Reliance Industries is reportedly in discussions to acquire a stake in Dharma Productions, the Bollywood production house helmed by director and producer Karan Johar.

What Happened: Johar has been seeking to monetise his stake in Dharma Productions for some time, but earlier negotiations have faltered over valuation disagreements, sources familiar with the matter told the Economic Times. A potential deal would bolster Reliance’s presence in India’s content production sector, though the size of the stake under negotiation has not been confirmed.

Currently, Johar owns 90.7% of Dharma, with the remaining 9.24% held by his mother, Hiroo Johar. The company is well-known for producing a significant number of popular Bollywood films.

Problems Pile-Up: The negotiations come at a time when the Hindi film industry grapples with a number of speedbumps, such as rising production costs, reduced theatre attendance and a shift towards over-the-top (OTT) platforms. Dharma Productions’ latest release Jigra, starring Alia Bhatt has been caught in a storm of accusations, including inflated collection numbers and script mishandling.

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An industry insider told the Business Daily that Reliance has previously picked up a minority stake in Balaji Telefilms and a similar arrangement could be on the table with Dharma Productions. Such a partnership would further strengthen Reliance's media portfolio, which already includes Jio Studios, Viacom18 Studios, Colosceum Media and its stake in Balaji Telefilms.

Jio Studios, now India's largest film studio, achieved box office collections of ₹700 crore in FY24. One of its co-productions, Stree 2, in collaboration with Maddock Films, has become the highest-grossing Hindi film of the year.

Second Time Lucky? Dharma had previously been reported to be in talks with Saregama, backed by entrepreneur Sanjiv Goenka, for the sale of a majority stake. However, Saregama clarified in a BSE filing on October 8 that it had no material updates to share on the matter.

Financially, Dharma Productions saw its revenue surge nearly fourfold to ₹1,040 crore in FY23, up from ₹276 crore the previous year. Despite this revenue growth, net profit dropped 59% to ₹11 crore, largely due to expenses mounting four and a half times to ₹1,028 crore.

The unpredictable nature of the film industry continues to affect the financial performance of companies like Dharma, with earnings largely dependent on the success and volume of their latest releases. As a result, major Hindi production houses have been cautious about greenlighting new projects, which have also hit the value of streaming and satellite rights.

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