London's Tamasha theatre will unveil its long anticipated adaptation of the Rohinton Mistry novel A Fine Balance in January next year.

The highly acclaimed novel, which was published in 1995 and described by the Guardian as "a masterpiece of illumination and grace" will be on stage for the first time.

The book is set in 1975 when the Indian prime minister Indira Gandhi declared a state of emergency. In these uncertain times, Dina Dalal - a spirited Parsi widow determined to avoid a second marriage - takes a student boarder and two Hindu tailors into her ramshackle flat.

Yet, as the cruel policies of slum clearances and enforced birth control bring chaos to the city, the four strangers find themselves crossing divides of caste, class and religion to form the most unexpected of friendships.

Mumbai born Rohinton Mistry, who now lives in Canada, is the author of three novels. He wrote Such a Long Journey in 1991, the story of a Bombay bank clerk who unwittingly becomes involved in a fraud committed by the government, which won the Commonwealth Writers Prize. Then came A Fine Balance four years later.

Family Matters was published in 2002, telling the story of an elderly Parsi widower living in Bombay with his step-children. His first two novels were shortlisted in previous years for the Booker Prize for Fiction and Family Matters was shortlisted for the 2002 Man Booker Prize for Fiction.

Tamasha will use a mixture of visual imagery and sound, with an ensemble of eight actors, to bring the novel to life. It is the theatre company's first production with Hampstead Theatre, where it will open.

Its latest production, The Trouble With Asian Men, is currently doing a two week run at artdepot.

The show uses recordings of interviews that have been edited into an oral script, which is relayed to and then acted out by the cast during the performance. This gives actors a unique opportunity to bring to life a host of characters using all the freshness, colour, rhythms and quirky imperfections of human speech.

Tamasha is also working to adapt William Dalrymple's White Mughals into a stage production.