I found it can be done with ffmpeg and desired optimal quality can be achieved gaining some free space.
For best quality
ffmpeg -i 1.MPG -sameq 1.avi
For desired quality
ffmpeg -i infile.MPG -qmax 4 outfile.avi
Here the number 4 indicates that I need a moderate quality , higher the number lower is the quality and smaller is the output file size. You can hit and trial with a small file and choose your desired number. Same is applicable while converting MOV file to avi.
For Batch processing one can try
for f in *.MPG; do ffmpeg -i "$f" -qmax 4 "${f%.MPG}.avi"; done
Thanks Thomas
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