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Utility vehicles maker, Mahindra and Mahindra (M&M), will invest around Rs 2,000 crore to set up an automotive plant and a testing facility in Tamil Nadu, according to a senior official of the company.

The company is likely to sign a memorandum of understanding (MoU) with the state government soon. Although the work was initiated in 2011, the fate of the project remained uncertain as land was not allotted to the company.

Speaking to Business Standard, Pawan Goenka, executive director and president (automotive and farm equipment sectors), M&M, said, "We are in dialogue with the industrial department of the state. The MoU will go to the Cabinet by this month-end. The moment the approval is given, we will sign the agreement."

The plant will come up on about 400 acre at Cheyyar in south Tamil Nadu. The original plan was to build a tractor facility first and then a testing ground and an automotive plant.

"Since the MoU got delayed, we had to set up the tractor plant at Zaheerabad in Andhra Pradesh (AP). The project has already started production," he said.

The company has invested over Rs 300 crore in its AP facility, which has a production capacity of about 100,000 tractors a year. At present, it is running in full capacity.

Goenka said the company didn't believe in committing a big figure first and reducing it later. "But, when we set up the full-fledged automotive plant here, the figure will go beyond the committed investment since such a plant costs more than Rs 2,000 crore," he added.

"Tamil Nadu is important for the company and we want to have a plant and a testing facility here. The testing facility will be fairly large. Right now, we are suffering because we don't have a testing facility in India and need to go to the UK, Australia or Korea to carry out testing," Goenka said.

According to Goenka, the automotive plant will cater to both domestic and export markets. "As soon as the land is allotted, we will build the testing facility so that we could undertake engineering, testing and production."

On when the plant would finally be ready, he said, "It depends on the timing of land allotment. If we don't have the land when we need it, we will start it somewhere else. We cannot wait for long and delay our plans."

The land to be allotted to the company is yet to be fully acquired. "Tamil Nadu is very important for us and we would like to do more projects here. The company has already invested around Rs 600 crore in the Mahindra Research Valley (MRV) on the outskirts of Chennai employing 2,500 people."