Explained: What the Rs 1000 crore deal means for KJo and Adar Poonawalla

Serum Institute of India CEO Adar Poonawallaled Serene Productions on Monday said it will pick up a 50 per cent stake in Karan Joharrsquos Dharma Productions and Dharmatic Entertainment for Rs 1000 croreThe past few months had witnessed speculation in the entertainment industry that Karan Johar was planning to sell a stake of Dharma Productions Saregama and Reliance were said to be frontrunnersBrahmastra Part OnemdashShiva 2022 and Rocky Aur Rani Kii Prem Kahaani 2023 were two of Dharmarsquos recent hitsWith this deal Poonawallamdashthe CEO of Serum Institute of India SII and Chairman of Poonawalla Fincorpmdashis foraying into entertainment through his Serene ProductionsThe deal which sees Karan retaining his position as the Executive Chairman and Apoorva Mehta as the CEO is being viewed as a winwin for both parties In terms of numbers prima facie this deal values Dharmamdash which includes its digital arm Dharmatic Entertainmentmdashat Rs 2000 crore Sources say it is an optimistic valuation An insider says ldquoKaran has got a good valuation Technically Dharmarsquos revenue fell by 50 per cent in the last financial year In 20222023 its revenue was said to be at Rs 1000 crore Brahmstra Part OnemdashShiva 2022 was a major contributor to the profit However in 202324 even though the company witnessed a spike in its digital and music earnings its total revenue had a 50 per cent drop as it did not have a blockbuster But Adar has invested in the company looking at its equity and Karanrsquos creative might A part of the Rs 1000crore investment will be directed to the original investorsmdashKaran and his mother Hiroo Joharmdashwhile the remaining will be allocated towards productionrdquoAdar Poonawalla and Karan JoharFor Poonawalla who has long been friends with Karan it is a strategic investment as it gives him a significant stake in the media industry Another source breaks it down ldquoFor Adar Poonawalla itrsquos a great diversification after dominating the pharmaceutical and financial sectors This move will bring corporate culture into the corridors of Dharma All the heavy lifting that Karan and Apoorva had been doing in terms of cost management will now be delegatedrdquo As is the norm with such deals the company is expected to undergo restructuring ldquoSome of Adarrsquos people will take key positions at Dharma and there will be a lot of layoffsrdquo saysanother sourceIt is understood that the roles will be clearly divided in the 5050 partnership Decades after his filmmakerfather Yash Johar founded Dharma in 1976 Karan took the company to new heights with his vision He not only helmed many blockbustersmdashfrom Kuch Kuch Hota Hai 1998 to Student of the Year 2012mdashbut also backed many directors becoming something of Bollywoodrsquos big daddy ldquoNow Karan will spearhead the companyrsquos creative operations and lead it from the front Adar wants to stay away from the creative aspect So everything related to films will be handled by Karan including the star fees and the budget on which a film is to be mounted Adar will look at the operational aspects probably telling him how much money can be spent on the workforce how much bonus to be given and so onrdquoThe equal partnership that Poonawallarsquos deal afforded was one of the reasons why Karan inked the deal In contrast Saregama owned by Sanjeev Goenka and Reliance Industries were reportedly in the bidding war to buy a majority stake in Dharma A source reveals ldquoSaregama was willing to acquire the stake for R800 crore Adar outbid both the players But another crucial reason is that neither of those giants would have gone into a 5050 partnership It has been seen historically that Reliance eventually acquires the companies it buys stakes inrdquo The partnership is being viewed as a huge boost for the Hindi film industry which has been struggling since theatres reopened after the pandemicinduced shutdown When pharma meets films1 Adar Poonawalla is the CEO of Serum Institute of India the worldrsquos largest vaccineproducing company in terms of volume which produced Covishield in India He is also the Chairman of Poonawalla Fincorp2 The Rs 1000crore investment in Dharma Productions marks the pharma tycoonrsquos foray into the entertainment industry with Serene Productions3 In the 5050 partnership Karan Johar will retain his Executive Chairman position and spearhead the creative operations Apoorva Mehta will continue as the CEO4 Part of the investment will be directed to the original investorsmdashKaran and his mother Hiroo Joharmdashwhile the remaining will be allocated towards production5 Saregama and Reliance Industries were said to be in the bidding war to buy a majority stake in Dharma