Is Saregama valuing Dharma at Rs 600 crore?

In a major development, Saregama, an RP Sanjiv Geonka group company, is believed to be close to acquiring a significant stake in Karan Johar's Dharma Productions, valuing the company at Rs 600 crore, e4m has learnt from sources.

While details of the current acquisition are not immediately known, industry observers speculate that India’s oldest music label may acquire more stake in Dharma in the future. The potential acquisition could be Saregama’s strategic move to diversify its portfolio and strengthen its foothold in the entertainment sector, industry watchers share.

e4m sent a detailed questionnaire to both Saregama and Dharma. They remained silent on the matter, with no official confirmation from either party. The story will be updated as and when they respond.

e4m on Monday (7th Oct) reported about Dharma potentially seeking investors and reaching out to Saregama . Amid acquisition reports, Karan Johar on Monday evening announced to stop pre-release screenings of Dharma Productions films, as reported by e4m.

On August 10, e4m was the first to report that the Dharma Productions is looking for suitors.

This deal would be the second big acquisition for SaReGaMa after the takeover of digital entertainment startup-Pocket Aces in FY24, which it described as “the secret sauce” that will help them transition to newer forms of content.

In November 2023, Saregama acquired a 51.8% stake in Pocket Aces for Rs 175 crore. It later purchased the remaining 48.2% for over Rs 209 crore in August this year, taking the total acquisition cost of Pocket Aces to about Rs 385 crore.

Observers suggest that SaReGaMa’s interest in Dharma Productions is driven by the latter’s well-established brand and rich history in Bollywood, along with its recent expansions into various entertainment sectors, such as digital content and talent management. An acquisition could allow Saregama to harness Dharma’s expertise and reputation, fostering synergies between music production and film to create innovative content that resonates with audiences.

This development arose amid a notable decline in Dharma Productions' profit after tax, which fell to Rs 10.7 crore in FY23 from Rs 27.1 crores in FY22, according to financial data from Tofler.

On the other hand, SaReGaMa posted Rs 866 crore in revenue from operations and Rs 197 crore in net profit in FY24. The company’s performance is led by growth in music licensing on account of advertisement revenues driven by its investment in new music and the revenues generated through the artist management vertical.

Founded in 1976 by Karan Johar's late father, Yash Johar, Dharma Productions is one of India's foremost film production houses, starting its legacy with 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.