Ardeshir Irani was planning to make the first Indian talkie movie Alam Ara in Hindi in 1931. Hanumappa Muniappa Reddy (well known as H. M. Reddy) was assistant director on that film. Simultaneously, Reddy made the first Indian talkie in Telugu.
Prahalada was one of the successful dramas being played on stage by Surabhi Telugu drama troupe in those days. The team was under supervision of C.S.R. Anjaneyulu, who later became a famous Telugu actor. H.M. Reddy brought the entire drama team to Bombay and made the movie on the same set of Alam Ara. Among the cast in the movie, L. V. Prasad and Kamalabai became famous Telugu film personalities.