Yash Johar’s legacy: Why did Karan Johar sell Dharma Production’s 50 per cent stake?

Karan Johar’s Dharma Productions, one of India's biggest film companies recently created a buzz after it sold half its ownership to Adar Poonawalla for Rs 1000 crore. While this was big news, it also hinted at some serious problems the company was facing in terms of finances. 

During the 2010s, Dharma Productions was doing very well. When Karan Johar stopped directing movies to focus on running the company, they produced many successful films like Yeh Jawaani Hai Deewani, 2 States, and Raazi. By 2019, the company was making Rs 700 crore per year and earning profit of Rs 27 crore. 

The pandemic era 

Then COVID-19 hit, and like many film production companies, Dharma also struggled. According to the Hindustan Times, their earnings dropped by 83 per cent and profits fell by 75 per cent. Yet, they managed to recover strongly with successful films like Jug Jugg Jeeyo and Brahmastra. They even did well with their TV shows like Fabulous Lives and Koffee with Karan. By 2022-23, they were making over Rs 1000 crore annually. 

However, things took an unexpected turn in 2023-24. The company's earnings dropped by half, falling to around Rs 500 crore. Even more concerning was that their profits crashed by 95 per cent, reaching their lowest point in over 10 years at merely Rs 59 lakh. These poor financial results might explain why they needed Poonawalla's Rs 1000 crore investment. 

What changed? 

This deal changed the essence of Dharma because it is no longer a single-family-owned business, which has not happened since it was founded by Karan Johar’s father, Yash Johar. 

According to the Hindustan Times, an anonymous source who is also an insider stated, "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." 

An exchange for survival 

Karan Johar, who was very close to his father and often states in interviews and on TV that he does everything to make his father proud and continue his legacy, may have had no other way than to sell half stake to make the company survive. 

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The deal involves Adar Poonawalla investing Rs1000 crore through his film company called Serene Pictures, making him an equal partner in Dharma Productions. Johar hopes to turn things around and make the company successful again, just like he did after the COVID-19 pandemic. Industry experts believe this partnership could benefit Dharma Productions by giving them more freedom to make different types of content and spend more money on their films.