Mahindra & Mahindra (M&M), a passenger, commercial and utility vehicles maker announced plans to invest Rs 20 billion over a period of 5 years in Tamil Nadu to expand its operations.

The company is signing a memorandum of understanding (MOU) with the government of Tamil Nadu in this regards.

The company said, "As a part of MOU, the company  commits to invest Rs. 20 billion including its investments in Mahindra Research Valley (MRV), a new test track for MRV and an automotive plant to meet it's future needs over the next 5 years."

"M&M could also increase the investment to Rs 40 billion by 2022 for which it can decide over the next few years. While the MRV is located at Mahindra World City, near Chennai, the MRV test track and the new plant would be set up on about 450 acres of land at Cheyyar near Kancheepuram," it added.

The MOU also provides details of the package of incentives that would be commensurate with the level of investment commitment.

Shares of the company gained Rs 33.45, or 2.92%, to trade at Rs 1,179.55. The total volume of shares traded was 31,206 at the BSE (1.31 p.m., Wednesday).