MUMBAI: When Adlabs Films  diversified into the film exhibition business in 2000, and then into film production in 2002, there were a few titters heard.

Seven years later, backward integration  has become a sine qua non as the Indian entertainment and media (E&M) industry draws up strategies to expand.

And news is that the pioneers of cinema multiplex business in India are looking at adopting this strategy to expand business operations.

According to reliable industry sources, the Ajay Bijli-promoted PVR is all set to enter Bollywood by launching its film production business. PVR has already taken a step towards backward integration by diversifying into the film distribution business under a fully owned subsidiary (FoS) called PVR Pictures.

And adding film production to its portfolio is considered to be the next step in this direction. Concrete announcement on this new business foray is expected in another 3-4 weeks.

Both Ajay Bijli, chairman and managing director, PVR Ltd, and its executive director Sanjeev Kumar refrained from making comments. However, industry sources revealed that the film production foray will most likely be launched under PVR Pictures.

“From what I gather, the company is either in the advanced stages of discussion or has already entered into an agreement for co-producing two movies with Aamir Khan Productions,” sources said.

PVR will be the third player entering into the country’s film production business in the past 6-8 months.

Earlier, two fairly new entrants — Chennai-based Pyramid Saimira Theatre Ltd (PSTL) and Moser Baer Entertainment — had announced their foray into film production.

In October last year, Pyramid Saimira stepped into the film production business through a film fund to the tune of $150 million. While the structure of the fund has been completed just recently, the promoters are in the final stages of taking a decision on how to take it forward.

Meanwhile, PSTL has already begun to fund film production directly.

The recent release in Tamil, Mozhi, produced by actor Prakash Raj, was funded by Pyramid Saimira to the tune of Rs 4.5 crore. P S Saminathan, Pyramid Saimira’s MD, said: “There are various reasons for adopting this strategy. One, it helps in eliminating the middle-men thus adding 20% in terms of revenues to total earnings from that project secondly, we can have predictable inflow to our theatres which is very crucial in our line of business.”

For Moser Baer, entering the film production business was all about adopting the forward integration strategy now that capacity, content and supply chain was already in place.

G Dhananjayan, COO of Moser Baer Entertainment, said: “Film production was certainly the way forward for us considering the necessary infrastructure and distribution for optimum exploitation of the content was in place.”

With two films on the floor already, Moser Baer expects to launch at least 7 films in a year. While focus will certainly be on mainstream Bollywood films, the company will also produce regional films on a case to case basis.

Though, the overall capital expenditure earmarked by Moser Baer for their entertainment business is around Rs 500 crore, the management expects around Rs 100 crore to be invested in films in the next three to five years.

A few other examples of companies adopting backward integration, partially though, include E-City Venture’s Fun Cinemas and INOX Leisure. INOX though has not entered the film production business in a full-fledged manner as yet, the company is open to co-producing films as and when the opportunity knocks.

“Mangal Pandey — The rising was partly funded by us,” said Alok Tandon, chief operating office, Inox Leisure Ltd.

But not all have hopped on. Vishal Kapur, COO, Fun Multiplex, said: “The focus is more on establishing the distribution network. Once the critical mass is in place, film production as the next level of backward integration will be thought over for sure. But there are no immediate plans to get into that business.”

Kick-starting the distribution business with English movies, this year Fun Cinemas will get aggressively into the distribution of Hindi entertainment content through its network of 50 screens across the country.

The consensus is that with more Indians watching movies and incredible advances in technology will help the entertainment and media industry see better times in the coming years.