The Hindu Business Line : Adlabs strikes deal with Ram Gopal Varma

THREE months after it became majority-owned by Reliance Capital, Adlabs Films Ltd is understood to have signed a deal with the film-maker, Ram Gopal Varma, to direct a series of films that it plans to produce.

When contacted, Varma, who confirmed the move, said that the discussions covered an initial lot of 12 films. It is likely that the two parties would periodically review the arrangement as they go along. "We intend to start work soon, possibly over the next one month," he said. The 12 films would entail an investment of around Rs 80 crore and the rollout should be completed by mid-2007. "This should qualify to be the biggest investment in film production from organised sources," Mr Sunir Kheterpal, Country Head (Entertainment & Media Banking), Yes Bank, said.

Mr Manmohan Shetty, Managing Director, Adlabs, said the company's intent at this stage is to invest its own funds into the said films. However, Adlabs has interests spanning production to exhibition, and it may look at borrowing funds for film production if its competing needs create a squeeze on available finances.

"As of now, we intend to invest our own funds," he said. Mr Kheterpal saw the Adlabs-Varma tie-up as yet another step in the growing trend of co-production. "Since 2001, co-production, particularly financial co-production, has been on the rise. In 2004, there were 10 films in that category. This deal alone gives a dozen films that status over the next 12-24 months," he said. Adlabs, which started off as a film processing facility, had under Mr Shetty's stewardship, gone public and diversified into film production and exhibition. In June-end, Reliance Land Pvt Ltd, part of Reliance Capital, had announced its proposal to acquire a 51 per cent stake in Adlabs at a cost of Rs 360 crore.

Besides denoting the first big sized investment in the Indian entertainment industry, the move has also brought together a respected film director from the heart of Bollywood and a business group that has in its wings one of the biggest telecom players in the domestic market. The latter was known to have a hunger for content.

Mr Varma said that the scenario of multiple delivery systems for content would be taken into consideration while planning out the new films. "There is a wider scope," he said. Driven by the telecom/media interests of Anil Dhirubhai Ambani Enterprises (ADAE) and the capital strength it gained from entering the ADAE fold, Adlabs has "loosened" the earlier cap it had set on its film production budget.

Mr Shetty said that while there was nothing restricting Adlabs from signing on other prominent directors too, for the time being, it has chosen a long-term tie-up with Varma alone. But recognising the need for content and a single company's inability to produce all that may be wanted by ADAE, Adlabs plans to open a division that would acquire film rights. This should take the company into film distribution as well.

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