Subhash Ghai-promoted Mukta Arts has churned out several blockbusters in the past. But it has had to wait till 2006-07 to cross Rs 1 billion in turnover, dwarfing its earlier best performance of Rs 511.63 million in 2004-05.

The plan now is to increase its production bandwidth and quickly build a large library. As part of this script, Mukta Arts has acquired a 50.01 per cent stake in Manish Goswami's (who runs a TV content company Siddhant Cinevision) start-up movie company Red Carpet Films. A three-movie distribution deal has also been stitched with Eros for Rs 730 million.

In an interview with Indiantelevision.com's Sibabrata Das, Mukta Arts CEO says the company is set to produce 10 films a year by 2010 and create a talent pool from its film institute Whistling Woods International before it starts playing the real big game.

Excerpts:

How has Mukta Arts been able to hit record revenues in 2006-07?
We had a 12-movie satellite telecast rights deal with Zee Cinema. The total size of the transaction is Rs 220 million; we got Rs 180 million in the fiscal 2006-07. We also sold the five-year home video rights to Shemaroo Entertainment for Rs 32.5 million. But there are other reasons for our strong performance in the fiscal. We released four movies in the year - Shaadi se pehle, 36 China Town, Apne sapna money money and Khanna and Iyer.

Mukta Arts has a basket of 26 movies. Will we see the revenue rub-off from the remaining 14 movies even in 2007-08?
The library will come up for renewals in different periods. We expect the total earning potential of the fully amortised library of 26 movies to be upward of Rs 400 million in every five-year window.This will come from re-issue rights of satellite, direct-to-home (DTH), cable, home video, terrestrial TV and other electronic media rights. It will add to our bottomline and our turnover. But the challenge is to scale up the production slate and build a larger library in quick speed.

Which is why Mukta Arts acquired a 50.01 per cent stake in start-up company Red Carpet Films?
The idea is to increase the bandwidth of our production capability. We bought the stake in the newly started movie company at par value. Though Red Carpet Films has not produced any movie so far, it has a distribution deal in place with Eros; it will also have Eros financing four mid-budget movies.

Manish Goswami already runs a successful TV content company. We expect Red Carpet Films to produce at least four movies a year. We will have another source to ramp up our production. We hope to have a film project every quarter through Red Carpet Films. We are also talking to other potential filmmakers for projects.

Are you creating divisions inside Mukta Arts to produce movies for different segments?
Mukta Arts will produce big budget films. Mukta Searchlight will make movies for niche audiences while Malpix will be engaged in regional language films. The segmentation approach is necessary since these are films having distinct identity. We expect to step up our production to 10 films a year. This should be further ramped up including movies produced to release directly on digital format.

But 2007-08 doesn't look like a scale up year for Mukta Arts?
We should be having four films in the year. We have already released Good Boy Bad Boy. While Bombay to Bangkok will be on 18 January, Black & White (directed by Subhash Ghai) will release on 7 March. The Marathi movie will also get reflected in the year. Cycle Kick may come up in the fiscal but Right yaa Wrong will get into the next financial year. We are also producing Yuvraaj (Rs 400 million budget film directed by Ghai) which is slated for release in 2008-09.

The acceleration in producing more movies will be possible once we build an infrastructure for it. Our long term vision is to create a backward integration into education which will drive up talent pool. We expect to benefit from the talent that will get created at Whistling Woods International.

Are you widening the base of Whistling Woods International?
We plan to franchise it beyond the mother campus. We are looking at other key production centres like Bangalore, Hyderabad and Chennai. We also plan to take it overseas like Dubai Media City, South Africa and Nigeria.

Exhibition contributes to 34 per cent of the company's revenues. Will this go up this year?
We do bookings for PVR (all theatres), Adlabs (north), Fun City (north) and Wave Cinema. We also distribute 6-7 movies every year.

Why did you then get into a deal with Eros for distributing three of Mukta Arts' films?
We will get paid Rs 730 million and Eros will have the distribution rights for five years. It made business sense for us as we were getting a higher amount.

Many film production houses have gone in for long term deals with stars and directors. Why has Mukta Arts stayed out of it?
There are only limited number of stars and star directors. Besides, we also don't believe that this is the best way forward. You can't lock in stars. The model works with younger talent; lock them at an early phase.

Why did Mukta Arts sell out to Adlabs and exit from the digital cinema joint venture?
Adlabs bought out our 50 per cent stake in the joint venture company, Mukta Adlabs Digital Exhibition. We realised that there is no standardisation in the marketplace. Globally, there is no technology which meets industry standards. We felt that if we were betting on the wrong technology, it could be a high risk business and our investments would go down the drain.

Does Mukta Arts have a digital plan?
We are learning how to create and repurpose content for digital media. We are also launching two websites - bollywoodmoviemax.com which will have digital downloads and indianfilmtrade.com. Both are on the testing stage.