One of the giants of the Indian film industry is looking to enter the British market by taking over Reel Cinemas, the award-winning Midlands-based group that specialises in small luxury theatres that show art house films and classic movies alongside Hollywood blockbusters.

Pyramid Saimira Group, which is based in Madras and is one of the biggest players in south Indian cinema, is in talks to take control of Reel in a deal that would value the British company at between £25 million and £30 million, sources in Bombay said.

Kailash Chander Suri, the entrepreneur who founded the privately-owned Reel in 2001, said that talks over a tie-up were ongoing.

Reel operates 13 cinemas in the UK and has plans to open another seven over the next two years. The company has won a following among cinema-goers with niche tastes looking to avoid large multiplexes - partly by serving alcohol in its foyers before and after screenings of cult films.

The group was created when Mr Suri acquired the art deco Curzon Cinema in Loughborough. This year the theatre was named by Walt Disney as one of the best in Britain.

A tie-up would mark the first foray into the British theatre business by one of the mainstays of the Indian film industry. Pyramid Saimira, one of the subcontinent's most prominent film producers and distributors, already operates in six countries. Last year the Indian company announced plans to raise $1 billion to fund an ambitious international expansion plan.

The discussions with Reel are "in a primitive stage" the company said.

Pyramid Saimira, which was established 10 years ago, owns a chain of cinema halls in southern India. It has also expanded to the US and parts of Southeast Asia, including Malaysia and Singapore.

It operates about 800 cinema movie screens and is collaborating with Walt Disney on new productions.

Several Indian film companies already have their sights set on the West. In May, Anil Ambani, the Indian industrialist, announced a $1 billion foray into Hollywood through tie-ups with a roll-call of A-list stars including George Clooney, Nicholas Cage, Tom Hanks and Brad Pitt. He is expected to announce a similar funding deal with Steven Spielberg in the coming months.

India's movie moguls are especially interested in tapping the relatively deep pockets of Western movie buffs. India is the largest producer of films in the world, with more than 1,100 films released and about 3.7 billion tickets sold every year, more than twice as many as in the next biggest market, the US. However, tickets are still sold for tiny amounts at most Indian box offices, which means that returns remain slender when compared with the US and the UK.

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