New Delhi: One of India’s largest media companies by market capitalization, Zee Entertainment Enterprises Ltd (ZEEL) will re-enter film production and distribution, a business it had left a few years ago.

It will create a subsidiary—Zee Entertainment Studios—and raise about $250- 300 million (Rs1,072.5-1,287 crore) for the films business.

“The board has given the go-ahead for raising the capital. We are considering two-three options to do this, including a listing on London’s Alternative Investment Market,” said Pradeep Guha, chief executive, ZEEL.

The subsidiary will have two divisions. While Zee Motion Pictures will produce Bollywood movies with budgets of Rs50-60 crore, Zee Limelight will produce lower-cost movies in Hindi, Marathi, Bengali, Telugu, Tamil and Kannada.

The company had produced a movie, Gadar, in 2001. Though it went on to become a hit, the returns from the movie were not very good for the company.

“We realized that more than 50% of the accruals had gone to distribution and other heads. But now we have an opportunity to leverage synergies with the multiplex business of the promoters. We have about 300 screens in India so it will all stay within the company,” Guha said.

ZEEL’s parent Essel Group operates multiplexes under the Fun brand.

The company is demerging its youth channel Zee Next into a separate firm. The channel’s losses will be capped at Rs50 crore this fiscal year compared with Rs300 crore last year, the management said during an analyst call on Tuesday.

On Wednesday, ZEEL shares rose Rs8.80, or 3.7%, to close at Rs242.75 each.