Domestic revenues hit 19.25 billion rupees ($363.2 million) this year, up from 14.5 billion rupees in 2010, and an unprecedented four films crossed the billion rupee milestone. Two of those blockbusters starred actor Salman Khan.

The solid performance contrasted sharply to the previous year when there were hardly any hits.

"Audiences and filmmakers have gone back and discovered stories that are close to our Indian roots," said Sanjeev Lamba, Chief executive of Reliance Entertainment, which produced two of the year's biggest blockbusters -- "Bodyguard" and "Singham".

"Bodyguard", in which Khan plays a personal security guard to a rich man's daughter and ends up falling in love with her, was the most successful Bollywood film, raking in more than 1.5 billion rupees ($28 million) at domestic box offices.

"Singham" told the story of a right-minded police officer who stands up to a corrupt politician and was accompanied by romance, drama and high-octane action.

Both "Bodyguard" and "Singham" were panned by critics but loved by audiences. And both featured strong central characters, harkening back to the 1980s and early '90s in Bollywood when films were centred on the hero and his defeat of a villain in a battle of good versus evil.

"Audiences have always loved the dilemmas of the hero, a little bit of action, some drama and some romance," Lamba said. "We had a lot of that this year."

Other themes were successful, too.

Offbeat films like "The Dirty Picture", based on the life of a soft-core porn star, proved to be sleeper hits and took industry analysts by surprise. Together with the likes of "Singham" and "Bodyguard", these smaller films proved audiences have an appetite for both mass market and niche-oriented work.

"It is not that more people are watching movies, but that the same audience is watching more movies," said Shailesh Kapoor of Ormax Media, a firm that specialises in film market research.

"HARRY POTTER" HOT; "RA.ONE" NOT

But widely-hyped movies like superhero film "Ra.One" were a let-down.

In spite of a publicity blitzkrieg, actor Shah Rukh Khan's film did not live up to expectations with around 1.2 billion rupees ($22 million) in net box office. That was just a bit more than its official budget of a billion rupees. Industry estimates put the film's cost at over 1.5 billion rupees.

Aside from that, for the most part, Bollywood managed to keep its purse strings in check, with production houses learning that budgeting a film right is half the battle.

"Balaji Motion Pictures made 'The Dirty Picture' at a budget of less than 300 million rupees but have chosen themes and subjects which are interesting, and (they) publicised their films so well that audiences have felt compelled to watch them," said industry analyst Vajir Singh.

Big studios like Reliance and UTV also have changed their business models, preferring to co-produce films rather than acquire them after completion. Last year, Reliance suffered losses after two big-ticket acquisitions, Mani Ratnam's "Raavan" and Hrithik Roshan-starrer "Kites" flopped at box offices.

"This year, all our films have been co-productions or our own productions and we have seen the successes," Lamba said.

"We prefer to be creatively involved from the beginning of the project rather than coming in at the end in an acquisition scenario."

Indian audiences also warmed up to Hollywood blockbusters including "Harry Potter and the Deathly Hallows: Part 2" and "The Adventures of Tintin: The Secret of the Unicorn" -- something that wasn't seen until just a few years ago due mainly to Bollywood's dominance of the box office.

"These days, the box office collections of good Hollywood films can rival those of a Bollywood film," said Sunil Punjabi, chief executive of the Cinemax chain of multiplexes.

"The Adventures of Tintin," which was released along with Ranbir Kapoor's "Rockstar" in November, made more than 70 million rupees its opening weekend

(Editing by Elaine Lies and Bob Tourtellotte)

• A Permanent Economic Emergency