TVS Motor’s and Singapore-based Universal Success’ upcoming manufacturing unit at Uluberia would see major capacity expansion over the next five years.

“We have not come here with a small plant in mind. This will be a plant catering to the eastern part of the country. We are starting with 20,000 vehicles a year and then as the market grows it will grow. In five years’ time hopefully we will produce a couple of lakh units, may be from 20,000 a year to 20,000 units a month, “ TVS chairman Venu Srinivasan told reporters on the concluding day of Bengal Leads 2012 here on Saturday.

Though he declined to comment on investment, the company had earlier said it was likely to invest about Rs 350-400 crore over the next couple of years in the plant. The joint venture would also set up an auto ancillary unit in long-term. “Once the auto come, the ancillary will follow. Volumes has to reach that level first," he added.

The Chennai-based two-wheeler major plans to set up its own unit at Mahabharat Motor’s plant at Uluberia. The proposed demerged company will be a joint venture between TVS Motors and Prasoon Mukherjee’s Universal Success Enterprise based in Singapore, one of the promoter of Mahabharat Motors.

The entrepreneurs will have to go through the court process of demerger to float the new company. It will use 45 out of the total 63 acres Mahabharat Motors’ plant at Uluberia.

“The state government has given all possible clearance for the demerger. We are waiting for demerger permission from high court," Prasoon Mukherjee said.

Mahabharat Motors, jointly promoted by Indonesia’s Salim Group, and the Universal Success Enterprise based in Singapore was incorporated in 2006 to produce two wheelers based on Chinese technology.

Later in 2008, TVS Motor tied up with Mahabharat Motors as their contract manufacturers. According to the proposal then, the facility was to manufacture 1,000 bikes per month from October 2009. The production capacity was supposed to be expanded to 10,000 per month by 2011.

However, it failed to match the estimated production and, finally following the economic slowdown in 2009, TVS stopped sourcing from Mahabharat.