For someone who cannot tell the difference between a Priyanka Chopra and a Lara Dutta and who’s barely seen a handful of Hindi films, Raaja Kanwar’s foray into India’s booming entertainment industry is surprising. Last April, the striking 36-year-old son of Onkar S. Kanwar, chairman and managing director of the Rs 2,300-crore Apollo Tyres Limited, launched Valuable Media Private Limited, a company that’s making theatres across the country go digital. “It will change the way films are distributed and exhibited in India,” says Kanwar.

Launched as a subsidiary of Apollo International which exports and trades in tyres, Valuable Media is run by Kanwar and his business partners, including technology whiz Sanjay Gaikwad, who set up Zee’s lottery business Playwin and later, Lottus lottery for Apollo.

Under the brand UFO (United Film Organisers) Moviez, the company has already equipped 210 theatres with digital projection systems in states like Chhattisgarh, Gujarat, Maharashtra, Tamil Nadu and West Bengal. “By next week we’d have covered 250 theatres,” says Kanwar, who is extremely upbeat about his digital cinema business. By June, he is expecting 500 theatres to go digital, pushing up his investment from Rs 50 crore to Rs 80 crore.

When Kanwar, who studied finance and photography at Drexel University in Philadelphia, says that UFO is revolutionising the cinema exhibition business, he means several things. First and foremost, his digital system eliminates the need for a celluloid print of the film. His company converts the film into a digital format and sends it to theatres through a satellite. At the theatre the film is downloaded via a V-Sat antenna to a high-end server and screened through a digital projector.

Each celluloid print costs Rs 60,000 to Rs 70,000 to make. “It adds to the financial burden of the producer, distributor and exhibitor,” says UFO Moviez CEO Sanjay Gaikwad. Thanks to the high cost of prints, on an average, a producer releases about 100 of them to be shown in A class cities. After their stint in the metros and big cities they are shipped to the B and C class towns. In the interim, the commercial value of the film gets eroded and the quality of the print also deteriorates.

The gap between the release of the film in different cities also fuels piracy. “Digital cinema is a direct attack on piracy as the films are digitised and encoded,” says Gaikwad. UFO has outsourced the satellite delivery of films to HECL, a Hughes-Escorts company.

Clearly, UFO has positioned itself as a service provider to the entertainment industry. Says Kanwar: “I am not competing with a Prakash Jha or a Yash Chopra. I’m just providing the highway ? you could pay me a toll and ride it.”

Kanwar’s optimism notwithstanding, critics point out that several companies attempted to create the digital highway for cinema in the past and failed. Mumbai-based Adlabs Films Limited was among the pioneers that launched a digital cinema business a few years ago. However, media industry analysts say that today Adlabs’ digital cinema projection system is available in fewer than 30 theatres, down from the 80 it was installed in earlier.

Adlabs Multiplexes chief operating officer Tushar Dhingra says that the company now operates 23 digital cinema theatres. “At the moment, we are focused on our multiplex business and on the branding of our theatres,” says Dhingra. However, he adds that there is scope for growth in both the businesses. “Digital is the future,” he observes.

Entertainment industry insiders say that the Adlabs model did not work as it did not deliver films through satellites. “Pushing films on hard disks to theatres in remote towns can be a logistical nightmare as well as expensive,” observes Kanwar.

That is not all. UFO executives say that other companies that got into the business used the MPEG 2-based encoding system that does not deliver a very high quality picture. “But we are using the MPEG 4-based system,” says Gaikwad, explaining that the latter is the latest technology in video encoding and compresses data far more efficiently than MPEG 2.

Even so, the cost of putting up a digital system is high and the profits are likely to trickle in very slowly. UFO, for instance, invests Rs 15 lakh in each theatre in setting up the equipment. It asks for a Rs 2 lakh deposit from the theatre owner, though, and a nominal sum per show, both from the distributor and the exhibitor. Kanwar estimates that individual theatres should start breaking even in one-and-a-half to two years.

Another glitch, some feel, is that the quality of digital films does not measure up to the quality of a celluloid print. Promoters of digital cinema, however, insist that there is no loss in the quality of the image. Explains Adlabs’ Dhingra: “It would depend on the power of the digital projector. If a weak projector blows up the image too much the picture gets pixellated like in a photograph. But there is no loss in digitisation.”

It’s not that Kanwar is not aware of the sceptics. After all, he had a hard time getting the relevant approvals from the board of Apollo International last year. But his determination to steer the business ahead stems from the fact that “nobody has done 200 theatres in six months,” he says. Besides, the company has successfully digitised and screened nearly 60 films, including big ones such as Bluffmaster, Rang De Basanti, No Entry and Zinda.

Not surprisingly, UFO Moviez is moving into UP and Punjab this year and targeting 2,000 screens by the end of 2007.

Kanwar is confident of achieving the number as the main bottleneck ? shortage of digital projectors ? has been overcome. “It took Panasonic some time to deliver such a large order for digital projectors,” says Kanwar. Two companies, Panasonic in Japan and Digital Projections in the UK, are now supplying 100 projectors a month.

So where does the company go from here? For starters, it hopes to go international. The attempts are to tie up with theatres in non-resident Indian-populated locations abroad like New York and New Jersey and the Silicon Valley in the US, Dubai in the Middle East, London, Singapore and Hong Kong. “Imagine offering a producer 500 theatres in India, and, say, 35 in the US, 10 in London and 5 in Dubai for simultaneous release of his film,” says Kanwar.

In the long run, the Valuable Media business model could be extended to reach individual homes. “We could provide a set top box and, say, download 10 films on a pay per view basis. These could be delivered via satellite or broadband,” says Gaikwad, adding however, that there are no immediate plans to do it yet.

Kanwar is not closed to the idea either as he’s experienced the joys of pay TV during his stay in the US. “Boxing was huge and I’d pay $ 35 to my pay TV guy to watch Evander Holyfield and Mike Tyson slug it out,” he recalls.

Other than growing his entertainment business (“because the lowest common denominator to the biggest guy in India wants entertainment”), Raaja Kanwar is very hot on the media business. “I believe that the media business is the most powerful business in the world,” he says. He is not closed to the idea of launching or acquiring a newspaper or a TV channel, he says.

To update himself on showbiz, Kanwar now finds himself flipping through Stardust and Cine Blitz, in addition to his favourite Vogue, BusinessWeek, etc. “I also watched Rang De Basanti recently and thought it was amazing,” he says. And while he may take a while to distinguish a Priyanka Chopra from a Lara Dutta, he says that he does know it when he has a celebrity as a co-passenger. “I am aware that sitting next to me is a beautiful woman who is very important.”