Mahindra & Mahindra (M&M), India-based major tractor manufacturer is searching options to acquire stake in Swaraj Engines.

M&M functionaries stated in a communiqué that the company is in discussion with KOE to buy out the stake .

The sources informed that this is a part of company's proposal to spread the diesel engine business.

The sources further informed that M&M purchased 33.2% stake in Swaraj Engines as well as 14 percent stake in Swaraj Mazda through its acquisition of Punjab Tractors in fiscal 2007.

Swaraj Engines, supplies diesel engines for Swaraj Tractors. The conglomerate was formed in technical partnership with Kirloskar Oil Engines (KOE), which at present holds 17 % stake in the company.

Stock of Mahindra and Mahindra declined Rs 11.2, or 1.3%, to settle at Rs 849 on Bombay Stock Exchange (BSE). The total volume of shares traded was 196,458.00 on BSE (Friday).