When Pitlochry Festival Theatre's artistic director John Durnin arrived at the Perthshire producing house 10 years ago, he had transformation on his mind.

Here was a theatre which, while situated well out of the central belt, had developed a repertoire and production standards on a par with London's West End. This in itself was a major step forward from the Theatre In The Hills' beginnings in 1951 when John Stewart opened it in a tent. Once PFT's purpose-built premises opened for business, under Clive Perry and others it developed a reputation for producing calculatedly commercial fare personified by the work of Alan Ayckbourn.

While Durnin's tenure has not been averse to producing the odd Ayckbourn over the years, he has broadened the repertoire considerably, so it now includes more contemporary plays in the programme, alongside familiar classics. Durnin also introduced a sequence of musicals that now form a major part of PFT's in-house season, while all-year-round programming has seen the institution of an annual Christmas play into the programme.

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With this year's programme already up and running with a typically lavish production of Hello Dolly!, Durnin is already looking forward to the rest of the programme, even as he reflects on his achievements with PFT over a decade which he never doubted he'd stick around to see through.

"The task we'd set ourselves and the objectives we wanted to achieve weren't going to be achieved overnight," he admits. "The big objective was to make PFT not just a seasonal operation, but an all-year-round one. That was going to take time in terms of raising audience awareness of what we were doing, and only now is that starting to bed in. Now we're able to include not just work from other organisations, but are able to produce our own shows as well so they form a significant part of our programme, and that's very satisfying.

"In terms of broadening the repertoire, since my first season at PFT in 2004, we've been able to incorporate musical theatre using an actor/musician model, and we've been able to put on plays which 10 years ago people might have said: 'My God, that's not a PFT sort of play!' Now we can put on contemporary Scottish plays like Outlying Islands by David Greig or Passing Places by Stephen Greenhorn, and we've started to see different sorts of audiences coming in. That's been a big mountain to climb, but we're now some way along it."

"In a lot of ways things haven't changed at all, in that we've been able to keep on doing plays that have the broadest appeal, but we're also now able to do things which are slightly more niche. Now, if you look at the socio-economic base of our audience, it's very similar to the audience that goes to the Royal Lyceum in Edinburgh and the Citizens in Glasgow rather than some funny place up a hill."

If there is a theme running throughout Durnin's 10th anniversary season, it is an all-too-appropriate one of theatricality, and attempting to lead private lives while being in full public view.

Following the opening of Hello Dolly!, the season continues with Alan Ayckbourn's A Chorus of Disapproval, about the travails of an amateur theatre company's attempts to put on a production of The Beggar's Opera. This is followed by Noel Coward's Present Laughter, Alan Bennett's double bill, Single Spies, and Oscar Wilde's Lady Windermere's Fan. While the summer rep season concludes with Jim Cartwright's pub-set play, Two, a new production of The Steamie – PFT's third – will grace the autumn schedule. After last year's hit production of White Christmas, this year Pitlochry follows up with a rarely seen stage musical version of the ultimate feelgood festive flick, It's a Wonderful Life.

While Durnin remains buoyant about Pitlochry's successes, there have of course been setbacks. One of these was the proposed use of the theatre's grounds and gardens, used so spectacularly in a production of Judith Adams's audacious play, Sweet Fanny Adams in Eden. With funds already limited to allow this initiative to develop any further, things were not helped when the then Scottish Arts Council (SAC) withdrew all funding from PFT. Despite such setbacks, Durnin remains philosophical about his theatre's economic state.

"We're not immune to what is happening to everybody else," he says. "Ever since the SAC took that decision, we've been living hand to mouth. As a result, we had to look at things in a different way."

With a long-term feasibility study already under way, Durnin is confident about PFT's relationship with Creative Scotland, the funding body which replaced the old SAC.

"We have a much better relationship with Creative Scotland than we did with the Scottish Arts Council," he says, "and we're looking to strengthen that position."

Whatever happens, Durnin remains confident about PFT's continuing expansion.

"People said musicals wouldn't work in rep," he says, "but we've proved that they can. We've also shown we can do adventurous contemporary plays, even as there have been some strange reactions to things that we thought would be hugely popular. So there are no certainties. In terms of developing things, we've still an awful long way to go, but there are still some big things ahead for PFT. We're exploring the possibility of touring work, and there are a lot of other possibilities on the horizon, so I think there's enough to keep me occupied for a while yet."

Pitlochry Festival Theatre's 2013 season features Hello Dolly!, already in rep, and A Chorus of Disapproval opening on Thursday.