Vauhini Studios was founded by Moola Narayana Swamy. Narayana Swamy met Bommireddi Narasimha Reddy (brother of B.N.Reddy and B.N. Kondal Reddy) through some business connections. Both of them became business partners and started exporting onions to Rangoon in Burma. Narayana Swamy and B.N.Reddy joined as partners in Rohini Pictures owned by H.M.Reddy. Under Rohini Pictures banner they produced some movies like Gruhalakshmi. Later H.M.Reddy and B.N.Reddy had differences and B.N.Reddy and Narayana Swamy separated and decided to start their own production company. With Narayana Swamy as a major share holder Vauhini Pictures was started. Several movies were produced under this banner like Vandemataram, Sumangali, Devatha and Swarga Seema. Swarga Seema movie was shot mainly in Newtone studio in Madras. But there were so many difficulties with the studio and younger B.N.Reddy who was also director for the movie was very upset and expressed this to Narayana Swamy. So Narayana Swamy suggested that they could build a new studio.
Vauhini Studios was started under the chairmanship of Narayana Swamy. Narayana Swamy was the major share holder. Out of two and half lakh rupees investment, Narayana Swamy's share was two lakhs and rest were B.N.Reddy, Nagi Reddy and others. As part of inheritance from their father Narasimha Reddy, B.N.Reddy and Nagi Reddy got these shares.
Narayana Swamy also built theatres, Vauhini Talkies in his native place Tadpatri and Raghuveer Talkies in Anatapur.
Narayana Swamy got his childhood friend K.V.Reddy as cashier in Vahuini Pictures and later made him direct the movie Bhakta Potana. Bhakta Potana was a very big hit at that time. K.V.Reddy later directed many other movies for Vauhini and Vijaya studios.
In 1948 Narayana Swamy properties and businesses were seized due to income tax problems. Vauhini studio was also leased to Vijaya Productions to save from income tax.
Narayana Swamy died in 1950. In 1961, after Narayana Swamy's son became major. His eldest son with the help of Damodaram Sanjeevaiah (whom Narayana Swamy helped for his education) sold the studio to B.Nagi Reddy as part of an agreement that they'll clear all the income tax dues that need to be paid by Narayana Swamy family. B.Nagi Reddy later renamed the studio Vijaya Vauhini Studios.