MUMBAI: Percept Picture Company (PPC) and Hyderabad-based DQ Entertainment (DQE) have signed a memorandum of understanding (MoU) to produce three animated films with a total budget of around $25 million (approximately Rs 1 billion).

This is DQ Entertainment's first investment announcement after raising $56 million through its listing on the Alternative Investment Market (AIM) of the London Stock Exchange (LSE).

As per the MoU, PPC and DQE will produce two films based on mythology, and the third one will be a Bollywood masala flick.

The films are slated to release in 2009 and 2010.

PPC MD Shailendra Singh said, "The Indian animation feature market today finds itself at unprecedented values since the whopper hit Hanuman (2005). The movie not only smashed records in the animation segment, but went on to achieve further heights when it broke DVD sales in 2006 followed by the release of PPC's Return of Hanuman in 2007."

DQE CEO Tapaas Chakravarti said, "Bollywood's foray into animated Indian feature films with Hanuman has triggered many announcements of animated features by Bollywood houses. The business proposal and co-production understanding between PPC and DQE is aimed at bringing high-quality story telling and visuals and international success to India. We are excited about our plans with PPC and committed to producing high-quality animated films from India for the world."

DQ Entertainment had earlier said that it would be producing a live action feature film every year, starting from 2008 along with an animated TV series every 18 months.