Bollywood's dream factory may churn out twice as many movies as its Hollywood mentor and at a fraction of the price but despite the relative success in the West of movies such as Monsoon Wedding and Om Shanti Om, the Indian film industry is striking deals with Hollywood studios to make world-class blockbusters.

Kishore Lulla, the chief executive of UK-listed Eros International, with a family fortune of £206 million, according to The Sunday Times Rich List, believes Bollywood, an industry worth $10 billion (£5 billion), is now where Hollywood was in the 1930s and 1940s. However, he thinks it will take Bollywood just ten years to catch up.

Humble and quietly spoken, yet often in the company of Bollywood glitterati, Mr Lulla is credited with taking his family business around the world. There are offices from Fiji to the Isle of Man. He has evolved Eros from a Bollywood film distributor into an integrated studio.

“I told my father that Indian film would go global and chose to set up our base in London. I said one day we would be as big as Warner or Disney,” says Mr Lulla, who has two daughters in their twenties whom he hopes will follow him into the family business.

Last October, he joined forces with Sony Pictures to co-produce films. In marked contrast to Hollywood, where an action or animation film is rarely made without a studio signing up a video games manufacturer and merchandising partners, Bollywood currently makes virtually no revenues from games and merchandise, but Eros wants to change that.

“We are in talks with two companies about creating games for two forthcoming films,” he says. Eros is understood to have spoken to leading games developers such as Vivendi's Activision and Sony.

The budget of the a Bollywood film is usually between $5 million and $20 million, but Mr Lulla intends to use his venture with Sony to increase this to $40 million. The pair have held meetings with artists and writers in an attempt to create a new superhero that will appeal to the global market.

They are planning to create a Spider-Man-type character in Hindi and have hired Charles Darby and a top visual effects team. Mr Darby is the renowned matte artist who has worked on dozens of films from Waterworld to Harry Potter and the Goblet of Fire.

“I have turned down many Indian animation films recently because they have been poor quality,” says Mr Lulla. While Indian cinema is famed for its ability to pull on the heart strings, or “providing a button to cry” as Mr Lulla puts it, he is aware that visual effects may need to be improved for the industry to achieve a mooted goal of reaching the $50 billion mark by 2015.

Eros was begun by Kishore's father, Arjan Lulla, 30 years ago with a view to exporting Indian films worldwide and tapping into the video boom of the 70s and 80s. It has seen a 60 per cent fall in its market value in the past year, with the company now valued at £349 million. However, Mr Lulla believes that the growth of Indian cinema and the increase of multiplexes in emerging markets such as South-East Asia makes this a healthy area in a challenging media sector.

There are about 1.1 billion people in India, 350 million in the middle class and 30 million joining the middle class every year. The industry sells twice as many tickets as Hollywood, although they cost only about $1. With the country set for thousands more multiplex screens, he expects ticket prices to rise by $2 or $3 - a big percentage.

The plan is for organic growth. Mr Lulla says there are no plans for acquisitions, despite revealing that a banker recently asked if he would consider buying a stake in Steven Spielberg's DreamWorks studio, currently the subject of talks with Indian billionaire Anil Ambani's Reliance Group. But while he may want to build a studio on the Hollywood model, he worries about investing in the real Tinseltown. “Getting too involved with Hollywood is risky at the moment.”

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts