Dharma-Adar deal gives quest for scale a chance

Kuch Kuch Hota Hai, Kabhi Khushi Kabhie Gham, and Rocky aur Rani Ki Prem Kahani are among filmmaker Karan Johar's biggest hits. They are sweet, funny, and romantic. None, however, had an unexpected twist in the tale like the announcement that came on Monday. Johar will sell half his stake in Dharma Productions, the company he owns and runs as executive chairperson, to Serum Institute of India's Chief Executive Officer Adar Poonawalla for ₹1,000 crore.

- VANITA KOHLI-KHANDEKAR

There had been speculation about Dharma selling to either Saregama, Reliance Industries, or the Adani Group. Poonawalla, however, was never in the reckoning, not even by some of the biggest advisory firms representing potential buyers for Dharma.

"This has to be one of the weirdest couplings," says one consultant. "There is a dearth of strategic capital to fuel this business. What you are seeing is consolidation and external capital coming in. It is a very welcome move," says Vikram Malhotra, founder and CEO of Abundantia Entertainment, the makers of Toilet: Ek Prem Katha and Airlift, among others.

That is the first important takeaway from this deal - the business of making films and TV shows needs capital. And sellers (and their investment bankers) need to cast their net far and wide - capital could be sitting anywhere.