Disney is looking to increase its holding in UTV Software Communications, the Indian media group that controls Bollywood's largest film studio, in a move that could trigger a full takeover.

At stake is control of UTV Motion Pictures (UMP), a film subsidiary created to bring Hollywood-style business models to Bombay and valued at about £150million.

The unit, which has financial links with Will Smith, the American actor, was floated on London's AIM market last year by Ronnie Screwvala, the UTV chief executive, and now boasts the biggest slate of forthcoming productions in Bollywood, one of the world's largest film centres.

Disney owns 14.9 per cent of UTV Software, the parent conglomerate that runs businesses from videogaming to cable television and is one of the most visible presences in India's booming media sector. The Bombay-listed company's shares have risen almost fourfold in the past year, valuing it at about £275million.

It is understood that Disney is competing with a Western financial investor to lift its strategic stake. Last year UTV said that it would consider selling a further 12 per cent to raise £76million to fund a new set of cable channels. Under Indian takeover rules, if Disney's holding rises above15 per cent it could be forced to launch an open offer.

A source said: “Change of control is obviously a possibility. There are no safeguards.”

With two other promoters Mr Screwvala controls a total of 36 per cent of the parent company.

A deal is expected next month, but interest in UTV may yet emerge from other parties. Media houses including Viacom and Sony are targeting India.

UMP's biggest production, Jodha Akbar, starring Hrithik Roshan and Aishwarya Rai, two of Bollywood's biggest names, is set for release next month.

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