Top leaders of Dharma & Reliance meet for acquisition talks

Amid speculations about Mukesh Ambani-led Reliance Industries Ltd seeking to acquire stakes in filmmaker Karan Johar’s Dharma Productions, it has emerged that the top leaders of both the companies met today to discuss the potential deal.

“The RIL is likely to acquire minority stakes in Dharma Productions,” sources privy to the development told e4m, adding, “Dharma will be able to function in the same way as it is functioning now.” 

While further details of the meeting were not immediately clear, the discussion is moving in the right direction, people in the know said. If the deal materializes, RIL would be able to enhance its existing content production portfolio, which includes Jio Studios and Viacom18 Studios.

The major discussion around any such deal is usually the "deal-size" which largely depends on the "valuation" of the company whose stakes are to be acquired, experts say. It is believed that Friday’s meeting revolved around the same. 

Emails and text sent to Apoorva Mehta, CEO of Dharma, and RIL elicited no response till the time of writing these lines. The story will be updated as and when they respond. 

e4m earlier reported that Saregama, an RPSG group music label, was in talks to acquire stakes in Dharma. The group had reportedly valued Dharma Rs 600 crore, even as the company’s revenue was above Rs 1,000 crore. 

However, Saregama India last week clarified in a stock exchange filing that the company “evaluates various strategic opportunities in the ordinary course for growth and expansion of its business but at this stage there is no material evidence”.

Industry insiders claimed that Dharma approached RIL for a better deal. This potential acquisition appears to be a strategic move by the Reliance group to diversify its portfolio and strengthen its presence in the entertainment sector, industry experts say.

Dharma Productions has been actively seeking strategic partnerships for quite some time in response to rising production costs and shifting consumer preferences toward OTT platforms.

Notably, Dharma is currently reeling under pressure due to losses incurred on poor performance of its recent film Jigra which Karan co-produced with Alia Bhatt. The total collection of Alia starrer 'Jigra' so far after 6 days of release is Rs 21 crore. Meanwhile, Rajkummar Rao, Triptii Dimri's 'Vicky Vidya Ka Woh Wala Video' released alongside Jigra on October 11 has made Rs 25 crore so far, which is also being considered subdued by film critics. 

As per media reports, Jigra was made on a budget of Rs 80 crore, and another Rs 10 crore was allotted to the film publicity. However, Jigra faced allegations of plagiarism. While Johar may have recovered the product cost with sale of digital, satellite and music rights, he could not profit despite a festive season. 

In FY23, Dharma Productions' profit after tax fell to Rs 10.7 crores, down from Rs 27.1 crores in FY22, according to financial data from Tofler. 

Founded in 1976 by Karan Johar's late father, Yash Johar, Dharma Productions is one of India's foremost film production houses, launching its legacy with the film Dostana, starring Amitabh Bachchan. Karan Johar took over the company in 2004 after his father’s demise, expanding its operations into various sectors, including advertising, talent management, content production, and live entertainment through initiatives like Dharma 2.0, Cornerstone Agency, Dharmatic Entertainment, and DharmaShow Live TV & Movies.