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Listening to Lord Karan Bilimoria speak about business is like listening to a favourite uncle read you a bedtime story. His voice is deep, gentle, soothing, assured. You would never guess that, on his way to establishing his Cobra Beer empire, this man ran up huge personal debts, overturned the received wisdom of the brewing industry, changed the name of his first product at the last minute, and took many other major risks.

Like all good stories, Bilimoria's is one that evokes all the senses, explains how great obstacles can be overcome and leaves you fizzing with ideas. Around 200 members of the London Business Forum (LBF) gathered at the Prince Charles Cinema, just off Leicester Square, to hear it. Far from nodding off, all were to be heard chatting loudly at the end about their own businesses over free bottles of Cobra Beer.

The story began in India, where Bilimoria was born in the city of Hyderabad. His father was Commander-in-Chief of the Central Indian Army, responsible for about 350,000 men, so the family moved around a lot, and the young Karan ended up attending seven different schools, latterly a boarding school for British expatriates. He skipped his A-levels but "got a lucky break" and went up to Osmania University in Hyderabad at the age of 16, graduating three years later with a Bachelor of Commerce degree. Then he came to the UK and joined Ernst & Young to train as a chartered accountant.

"It took me about two years... to realise I wasn't going to be an accountant for the rest of my life," Bilimoria said. "But I did realise I was learning a huge, huge amount and it was a fantastic exposure to business." He stuck at the training, then went to Cambridge to study law. But although he had a "great time" at the university, the idea of a professional career still did not appeal. "Within six months of finishing my studies, at 26 years old, I set up in business," he said.

The origins of Cobra Beer were the same as those of most other business ideas, Bilimoria argued: "being absolutely passionate about something on the one hand and hating something on the other." Passionate about Indian food and certain UK beers, Bilimoria hated the fact that UK curry houses only seemed to serve "fizzy, gassy, bland, harsh" lagers, which made diners feel too bloated to enjoy their meals. "The restaurant owner could, I realised, be selling me more beer and more food," he said.

He knew nothing about brewing beer, but was determined to make "the best ever Indian beer [and] a global beer brand". It was an outrageous ambition that few people believed he could fulfil, especially his father, whose initial reaction was to say: "What are you doing? You're going into business? All this education, and you're going to be come an import/export-wallah? Get a proper job! Become a banker!"

As Bilimoria himself admitted: "If I'd conducted a 'Five Forces' analysis [a popular framework for the analysis of market potential and competitive forces, developed by Harvard Professor Michael Porter in 1979], then [the idea] would have failed."

Yet the biggest obstacles in his way were practicalities. He was £20,000 in debt from his student days; the biggest Indian beer brand, Kingfisher, had already been established in the UK for eight years; the UK beer market in general was already crowded with powerful brands; and the worst UK recession since World War II was about to begin.

"Why is it that people finance you and supply you and buy from you when nobody knows you, nobody knows your brand, you have zero credibility, your product has zero credibility?" Bilimoria asked the LBF audience. The answer, he suggested, is that "you have so much belief and faith and passion and confidence in your idea, your product, and that gives people the faith and the confidence to trust you, to give you a chance... I call it bridging the credibility gap."

This attitude was put to the test at a meeting in Bangalore in 1989. Bilimoria had come to the headquarters of Mysore, the biggest privately owned brewery in India, in the hope of finding a manufacturing partner, but few of the senior managers there were prepared to take him seriously. "To sum it up, they all, individually and collectively, laughed in my face," he recalled. Nevertheless, he managed to convince Mr Balan, the brewery's owner, and Dr Cariapa, its chief brew-master, that he was on to something. Three months later, in collaboration with Dr Cariapa, he devised what he believed to be a winning recipe.

After securing another deal with a bottling plant in Hyderabad, overcoming various bureaucratic issues with the Indian Excise Authority and enlisting regional distributors in the UK, the beer was poised to go on-sale. Unfortunately, its name then became a serious problem. Originally, it was going to be called "Panther," but pre-sales feedback suggested this was universally hated by restaurateurs. On the fly, Bilimoria and his small team decided to switch to the second name on their list of preferences: "Cobra."

With no profile in the UK, Bilimoria knew he would have to win over the country's Indian restaurateurs before he could hope to sell into other outlets such as off licences or supermarkets. Indeed, listening carefully to the wishes of this core market remains a key discipline for the company today. "We have one rule [in sales], and that rule is that none of our sales team can ever, ever go into an outlet and ask for exclusivity," he said. "We have confidence in our product that it will perform on its own merit, and we believe customers should have a choice... When you give [the customer] that trust and that respect, it comes back multi-fold for your team and for your brand."

Bilimoria said the reorder rate among his restaurant clients was "almost 100% from day one". The first five years in Cobra's life were "really, really tough," he stressed, but two major trends were working silently in its favour. Firstly, the palate of UK drinkers was shifting fast from real ale to lager. "Before I was born, 1% of beer in this country was lager and 99% was ale... Now, it's 75% lager and growing." And the nation's love affair with curry was also continuing to grow: "We are a nation of curry-holics. We're addicted to curry, emotionally and physically," he said.

Today, Cobra has a retail-value turnover of around £80m, with a compound annual growth rate of 42% over the last 10 years. It sells into almost every supermarket and off-licence chain in the UK, and into 90% of the country's Indian restaurants. It exports to over 50 countries. Most importantly, Bilimoria said, its credibility is now firmly established: "From 2001, we started entering the Monde-Selection quality awards out of Brussels, and we won a gold medal the first year we entered. And we kept entering, and in 2005 we won 11 gold medals, more than any other beer brand in the world." In 2006, the company won 12 gold medals and, Bilimoria said, "this year, it had better be 13."

The company believes it has good reason to be ambitious. "There's still plenty of growth in Indian restaurants [and] the UK off-trade," Bilimoria pointed out. "We've got a huge potential with draft, in our exports and in our international operations, of which India is just booming... Our dream is to transform this into a billion-dollar retail company."

Yet it also recognises the need to diversify. Recently, for example, it launched a wine brand after discovering that a growing number of people wanted to drink wine, rather than beer, with Indian food. It has launched a non-alchoholic beer, prompted again by "dissatisfaction with the existing products in the market". It has launched a "light" beer with fewer than 100 calories per bottle. And it has launched a strong beer for the Indian market, where strong beers account for 70% of sales, called "King Cobra."

Bilimoria said the company now produces 30 SKUs [stock-keeping units] where, only a few years ago, it produced three. He adds that another recent priority was to end the company's dependence on the UK market, in terms of production capacity as well as export potential. "So we started opening up offices around the world, in India and in the US and South Africa, and we started brewing in different countries. And today, we brew in Poland, Belgium, Holland, the UK and in more than one location in India."

Nevertheless, the company can't afford to rest on its laurels, not least because protecting the intellectual property behind a beer is so difficult. The Cobra trademark is protected rigorously, he pointed out, but "it's practically impossible to patent a beer... If I register the patent today, tomorrow somebody else will copy my recipe as close as they could, and change one of the ingredients slightly, and that's another patent."

Ultimately, he argued, the most valuable form of differentiation is intangible. "What I always tell my team is that people can never, ever copy our culture... And in our case, our culture's very much about having the principle of giving trust and giving respect to everyone, we deal with rather than demanding their trust and demanding their respect." This applies to employees as much as customers, he argued - Cobra's future depends on its ability to innovate, and that means giving staff as much freedom as possible to follow their instincts, as he did against the grain of the industry.