The Bollywood giant is positioning itself at the centre of the growing Indian industry. Liza Foreman reports.

In its 30-year history, Bollywood heavyweight Eros International has come a long way as a distributor of Bollywood fare to India's growing number of expats, and is now set to return to its roots where it is muscling in on the country's economic and cinematic boom.

Eros is a vertically integrated company, spanning production and distribution via cinema, home entertainment, television and new media. Its business revolves around the release of 20-25 new films a year and the exploitation of its 1,300-title library.

'My father started the business in 1977 with a view to taking the Bollywood business into international markets,' explains the company's chairman and CEO, Kishore Lulla. Eros now operates in 50 countries and has offices from London to Dubai.

'In the last 25 years, you have seen big changes - 50 million Indians now live outside the country,' Lulla says. 'We created this library and a network to reach them, be it via film, television, video or new media.'

The logic of Eros' shift towards targeting its home country is hard to dispute: with a population of one billion, India has 13,000 existing screens and 25,000-30,000 under construction; and 3.1 billion tickets were sold there in 2005.

'The Indian entertainment business is worth $10bn a year,' Lulla says. 'There's 38% growth in home entertainment and 20% growth in television. There are 800-odd producers, each creating three to four films a year. We thought there's a great opportunity to consolidate this fragmented business.'

This realisation prompted Eros to undertake its IPO in London last year, which raised more than $100m (£50m) for the company's expansion. Since then, it has been busy acquiring catalogues, striking deals with content producers and distributors of all media, and expanding its Bollywood brief to include a select number of arthouse films, such as Jag Mundhra's Provoked, which so far has made close to $800,000 in the UK alone.

New production agreements include a co-production deal with leading Bollywood producer Venus; a five-year output deal with K Sera Sera; the acquisition of a 64% stake in production house Big Screen Entertainer; and a four-picture deal with Rose Movies.

'The name of the game is consolidation of distribution and production in a profitable model and creating India's first vertically integrated studio,' says Lulla.

The strategy is clearly paying off. Through the six-month period ending September 30, 2006, group turnover was up 48% to $21.8m and profit before tax, goodwill and IPO costs was up 102%, to $9.6m.