What is more significant, according to industry players, is this is the first time the industry crossed the triple century mark in terms of annual investment after stagnating around Rs 200-250 crore in previous years.
The release of 128 movies in a single year is also a record for Malayalam cinema, and eight of them reaped handsome profits and 40 films collected their investment back.
This showing is impressive in every aspect compared with release of 93 films in 2010 which further slid to 88 in 2011.
'Thattathin Marayath', 'Ustad Hotel', 'Mayamohini', 'Ordinary', 'Run Baby Run', 'My Boss', and 'Mallu Singh' were some movies which did quite well at the box office last year.
More than 10 dubbed movies from other languages were also released across the state and most of them wooed audiences, industry sources said.
Once rated highly for producing critically acclaimed movies and crowd-pulling commercial hits simultaneously, the film industry faced troubled times in last few years due to a combination of factors, including rampant video piracy and lack of good scripts.
Movies with superstars continuously flopped in theatres and films by yesteryear super directors also fared badly during this period.
When the industry in neighbouring Tamil Nadu made several experiments in subject and narration, Mollywood stuck to its beaten path and larger-than-life heroes, distancing audiences and making them seek greener pastures in other languages. The influx of a set of young directors, gifted actors who see cinema as a passion and committed producers have given Malayalam cinema a fresh lease of life, according to Sasi Ayyanchira, secretary of Kerala Film Producers Association.
"This is no hollow claim. For the first time in the history of Malayalam cinema, 128 movies have been released in a single year. The most striking thing is that a majority of the successful ones were of medium budget movies. Instead of actors, the story became the hero," Sasi told PTI.
He said the introduction of digital film making helped reduce the cost of production to some extent.
The average production cost of a Malayalam film is between Rs 2.50- 3.50 crore. It goes up to Rs 5.50--7.50 crore in the case of superstar movies. However, the production, especially when shooting in locations outside the state and abroad, would go up steeply, he said.
In Malayalam, a movie could fetch satellite rights up to Rs 3.50 crore based on the star appeal of actors, director and the commercial viability of the movie, he added.
Young filmmakers like Vineeth Sreenivasan, Sreenath, Ashiq Abu, Anvar Rasheed, Sugeeth and Arun Aravind became hit-makers while new entrants like Fahad Fazil, Nevin Pauly and Dulqar Salman became acting sensations in the last year.
According to Sabu Cherian, Chairman of Kerala State Film Development Corporation, the collection from theatres also increased remarkably in the last year.
"With the coming up of fresh and innovative films, audience have begun to come back to theatres. Containing of video piracy, which grievously harmed the industry in previous years and upgrading of facilities in movie houses and their classification have also contributed to the revival of Malayalam industry," Cherian told PTI.
He said the state government has also invested about Rs 4.5 crore for infrastructure improvement of state-owned theatres at Thiruvanathapuram, the prime venue for the annual International Film Festival of Kerala. In the next stage, the infrastructure development project would be extended to Kozhikode, Alappuzha and Cherthala, he said.