Johar has been seeking to monetise his stake in Dharma Productions for a while, but previous deals failed due to differences over valuation, the report said citing a source.

Currently, Johar owns 90.7 per cent of Dharma Productions, with the remaining 9.24 per cent held by his mother, Hiroo Johar. The production house has a strong track record, having produced numerous successful Bollywood films.

Reliance’s growing content portfolio

If the acquisition proceeds, it would enhance Reliance’s media and content portfolio, which already includes Jio Studios, Viacom18 Studios, Colosceum Media, and a minority stake in Balaji Telefilms.

Jio Studios, now India’s largest film studio, posted box office collections of Rs 700 crore in FY24. Its co-production with Maddock Films, Stree 2, has emerged as the highest-grossing Hindi film of all time.

Saregama’s interest in Dharma Productions

Earlier this month, reports indicated that Dharma was in talks with Saregama, part of the RP Sanjiv Goenka Group, to sell a majority stake. However, in an October 8 filing to the Bombay Stock Exchange (BSE), Saregama stated that there were no substantial updates on the matter.

In response to these reports, Saregama India issued a statement to the stock exchange, clarifying that while the company regularly evaluates strategic opportunities for growth, there were no material developments to report at that time.

Saregama also affirmed that it would make the necessary disclosures in compliance with applicable regulations, should any significant progress occur.

Dharma Productions’ financial performance

In FY23, Dharma Productions saw its revenue increase nearly fourfold to Rs 1,040 crore, compared to Rs 276 crore the previous year. Despite this, net profit dropped by 59 per cent to Rs 11 crore due to a sharp rise in expenses, which surged 4.5 times to Rs 1,028 crore, according to financial data accessed from Tofler.

The company’s revenue streams in FY23 included Rs 656 crore from distribution rights, Rs 140 crore from digital platforms, Rs 83 crore from satellite rights, and Rs 75 crore from music. In contrast, the previous year saw lower earnings of Rs 19 crore, Rs 167 crore, Rs 34 crore, and Rs 21 crore from these respective sources.