Lyca It Or Not: The Missteps That Derailed Tamil Cinema’s Most Prolific Production House

Few Tamil production houses can claim to have the filmography Lyca Productions has had in the 11 years since its launch with Vijay’s blockbuster Kaththi.

With a list that boasts four Rajinikanth films, two Kamal Haasan films, three Mani Ratnam films, three Shankar films, one Vijay film and a whole host of other A-list mega projects, even established production companies such as Sun Pictures have not been able to match the pace with which Lyca has been making films.

In total, Lyca has produced 34 films since launch and this includes two films that are yet to release: Indian 3 and the yet-to-be-titled Jason Sanjay directorial. Their productions were a mixed bag that created both critics' favourites and commercial entertainers such as Vetri Maaran’s Vada Chennai, Mani Ratnam’s Chekka Chivantha Vaanam, Nelson’s Nayanthara-starrer Kolamavu Kokila, and Sivakarthikeyan’s comedy Don.

A still from 'Chekka Chivantha Vaanam'

They also produced a series of films with budgets exceeding hundreds of crores such as 2.0, Indian 2, Indian 3, Ponniyin Selvan 1 and 2, Vidaamuyarchi and Vettaiyan. Three films among the 20 biggest budget Indian films are Lyca Productions' projects with Shankar’s 2.0 being the most expensive Indian film ever made when it released in 2018. They were just as prolific as a distributor too, having presented 14 films which included high-profile movies such as Pushpa: The Rise, RRR, Kaala and Spyder.

But the last few months have been anything but positive for what was the strongest production house in Tamil cinema. With Lyca Productions’ departure from Mohanlal’s mega budget L2: Empuraan on March 15, the future looks grim for the company. The dispute with Aashirvaad Cinemas led Lyca to exit, only for Sree Gokulam Movies to become a partner/distributor when the film was just two weeks away from its upcoming March 27 release.

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However, despite their exit, Lyca Productions’ banner will remain a part of all promotional material and the trailer of Empuraan, even though they will not be distributing the movie even in their home base of Tamil Nadu. This separation with L2: Empuraan might just be the final straw that broke the camel's back given the series of recent flops such as Lal Saalam, Indian 2, Vettaiyan, Vidaamuyarchi and Chandramukhi 2, all in just over a year.

But What Happened?

Naturally, most production companies would have struggled to overcome back-to-back failures of five films in such a short span. But the timing for the separation with the Empuraan team was particularly difficult for Lyca given what was happening at a larger level.

A still from 'Empuraan'

A close observer of the business, who did not want to be named in this report, points to the implosion of the OTT bubble as one of the most striking reasons for this immediate crisis. He says, “From reports, Lyca Productions came forward to invest upwards of ₹70 crore for Empuraan during the earlier stages of production. At that time, the OTT and television satellite market was strong, and the deal was made in a way that Lyca would be paid once these rights got sold. But in the recent past, most major streaming platforms have either begun to buy films at lower rates or have decided to not buy rights of Malayalam films at all. This backfired for Empuraan too, with none of its rights getting a buyer. When times were already tough for Lyca, the collapse of the OTT pricing structure further squeezed them out of funds."

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This source finds the situation ironic given the role Lyca themselves played in hiking the salaries of stars and star technicians after they cracked highly lucrative deals during the OTT boom. He adds, “If you look at the period during COVID-19, reports of most stars charging upwards of ₹100 crore began only when they signed on to do films with Lyca. In a way, Lyca passed on high rates given by OTTs onto stars. But when the streamers refused to pay those sums anymore, they were the first to collapse.”

As a company too, he points to the various decisions that have gone wrong. He says, “Their leadership has not been consistent and we've seen constant changes at the top of the production house. They have also got into films and industries without as much expertise as traditional producers. Their current situation is as much a doing of their own mismanagement as something macro.”

A History Of Missteps

But the issues for Lyca Productions began even before the release of their first film. Kaththi faced strong protests across the State by pro-Tamil groups alleging the involvement of the company with former Sri Lankan President Mahinda Rajapaksa. Refuting any such connections, the CEO of Lyca Group, Subaskaran Allirajah, claimed that Kaththi’s filming budget was merely two days’ turnover of his company. A political outfit named Ilaya Thalaimurai Katchi too protested the following year for the same reason when Lyca came forward to distribute Dhanush’s production Naanum Rowdy Thaan.

A still from 'Kaththi'

Five years later, the production house faced a much bigger challenge when three people, including one of the film’s assistant directors, were killed during the shoot of their film Indian 2. Nine others got injured too as a crane crashed onto a tent during the shoot of one of the movie’s songs. Although the matter got resolved later, Kamal Haasan had written an open letter at the time questioning safety standards on sets after the accident claimed three lives. This led to severe delays in production and when the film’s director Shankar announced the launch of his next film, Lyca approached the Madras High Court seeking a ban on him if he were to direct another film before completing Indian 2.

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In 2023, Lyca Productions had gone to High Court again seeking an injunction against the release of actor Vishal’s Veerame Vaagai Soodum, after the actor failed to repay a loan that he had taken from the production company.

Another setback for the production company took place early last year when the director of their film Lal Salaam, Aishwarya Rajinikanth, stated that the crew had misplaced an important hard disk which contained the footage of the film. She added that they had lost 21 days of footage and had to reshoot portions as a result, and this eventually ended up diluting the quality of the film. The film released last year to mixed reviews and a lukewarm opening, despite the presence of Rajinikanth in an extended cameo.

A still from 'Lal Salaam'

Most recently, Lyca Productions was blamed again after it failed to hit the initial release date announced for the Ajith-starrer Vidaamuyarchi. The film had been slated to release for the lucrative Pongal season in January, and allegedly had to be pushed when negotiations between Lyca and a Hollywood-based production company took longer than expected. Ever since the film’s teaser came out last year, comparisons began to spread with the Tamil film looking a lot like the 1997 Hollywood film Breakdown. With this forcing the film into renegotiation, Vidaamuyarchi got pushed by two weeks. The only major film that finally hit screens on Pongal was a comedy named Madha Gadha Raja that had remained unreleased for nearly 12 years. It also went on to become a surprise hit despite the delay.

Read More | Ajith's 'Vidaamuyarchi': Why The Film's Postponement Is Creating Havoc In Kollywood This Pongal

As for LycaMobile, one of the other companies in the larger Lyca Group, there were similar instances when Lycamobile’s French companies were fined an amount of 10 million Euros by a Paris-based court for money laundering and value-added tax (VAT) fraud. In India, this was followed by searches by the enforcement directorate at eight premises in Chennai in May 2023, after the central probe agency registered a money laundering case against Lyca Productions.

Will there be a 2.0 for LYCA?

Distributor and theatre owner Tirupur Subramaniam is unwilling to dismiss Lyca Productions just yet, and instead asks us to look at the damage that their potential exit could do to the Tamil movie business. He says, “They were a major corporate company based out of U.K who felt passionate about Tamil cinema to the point that they were willing to bring in so much capital. They are successful in other competitive industries, so it's not that they do not know how to run a business. I feel it’s the industry that must come together to help them out in this time of need.”

Subramaniam, who has worked with Lyca in many films, calls them “thorough gentlemen” when it comes to business and adds that they have never delayed payment of any amount, big or small. He also understands the role Lyca has played in hiking the salaries of stars and technicians, but feels that if they were ready to take a cut, Lyca could continue to make films. He adds, “Instead of demanding massive salaries, stars and directors could opt to take a percentage of profits and work on a couple of films for Lyca at this stage. If a company flush with funds like Lyca decides to quit, it will create a major hindrance for new producers to invest in Tamil cinema. It’s important for all of us to cooperate.”

Repeated attempts by THR India to contact the production house as well as the company’s CEO was met with silence. With the production company neither confirming nor denying reports of their shutdown, Lyca could be looking at giving their film production wing one last shot.

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Without any clear signs of a possible release for Indian 3, all signs point to Jason Sanjay’s first film as director, starring Sundeep Kishan, to be their final film as producers. Tamil cinema already has a long list of production companies that have failed to sustain themselves, including producers of several blockbusters, like Aascar Films, Pyramid Saimira and many more. We will have to wait to see if Lyca too will be added to this list.

“A Pause. Not A Full Stop”

But producer and distributor G Dhananjayan feels it's too soon to write off such a major production house. He prefers to call this phase a “pause”. Speaking about what has happened to Lyca, he says, “Instead of pointing at Lyca’s issues, one needs to study the overall perspective of the Indian movie business now. A lot of major corporate companies in our business are in deep trouble and just recently, we saw a veteran like Karan Johar selling 50 percent of his stake.

Explaining what has changed, he adds, “The theatrical business has become one of extremes. Either a film flops entirely, or it becomes a superhit. There is no scope for those average hits that kept most films safe. These extreme reactions are reflecting among buyers too. For Tamil films, there are no takers for the Hindi dubbing rights. Right from 2019, the television satellite rights too have become insignificant. Of the 241 Tamil films that released in 2024, only 31 have been sold. Which means that most producers were relying on the sale of digital rights alone for 50 percent of the income.”

Lyca, like other producers, are reeling from a change in strategy from the side of the OTTs. He adds, “For small producers, it's easy to call off a project or abandon them during such a crisis. But Lyca, being a major corporate, must keep the commitments of all the films they signed during their better days. Whichever way you look at it, they are one of first to get affected by this change, but they can easily turn things around; it's too early to be writing obituaries.”