Hyderabad, Oct 27 Medha Servo Drivers, a manufacturer of propulsion systems, will set up a railway coach factory near Hyderabad with an investment of Rs 800 crore, a Telangana minister said on Friday. The factory to come up near Kondakal in Sangareddy district is expected to provide direct employment to 2,000 people. The company on Friday signed a MoU with the state government. The unit will be set up with a strategic foreign collaborator who has not been named. Industries Minister K. Tarakarama Rao said work on the factory would begin in the first quarter of next year. The state government has allotted 100 acres of land for the plant. The minister said it was a matter of pride for the state that a company from Hyderabad had emerged to compete with global giants. He said it would be one of the few railway coach factories in the private sector and this would give boost to manufacturing in Telangana. He said the company planned to make diesel and electric locomotives in the next phase and even export coaches to the US and Europe.